Asia: Stocks head for lowest since 2012 on China concerns, Wall St drop

[SDYNEY] Asian stocks fell, with the benchmark index heading for the lowest close since November 2012, as a selloff in US and European markets spread to the region and material shares led losses.

Japan's Topix index lost 2.4 per cent after the yen gained 0.6 per cent against the dollar on Monday. Australia's S&P/ASX 200 Index declined 2.3 per cent and New Zealand's NZX 50 Index fell 0.9 per cent. Markets in South Korea are closed for a holiday and those in China, Hong Kong and India are yet to open. Taiwan's equity market is shut because of a typhoon.

The MSCI Asia Pacific Index retreated 1.4 per cent to 122.96 as of 9:10 am in Tokyo, on course to slide 16 per cent this quarter. The Standard & Poor's 500 Index slumped 2.6 per cent on Monday amid a rout in commodity and biotechnology shares, while a gauge of global equities fell to a two-year low. Glencore Plc slumped 29 per cent, dragging the Bloomberg World Mining Index to its lowest level in almost seven years.

Markets have been whipsawed as China's economy falters despite stimulus efforts. A gauge of industrial profits fell the most in at least four years, a report showed on Monday, ahead of manufacturing data this week that should provide further clues on the health of Asia's largest economy. The spectre of higher interest rates in the US is also weighing on sentiment, with Federal Reserve officials ramping up rhetoric in favor of a 2015 rate increase."The slowdown in China is spreading to other Asian economies, Brazil and Australia, and weakness in emerging countries could echo throughout the overall world economy," said Toshihiko Matsuno, chief strategist at SMBC Friend Securities Co. in Tokyo. "We still don't know when market fears will end about China's slowdown, and because of this investors are turning to cash and safe assets." E-mini futures on the S&P 500 rose 0.2 per cent after the underlying gauge's drop on Monday sent the measure to a one- month low.

Data on Monday showed household spending climbed more than forecast in August, indicating consumers will help the US economy muddle through any global slowdown.

New York Fed president William C Dudley said on Monday that the US economy was "doing pretty well" and that the US central bank will probably raise rates later this year. John Williams, head of the San Francisco Fed, also reiterated his expectation that borrowing costs will be boosted in 2015, adding that the jobless rate will probably fall to below 5 per cent this year.

BLOOMBERG