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Asian Stocks Dropped With Gold, Wheat As Nickel Extends Advance

Date 13-May-2014
Subject Asian Stocks Dropped With Gold, Wheat As Nickel Extends Advance

Asian stocks dropped, pushing the regional index down for the first time in three days, while US index futures gained after the Dow Jones Industrial Average climbed to a record. Gold led precious metals lower and wheat fell, while nickel advanced a fifth day.

The MSCI Asia Pacific Index fell 0.2 per cent by 10.11am in Tokyo after swinging between gains and losses. Standard & Poor’s 500 Index futures added 0.2 per cent after the gauge rose with the Dow May 9. Gold slipped 0.3 per cent in a fifth falling day, while nickel rose more than 2 per cent, headed for its highest close since 2012. Wheat futures slumped 2.2 per cent.

Two Ukrainian regions held referendums on autonomy yesterday as European leaders threatened more sanctions against Russia. Chinese President Xi Jinping said Asia’s largest economy needs to adapt to a “new normal” on growth, according to a state news report before the nation issues retail sales and industrial output data tomorrow. Malaysia releases March factory production today along with India, where voting in the national elections ends today. Australian business confidence is due.

“China is currently on course for its slowest growth period since 1990,” Evan Lucas, a markets strategist at IG Ltd in Melbourne, wrote in a client note today. “What is most interesting about the ‘new normal’ is the line on forward guidance. This is the clearest sign I have seen that a broad- base monetary stimulus to elevate the current slowdown will not eventuate.”

Counter measures Xi said that China needs to remain “cool-minded” amid a slowdown in the economy, according to a Xinhua News Agency report posted on the central government’s website May 10. The government must prevent risks and take “timely counter-measures to reduce potential negative effects” of faltering growth, Xi said.

Japan’s Topix index was little changed after fluctuating between gains and losses. Australia’s S&P/ASX 200 Index fell 0.3 per cent as New Zealand’s NZX 50 Index added 0.1 per cent, after dropping 1.5 per cent last week. The Kospi gauge in South Korea dropped 0.2 per cent. Lee Kun Hee, chairman of Samsung Electronics Co, the biggest stock in the gauge, is in a stable condition after surgery following a heart attack. Samsung Electronics shares gained 1.1 per cent today.

Futures on the Dow and Nasdaq 100 Index rose 0.2 per cent today. The Bloomberg China-US Equity Index of the most-traded Chinese stocks in New York rose 0.3 per cent May 9, reducing its weekly decline to 1.4 per cent. Internet stocks led the drop last week as investors sold off companies which have been among the biggest winners in the US bull market. The Dow Jones Internet Composite Index retreated 3.6 per cent last week, exceeding the 0.1 per cent decline in the S&P 500.

Twitter Inc. and Groupon Inc. tumbled more than 15 per cent last week. Apple Inc. fell 0.4 per cent May 9. The iPhone maker is in advanced talks to buy headphone maker and music-streaming service Beats Electronics LLC for US$3.2 billion (RM10.3 billion), according to people with the knowledge of the discussions who didn’t want to be identified.

Gold slipped to US$1,285.48 an ounce on the spot market today, after sliding 0.8 per cent last week. Silver dropped to US$19.13 an ounce, while platinum and palladium retreated at least 0.2 per cent.

Nickel for three-month delivery on the London Metal Exchange climbed 2.2 per cent to US$20,350 a metric ton, set for the highest close since February 13, 2012.

Supply concerns Nickel outperformed other industrial metals last week, surging 9 per cent for its steepest weekly advance in four years. Prices of the metal used in stainless steel climbed to a two- year high May 9 after the closure of Vale SA’s New Caledonia plant stoked concerns over supply already inflamed by Indonesia’s export ban from January.

Brent crude futures added 0.3 per cent today, to US$108.26 a barrel. Russia is the world’s biggest energy exporter. West Texas Intermediate crude oil rose 0.1 per cent to US$100.12 a barrel after last week’s 0.2 per cent climb.

Ukraine’s Donetsk region, in the country’s east, voted 89.7 per cent in favour of independence in a referendum, Russian newswire RIA Novosti reported, citing preliminary data from separatists. Turnout in the plebiscite was 74.87 per cent and final results are expected today, Roman Liagin, head of the Donetsk People’s Republic election committee, was cited as saying.

Tougher measures The Donetsk and Luhansk regions held referendums on autonomy that were viewed as illegal by the government in Kiev, the European Union and the US Russian President Vladimir Putin publicly called for a delay in the votes. French President Francois Hollande said tougher measures should be imposed if Russian interference prevents an election scheduled for May 25.

Wheat futures slid to US$7.0750 a bushel in a fourth day of losses. Russia is the world’s fifth-largest producer of the grain, followed by Ukraine.

Ten-year Treasury yields rose one basis point, or 0.01 percentage point, to 2.64 per cent today, after gaining the same amount May 9.

Dennis Lockhart, president of the Atlanta Fed, said he expects the central bank to use a reverse-repurchase programme when it eventually begins to tighten monetary policy. Lockhart, who doesn’t vote on policy this year, said reverse repos may well play a role in influencing short-term rates in comments to reporters yesterday after a speech in Dubai.

Federal Reserve Chair Janet Yellen declined to provide a timeframe for raising interest rates in the world’s biggest economy last week, and also told US lawmakers that she believes the economy still requires a strong dose of stimulus.

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