Asia: Stocks fall with Korean won as crude oil holds below US$45

[SYDNEY] Asian stocks retreated from near a three- month high and South Korea's won weakened as crude oil held below US$45 a barrel amid a worsening outlook for the global economy.

Raw-materials shares led declines on the MSCI Asia Pacific as shares declined in Japan and South Korea. Equity index futures for China and Hong Kong were little changed, as were contracts on the S&P 500 Index. Turkey's lira held losses after Tuesday's plunge, which was spurred by the government's post- coup purge of the country's institutions.

A three-week run that's boosted the value of global shares by more than US$4.5 trillion has pushed valuations on Asia-Pacific stocks close to the highest level this year.

Investors are assessing corporate earnings amid concern sluggish global economic growth will persist after the International Monetary Fund scrapped its forecast for a pickup in the pace of expansion this year.

Goldman Sachs Group Inc. and Microsoft Corp on Tuesday announced quarterly profits that surpassed analysts' estimates, something achieved by 77 per cent of S&P 500 members to have reported so far.

"The rally is losing some momentum as the reporting season heats up," said Niv Dagan, executive director at Peak Asset Management LLC in Melbourne. "We're staying cautious and taking a little bit of profit off the table. With the equity rebound stalling, we are really looking for positive momentum from the reporting season" for the next leg up in stock markets, he said.

Morgan Stanley, Intel Corp and American Express are among US companies announcing results on Wednesday, while in Europe Electrolux AB and Iberdrola SA will be reporting. Gauges of euro-area consumer confidence and UK unemployment are also due, and Brazil's central bank has a policy review scheduled.

STOCKS

The MSCI Asia Pacific Index fell 0.2 per cent as of 9.16am Tokyo time, having halted a six-day winning streak in the last session. Japan's Topix index lost 0.6 per cent and South Korea's Kospi declined 0.3 per cent.

Futures on Hong Kong's Hang Seng Index and the FTSE China A50 Index each added 0.1 per cent.

Most US stocks slipped on Tuesday as Netflix Inc led losses amid disappointing subscriber growth. Better-than-expected earnings from Johnson & Johnson helped the Dow Jones Industrial Average advance for an eighth day, its longest rally in three years. After the market closed, Microsoft gained after reporting its results.

Bets for a Federal Reserve rate increase have crept up this month amid improving economic data, though traders are still pricing in less than even odds of an increase until mid-2017.

With policy makers scrutinising data to determine when to boost borrowing costs, a Citigroup gauge that tracks the degree to which data are exceeding economist projections is at an 18-month high. A report on Tuesday showed new-home construction rose more than forecast in June.

CURRENCIES

The won sank 0.6 per cent versus the dollar, the biggest loss among 31 major currencies.

The yen was little changed at 106.11 per dollar after the IMF downplayed the need for Japan to weaken its currency to boost economic growth and inflation before a Bank of Japan policy meeting next week.

COMMODITIES

Oil held losses after closing at the lowest level in more than two months. West Texas Intermediate crude was little changed at US$44.72 a barrel.

BLOOMBERG