Wednesday, January 8, 2014

Asia Stocks Fall as Fed Minutes Signal More Stimulus Cuts

Asian stocks fell, with the benchmark index paring yesterday’s rally, ahead of Chinese inflation data and after Federal Reserve minutes showed officials saw diminishing benefits from the central bank’s bond-buying.
Canon Inc. lost 1.8 percent in Tokyo on a report operating profit at the world’s biggest camera maker probably missed its own forecast. Nintendo Co., a Japanese maker of video-game players, fell 3.3 percent after jumping 11 percent yesterday. Kumho Petro Chemical Co., a chemicals manufacturer, lost 4.7 percent in Seoul as raw-material shares led declines among the 10 industry groups of the Asia-Pacific benchmark index.
The MSCI Asia Pacific Index dropped 0.5 percent to 139.18 as of 10:22 a.m. in Tokyo, with almost two stocks falling for each that rose. The measure gained 1 percent yesterday, the biggest advance since Nov. 18.
“While policy makers go with tapering, they are keeping risks to the financial market in mind,” said Takashi Miyazaki, general manager of strategic research at Mitsubishi UFJ Asset Management Co., a unit ofJapan’s biggest bank. “The U.S. will raise rates eventually after tapering stimulus. The market will get a correction during that process, but stocks should rebound as long as the economy is strong enough to endure tightening.”
Japan’s Topix (TPX) index fell 0.8 percent. South Korea’s Kospi index was little changed as the central bank left its key interest rate unchanged. Australia’s S&P/ASX 200 Index fell 0.2 percent, while New Zealand’s NZX 50 Index gained 0.7 percent. Markets in China and Hong Kong are yet to open.
Futures on the Standard & Poor’s 500 Index slid 0.1 percent today. The equity gauge closed little changed yesterday. Fed officials saw diminishing economic benefits from their bond-buying program and voiced concern about future risks to financial stability during their last meeting, when they began to cut the pace of purchases.

U.S. Payrolls

Policy makers will gather Jan. 28-29 to consider the next step in their strategy of gradually reducing the pace of bond buying as the economy strengthens. The minutes didn’t describe a set schedule for reductions, although “a few” officials mentioned the need for a “more deterministic path.”
Companies in the U.S. boosted payrolls by 238,000 in December, figures from ADP Research Institute in Roseland, New Jersey, showed yesterday. The median forecast of economists surveyed by Bloomberg called for a 200,000 advance.
The Labor Department will announce tomorrow figures for new hiring and the unemployment rate for last month.
Futures on Hong Kong’s Hang Seng Index lost 0.1 percent in their most recent trading session and contracts on the Hang Seng ChinaEnterprises Index dropped 0.2 percent. The Bloomberg China-US Index of the most traded Chinese stocks in the U.S. rose 0.8 percent yesterday.
A report due today will show consumer prices in China, Asia’s largest economy, rose 2.7 percent in December from a year earlier, according to a Bloomberg poll of economists, after gaining 3 percent in the previous month.
The Asia-Pacific gauge traded at 13.2 times estimated earnings as of yesterday, compared with 15.5 for the S&P 500 and 13.8 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
To contact the reporter on this story: Yoshiaki Nohara in Tokyo
To contact the editor responsible for this story:
 Sarah McDonald