Asian stocks slid, sending the region’s benchmark index to its biggest drop in three weeks, and Malaysia’s ringgit weakened after a slump in commodities and as companies reported lower earnings. The euro strengthened.
The MSCI Asia Pacific Index lost 1 percent as of 1:45 p.m. in Tokyo. Standard & Poor’s 500 Index futures were little changed. The ringgit declined 0.6 percent against the dollar, Australia’s currency plunged 0.5 percent, while the euro climbed to 115.47 yen from 115.04 yesterday. Zinc retreated 1.5 percent, while rubber tumbled 4.2 percent. Oil rose 1.4 percent in New York, paring a 5.5 percent drop yesterday that helped send S&P’s GSCI Index of 24 raw materials to a 3.9 percent slump.
Investors have tempered their optimism over the U.S. and world economies, with almost one in three surveyed in a Bloomberg Global poll saying they will put more money in cash and less in commodities. Citizen Holdings Co. reported annual net income that missed its forecast, while Olympus Corp. (7733) said profit sank 85 percent. A government report today showed Australian employers cut the most jobs since 2009, while data tomorrow may show growth in the euro-region accelerated.
“The inflation concern is causing investors to avoid risk assets,” said Mitsushige Akino, who oversees about $600 million in Tokyo at Ichiyoshi Investment Management Co. “That is the underlying reason for a slump in the commodity market.”
More than two shares retreated for every one that advanced on MSCI’s Asia Pacific Index, erasing its gains for this year. The gauge was on course for its steepest loss since April 19. Australia’s S&P/ASX 200 Index dropped 1.2 percent, South Korea’s Kospi index declined 1.4 percent and Hong Kong’s Hang Seng Index slipped 0.8 percent.
Citizen Holdings sank 7.3 percent, the worst performer on the MSCI index, after the maker of watches and machine tools reported net income for the year ended March 31 that missed its forecast by 27 percent. Optical-equipment maker Olympus slumped 4.1 percent. BHP Billiton Ltd. (BHP) dropped 2.2 percent while Korea Zinc Co. lost 5.3 percent, pacing a retreat among producers of raw materials.
The decline in commodities yesterday sent the S&P 500 to a 1.1 percent drop, the steepest since March 16. Cisco Systems Inc. (CSCO) fell in extended trading after the world’s largest maker of networking gear forecast profit and sales that may miss analysts’ estimates amid price pressure in the markets for routers and switches. Retailers Kohls Corp. and Nordstrom Inc. are scheduled to release results today.
S&P’s GSCI index of 24 raw materials gained 0.6 percent, paring yesterday’s slump. The gauge tumbled 11 percent in the five days ended May 6, the steepest weekly loss since December 2008. The Bloomberg Global poll of 1,263 investors, analysts and traders showed 30 percent intend to reduce investments in commodities, the highest since the survey began asking the question last June.
Zinc for three-month delivery fell 1.4 percent to $2,130 a metric ton on the London Metal Exchange, extending yesterday’s 0.6 percent decline. Aluminum declined 1.1 percent, while and copper slipped 0.7 percent.
October-delivery rubber tumbled 4.7 percent to 365.10 yen in Tokyo as the slump in oil yesterday reduced the appeal of the commodity. Crude for June delivery rose 1.4 percent to $99.58 a barrel in electronic trading on the New York Mercantile Exchange, after futures tumbled to a three-day low yesterday.
The ringgit fell to 2.9993 per dollar, while the won dropped 0.7 percent to 1,082.60 per dollar, the steepest loss since April 12. Australia’s currency dropped to $1.0634 in Sydney from $1.07 in New York yesterday, after a government report showed employers cut 22,100 jobs in April, the biggest reduction since 2009.
The euro climbed to $1.4226 from $1.4192 yesterday, when it touched $1.4172, the lowest since April 18. Data tomorrow may show gross domestic product in the 17-nation bloc grew at a 2.2 percent annual rate in the first quarter, following the 2 percent expansion in the final three months of 2010, according to the median forecast of 24 economists surveyed by Bloomberg.
The cost of protecting bonds in Asia and Australia from non-payment increased, with the Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan rising 2 basis points to 106.5 basis points, according to Credit Agricole CIB. The Markit iTraxx Australia index climbed 1.5 basis points to 107, headed for its highest since April 19, Credit Agricole prices and CMA data show.