TOKYO: Asian stocks fell for a sixth day, their longest losing streak since February, as anxiety over the health of the global economy unnerves investors. South Korea’s won dropped by the most in four months, crude oil traded below $44 a barrel and sovereign bonds rallied.
More than two stocks dropped for every one that rose on an MSCI gauge of equities in Asia excluding Japan, where markets are closed until Friday. Australia’s benchmark slid by the most in a month and Hong Kong’s sank to a three-week low. U.S. crude was little changed, after tumbling by about 5 percent in the last two days. The dollar strengthened against all of its major counterparts after Federal Reserve officials flagged the possibility of an interest-rate hike in June. Australian and Korean government debt rose following gains in U.S. Treasuries.
Evidence of economic weakness from the U.S. to China and the U.K. has provided a speed bump for global equities, which had been recovering from an early 2016 selloff as oil prices rebounded amid monetary easing in Asia and Europe. Citigroup Inc.’s Economic Surprise Index for the U.S., which measures the strength of data relative to forecasts, has fallen to its lowest level since February and analysts are predicting an 8 percent decline in quarterly earnings for companies in the Standard & Poor’s 500 Index.
“In a now familiar theme, traders are becoming concerned about the possibility that the next volatile market swing, in this case downward, may not be too far away,” said Ric Spooner, chief market analyst in Sydney at CMC Markets. “Both U.S. stock market valuations and commodity prices have risen to levels that could be difficult to sustain against the ongoing reality of sluggish global demand growth.”
The MSCI Asia Pacific excluding Japan Index dropped 1 percent as of 9:45 a.m. Hong Kong time, leaving it close to where it was at the start of the year. The S&P/ASX 200 Index sank 1.1 percent in Sydney, led by slides in miners and energy companies. The Hang Seng Index fell 0.8 percent as benchmark gauges retreated across the region.
Futures on the S&P 500 Index were little changed early Wednesday, after the U.S. benchmark dropped 0.9 percent.
“The continued narrative is that the global economy is not very strong, even if the U.S. is the best of the bunch,” said Joe Bell, a Cincinnati-based senior equity analyst at Schaeffer’s Investment Research Inc. “We’ve had such a strong run-up over the last few months that we’re in a bit of a consolidation phase.”
The Bank of Korea releases the minutes of its last policy meeting on Wednesday, while Indonesia updates on gross domestic product. Gauges of services output are due for India, the euro area, the U.K. and the U.S.
The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, rose 0.3 percent after snapping a three-day drop last session to gain 0.7 percent. Atlanta Fed President Dennis Lockhart said Tuesday that the Federal Open Market Committee could move on rates in June if warranted, though he is not leaning in either direction at this point. San Francisco Fed President John Williams says that he would support a rate hike next month.
The won weakened 1.2 percent and Malaysia’s ringgit slumped as much as 1.5 percent to it s weakest level since March, weighed down by the drop in crude prices. Malaysia is Asia’s only major net oil exporter.
“The market is grasping the view that the dollar probably fell a little too much, and a rebound could be ahead, and this seems to have deteriorated sentiment towards emerging-market assets including the won,” said Jeon Seung Ji, a currency analyst in Seoul at Samsung Futures Inc.
