Asia: Stocks mixed as Aussie, Euro drop on price woes before Fed

[HONG KONG] Asian stocks were mixed, while the dollar strengthened against the euro and Australian dollar as traders wait on Federal Reserve commentary amid signs the global slowdown may be infecting the US economy. Oil in New York traded near a two-month low.

The MSCI Asia Pacific Index was little changed as declines by mining and energy shares in Sydney countered gains in Tokyo. Futures on the Standard & Poor's 500 Index were also steady after the UA benchmark slid for a second day. The Aussie tumbled after inflation came in below estimates and the euro slipped toward a two-month low hit Oct 23. West Texas Intermediate rose after touching its lowest price since Aug 28 on Tuesday. Natural-gas contracts rebounded Tuesday after dipping below US$2 for the first time since 2012.

"I don't think the Fed is going to risk tightening policy this year," Nader Naeimi, the Sydney-based head of dynamic asset allocation at AMP Capital Investors Ltd, which oversees about US$112 billion, said by phone.

"It looks like markets have stalled, but we still have some cash and if markets pull back, we are using that as a buying opportunity. We're starting to see the pressure abating on earnings." Investors will parse Fed commentary for clues on how oil's decline and China's slowdown are impacting policy makers' thinking as they mull the timing of the first US interest-rate increase since 2006. Orders for US business equipment unexpectedly declined in September, adding to a slew of recent data that's signaled the recovery in the world's largest economy may be losing steam.

The MSCI Asia Pacific Index slipped 0.1 per cent by 9:16 am in Tokyo, led by material and energy shares. A subindex of oil and gas companies in the regional gauge has dropped 18 per cent this year, almost twice the decline registered by miners, the second-worst performing group.

Tokyo's Topix index rose 0.2 per cent, while the Kospi index in Seoul retreated 0.1 per cent. The S&P/ASX 200 Index fell 0.3 per cent in Sydney, while the NZX 50 Index in Wellington climbed 0.1 per cent to extend its most recent record. The New Zealand benchmark measure is heading for its 13th straight gain, the longest streak in three years.

Investors will be watching Chinese e-commerce stocks after Alibaba Group Holding Ltd. results beat estimates. Increased promotions on Tmall.com and Taobao Marketplace under new CEO Daniel Zhang drove sales ahead of next month's Singles' Day, the country's biggest shopping event.

Apple Inc. suppliers may also be active after the Cupertino, California-based company said fiscal first-quarter sales will be US$75.5 billion to US$77.5 billion, topping last year's record. The iphone maker swung between gains and losses in after-hours trading in New York. Revenue is being fueled by demand for the latest iPhones and sales in China. Twitter Inc tumbled 13 per cent in late trading as user growth slowed.

S&P 500 futures were 0.1 per cent weaker after the measure lost 0.3 per cent Tuesday. The gauge closed on Friday at a two- month high. The index remains on track for its best monthly advance in four years as it rebounds from a summer swoon. In the regular session, energy shares sank 1.2 per cent, with Consol Energy Inc. tumbling 21 per cent after losses topped estimates. International Business Machines Corp. fell 4.1 per cent after disclosing a regulatory investigation into its accounting.

Drugmakers were the only group in the S&P 500 to advance after Pfizer Inc. and Bristol-Myers Squibb Co. rallied on profits that topped projections.

Commodities West Texas Intermediate oil climbed 0.3 per cent on Wednesday. The contract dropped 1.8 per cent to settle at US$43.20 a barrel in New York, the lowest close since Aug 27.

Oil's rally above US$50 a barrel earlier this month failed as surging US inventories bolstered speculation that a global glut will be prolonged. A report Wednesday is expected to show inventories rose by 3.1 million barrels last week.

The Bloomberg Commodity Index fell 0.4 per cent on Tuesday for a fifth straight decline, the longest run of losses since August.

USnatural gas futures gained 3 US cents to settle at US$2.092 per million British thermal units in New York, erasing a loss of as much as 5.5 percent to US$1.948 on speculation that low prices and the approach of winter will ease a supply glut. Prices dropped more than 40 per cent in the past year.

Currencies The euro slipped 0.2 per cent to US$1.1029, approaching its Oct 23 close of US$1.1019, amid speculation that the European Central Bank will extend its stimulus programs later this year. Downward pressure on prices could warrant more monetary policy steps and the evolving situation will continue to be discussed by policy makers, ECB Executive Board member Benoit Coeure said at an event in Mexico City.

The yen slipped less than 0.1 per cent to 120.52. The currency has strengthened this week as investors opted for its relative safety before policy decisions from the Fed and Bank of Japan. Economists are split on whether the BOJ will boost its already record stimulus at an Oct 30 meeting. The yen climbed 0.5 per cent on Tuesday. The Japanese currency weakened 1.7 per cent against the greenback last week. The euro was little changed at US$1.1037.

The Norwegian krone extended its 1.5 per cent Tuesday drop, falling 0.2 per cent in early Asian trading.

BLOOMBERG