Asian equities extended the biggest monthly decline in more than three years after Federal Reserve officials signaled they’re prepared to raise interest rates even amid turmoil in Chinese markets. The yen halted a four-day drop, while Australia’s dollar retreated with copper.
Asia’s benchmark share gauge fell with U.S. futures. The Shanghai Composite Index slid even as Chinese authorities seek to stabilize markets before an important military parade this week. Japan’s currency rallied 0.5 percent. The Aussie traded near a six-year low, while copper futures sank.
More than $5 trillion has been erased from the value of global shares in August as concern that China’s economy may be in worse shape than previously estimated collides with investor worry about whether global growth can withstand higher U.S. interest rates. That’s sent prices swinging for everything from equities and oil to havens such as the yen and bonds. Bets on a September Fed liftoff climbed after Vice Chairman Stanley Fischer said there is “good reason” to believe inflation will accelerate.
“We are going to continue to see volatility,” Nader Naeimi, head of dynamic asset allocation at AMP Capital Investors Ltd. in Sydney, which oversees about $118 billion, said by phone. “The Fed is aware of the market volatility and you wouldn’t have thought they would be raising rates into market turmoil. But at the same time, data coming out of the U.S. has been surprisingly resilient and strong. It’s very difficult for the Fed.”
The MSCI All-Country World Index is heading for a 6.5 percent drop in August, the biggest such slump since May 2012. MSCI’s Asia-Pacific gauge dropped 0.8 percent by 11:08 a.m. in Tokyo, headed for an 8.5 percent slide in August, its fourth straight monthly retreat. The Hang Seng China Enterprises Index fell 0.7 percent, taking losses since a May peak to 35 percent.
The Shanghai stock measure fell 3.4 percent amid reports that Chinese authorities are stepping up a crackdown on people engaged in market destabilizing activities. Four executives of Citic Securities Co., the nation’s largest brokerage, a journalist at business magazine Caijing and a staff member at the securities regulator all confessed to crimes, the state-run Xinhua News Agency said.
Australia’s S&P/ASX 200 Index fell 0.9 percent as the Kospi index in Seoul lost 0.5 percent.
Standard & Poor’s 500 Index futures slid 1 percent. While Fischer was careful to announce that he wasn’t signaling an impending rate increase, his remarks suggested a move hasn’t been ruled out when the Federal Open Market Committee gathers in Washington Sept. 16-17.
The yen gained 0.5 percent, while the Aussie weakened 0.5 percent. Copper futures due in December slipped 0.9 percent on the Comex. The London Metal Exchange is closed Monday.
West Texas Intermediate crude dropped 1.6 percent to $44.52 a barrel. The contract added to Thursday’s 10 percent surge with a 6.3 percent advance on Friday, its steepest two-day jump since 2009.
Data indicating U.S. consumer purchases climbed in July as incomes grew boosted optimism over fuel demand at the end of last week. Brent oil lost 1.7 percent to $49.19 per barrel on Monday after gaining 10 percent last week, the most since March 2009.
Courtesy: Bloomberg Business 31 August 2015