Asian Stocks Drop On U.S.; Oil Near Nine-Month Low

Asian stocks fell, trimming a third weekly advance, after reports signaled a slowing U.S. economic recovery and Moody’s Investors Service cut ratings on 15 of the world’s biggest banks. Oil traded near a nine-month low.

Asian Stocks Decline on U.S. Slowdown; Oil Near Nine-Month Low

The MSCI Asia Pacific Index (MXAP) declined 0.7 percent as of 9:02 a.m. in Tokyo, as the Nikkei 225 Stock Average slid 0.9 percent. Futures on the Standard & Poor’s 500 Index advanced 0.2 percent after the gauge slid 2.2 percent yesterday, its second heaviest loss of 2012. Oil rose 0.3 percent after plunging a day earlier. The euro advanced 0.1 percent to $1.2551, following its worst slide in six months.

A Federal Reserve Bank of Philadelphia index signaled the worst contraction in manufacturing in almost a year, while existing U.S. home sales fell more than forecast and jobless claims exceeded estimates. Moody’s cut credit ratings for Credit Suisse AG, Morgan Stanley, UBS AG and 12 other lenders. China’s banking regulator proposed capping local government loans to curtail defaults.

“The data shows a continuation of a trend of deteriorating data out of the U.S.,” said Peter Esho, chief market strategist at City Index Ltd., a provider of equities, bonds and currency trading in Sydney. “Traders and investors need to conserve capital. I wouldn’t be buying equities at the moment. You have to be cautious. The market’s now caught in a rip current and I don’t recommend trying to fight it.”

MSCI Slides

The MSCI Asia Pacific Index has lost about 11 percent from this year’s highest level in February amid signs of slowing global recovery and as Europe struggles to contain its debt crisis. Shares of manufacturers and material makers led declines today on the gauge, which is headed for a 0.5 percent advance this week.

Oil tumbled yesterday to $78.20, its lowest close since Oct. 4, on concern slower growth will cut fuel demand. Crude has fallen 21 percent this year and traded at $78.45 a barrel today.

The euro fell 1.3 percent versus the dollar yesterday before data today forecast to show German business confidence fell this month, a sign that the European debt crisis is hurting the region’s growth. The dollar gained against 13 of its 16 major counterparts. The won declined 0.4 percent to 1,156.54 against the greenback.

“The news out of Europe remains pretty dour, despite the fact that we’ve had a bit of consolidation higher the last couple weeks,” Mike Moran, a currency strategist at Standard Chartered Bank, said in a telephone interview from New York. “That plays into a broadly risk-averse investor mindset, which has been helping the dollar.”

(Curtsey : Bloomberg)

Rupesh Yatesh Dalal
Head Research Department

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