 Asian Stocks Fall After China Rout as Oil Drops; Aussie Rebounds by Sarah McDonaldAdam Haigh
Bloomberg - 7/28/2015 8:18:42 AM
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Asian stocks retreated for a fifth day after a rout in China drove global shares lower. Oil declined, while the Australian and New Zealand dollars rebounded from near six-year lows.
Japan’s Topix index slid 1.3 percent by 9:55 a.m. in Tokyo as South Korea’s benchmark gauge lost 0.9 percent. Futures on the Standard & Poor’s 500 Index were little changed after the measure capped its longest losing streak since January. Crude dropped 0.6 percent and the Aussie rose 0.2 percent while copper futures snapped a seven-day losing streak.
The benchmark Shanghai Composite Index plunged the most in eight years Monday, intensifying concern government efforts to prop up shares are unsustainable. The turmoil -- the worst of which came after markets in Tokyo and Seoul closed -- bolstered speculation the Federal Reserve will keep interest rates lower for longer. The U.K. reports on economic growth Tuesday, while measures of U.S. house prices and consumer confidence are due.
“Extreme caution is needed here,” said Matthew Sherwood, Sydney-based head of investment strategy at Perpetual Ltd., which manages A$33 billion ($24 billion). “The return of market volatility in China will be a significant discussion point at the U.S. Fed. in terms of what this is telling us about the Chinese economy. There is a lot of global weakness and significant external risk.”
The Bloomberg Dollar Spot Index was little changed at 1,204.13 after sliding 0.4 percent the previous session. Australia’s dollar bought 72.83 U.S. cents. It touched 72.60 on July 24, the weakest since 2009. New Zealand’s currency also strengthened Tuesday, trading 0.5 percent higher.
Stocks Slide
The Standard & Poor’s 500 Index declined 0.6 percent at the close in New York, falling for a fifth day. European stocks fell 2.2 percent and emerging-market shares lost 2 percent. That followed an 8.5 percent slide in the Shanghai Composite as Chinese industrial company profits shrank in June.
Stocks with heavy exposure to China slumped in New York trading. Apple Inc. slipped 1.4 percent, after its worst week in six months. Alibaba Group Holding Ltd. retreated 2 percent. Baidu Inc., China’s largest search engine, lost 4.2 percent. The company tumbled about 6 percent further in extended trading after posting second-quarter profit that missed estimates.
West Texas Intermediate fell 0.6 percent to $47.10 a barrel in early Tuesday trading after Brent relapsed into a bear market Monday. The European benchmark crude tumbled as rising Iraqi exports and a rebound in U.S. drilling signaled the global supply glut will grow.
Gold was at $1,093.98 an ounce after dropping 0.5 percent Monday.
Australian bonds rallied after Treasuries climbed on Monday, with the yield on the South Pacific nation’s 10-year note falling three basis points to 2.72 percent.
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