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Asia: Stocks set for worst month since 2012 as Fed, China woes collide; STI down 0.7%
[HONG KONG] Asian stocks extended the biggest monthly decline in more than three years after Federal Reserve officials signalled they're prepared to raise interest rates even amid turmoil in Chinese markets.
Asia's benchmark share gauge fell with US futures. The Shanghai Composite Index slid even as Chinese authorities seek to stabilize markets before an important military parade this week. Japan's currency rallied 0.5 per cent. The Aussie traded near a six-year low, while copper futures sank.
Singapore shares turned down after briefly advancing on Monday. The Straits Times Index was trading 0.73 per cent lower at 2,934.45 as of 2:32 pm.
More than US$5 trillion has been erased from the value of global shares in August as concern that China's economy may be in worse shape than previously estimated collides with investor worry about whether global growth can withstand higher US interest rates. That's sent prices swinging for everything from equities and oil to havens such as the yen and bonds.
Bets on a September Fed liftoff climbed after vice chairman Stanley Fischer said on Saturday that there is "good reason" to believe inflation will accelerate. While Mr Fischer was careful to announce that he wasn't signaling an impending rate increase, his remarks suggested a move hasn't been ruled out when the Federal Open Market Committee gathers in Washington Sept. 16-17.
"We are going to continue to see volatility," Nader Naeimi, head of dynamic asset allocation at AMP Capital Investors Ltd. in Sydney, which oversees about US$118 billion, said by phone. "The Fed is aware of the market volatility and you wouldn't have thought they would be raising rates into market turmoil. But at the same time, data coming out of the US has been surprisingly resilient and strong. It's very difficult for the Fed." The MSCI All-Country World Index is heading for a 6.5 per cent drop in August, the biggest such slump since May 2012. MSCI's Asia-Pacific gauge dropped 0.7 per cent by 8:16 am in Frankfurt, headed for an 8.4 per cent slide in August, its fourth straight monthly retreat. The Hang Seng China Enterprises Index fell 0.2 per cent, taking losses since a May peak to 35 per cent.
The Shanghai stock measure fell 1.2 per cent. The measure's 13 per cent August retreat has it on track for the biggest two-month loss since 2008 amid reports that Chinese authorities are stepping up a crackdown on people engaged in market destabilizing activities.
Four executives of Citic Securities Co, the nation's largest brokerage, a journalist at business magazine Caijing and a staff member at the securities regulator all confessed to crimes, the state-run Xinhua News Agency said. Citic Securities shares plunged 7.3 per cent in Shanghai.
Australia's S&P/ASX 200 Index fell 1.1 per cent as the Kospi index in Seoul fluctuated.Â Taiwan's benchmark stock gauge jumped at the close to finish 1.9 per cent higher. Markets in the Philippines and Malaysia are closed.
Euro Stoxx 50 index futures dropped 0.7 per cent, while those on the Standard & Poor's 500 Index slid 0.9 per cent. A measure of price swings in the US benchmark over the last 30 days is at its highest since early 2012. More than US$2 trillion of share value was erased from US markets between the end of July and the lowest levels of last week, a sum equal to roughly two years of S&P 500 earnings, data compiled by Bloomberg show.
The safe haven yen gained 0.5 per cent with the euro, while the Aussie weakened 0.5 per cent. Treasuries rallied, with the yield on 10- year notes falling two basis points after surging through the end of last week.
Copper futures due in December slipped 0.8 per cent on the Comex. The London Metal Exchange is closed Monday.
West Texas Intermediate crude dropped 1.8 per cent to US$44.42 a barrel. The contract added to Thursday's 10 per cent surge with a 6.3 per cent advance on Friday, its steepest two-day jump since 2009. Data indicating US consumer purchases climbed in July as incomes grew boosted optimism over fuel demand at the end of last week.
Brent oil lost 2.1 per cent to US$49 per barrel on Monday after gaining 10 per cent last week, the most since March 2009.