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Asia: Stocks slide before US payrolls report as oil rebounds
[HONG KONG] Asian stocks headed for a third weekly loss and bond risk rose amid concern a US payrolls report will reinforce prospects the Federal Reserve will raise interest rates. Oil rebounded from a 4 1/2-month low.
The MSCI Asia-Pacific Index fell 0.4 per cent by 10:51 am in Tokyo, bringing the week's decline to 1.1 per cent. US Standard & Poor's 500 Index futures were little changed. The Australian dollar rose 0.3 per cent as the central bank indicated the jobless rate has peaked. The yen headed for a weekly loss before the Bank of Japan announces policy.
US stocks slumped yesterday before a payrolls report Friday that may add to evidence the economy is robust enough to embolden the Fed to raise near-zero interest rates. The MSCI Emerging Markets Index declined 0.8 per cent on Thursday to the lowest in two years, after benchmark gauges in Malaysia, Poland, Russia and Taiwan dropped more than 1 percent.
There's "a cautious tone in risk markets ahead of tonight's non-farm payrolls," said Matthew Sherwood, Sydney- based head of investment strategy at Perpetual Ltd, which manages about US$22 billion. "Increased concern about what a strong report may mean saw equities out of favor and gold, safe- haven currencies and government bonds edge higher." Australia's S&P/ASX 200 Index sank 1.8 per cent Friday and is heading for its steepest weekly decline in two months. Australia & New Zealand Banking Group Ltd shares tumbled 6.9 per cent, the most since May 2010, after raising A$3 billion (S$3.05 billion) in capital following moves by regulators to make Australian banks safer.
Japan's Topix slipped 0.3 per cent, South Korea's Kospi index lost 0.2 per cent, and Malaysia's stock benchmark lost 0.9 per cent. The Shanghai Composite Index rallied 0.6 per cent as speculation grew the government will take more measures to stem a market rout.
The yen was little changed at 124.74 per dollar, heading for a second weekly decline with the BOJ forecast to maintain its unprecedented monetary stimulus on Friday as the economy shows signs of stumbling.
The S&P 500's 0.8 per cent slide on Thursday left it at the lowest level since July 27. The selling came amid data Thursday that showed jobless claims hovering near a four-decade low. A report yesterday on the services industries showed the fastest growth in a decade. Traders are pricing in a 48 percent probability that the Fed will raise rates in September.
"It's really about if the jobs number will alter the message from the Federal Reserve," said Chad Morganlander, a money manager at Stifel, Nicolaus & Co in Florham Park, New Jersey.
The Bloomberg Dollar Spot Index was little changed after slipping 0.1 per cent Thursday, when it touched the highest intraday level since March after the services data on Wednesday bolstered confidence in the economy.
While the Fed will scrutinise hiring data, the global rout in commodities is keeping inflation muted. Longer-term Treasuries led gains on Thursday as the outlook for inflation dropped to the least in almost five months. The yield on 10-year notes was little changed at 2.23 per cent, after falling five basis points the previous day. Australian 10-year yields declined one basis point to 2.82 per cent on Friday.
Oil rose after falling on Thursday to the lowest level since March in New York when US government data showed crude stockpiles remain more than 90 million barrels above the five- year seasonal average. West Texas Intermediate rose 0.2 per cent to US$44.76 per barrel after touching US$44.20 on Thursday, the lowest since March 20.
Gold traded little changed at US$1,088.85 an ounce. Prices are 0.6 per cent lower this week to head for a seventh straight weekly loss, the longest run since May 2004. Nickel fell 0.5 per cent, while copper lost 0.4 per cent.