Yen Strengthens, Silver, Gold Rally; Asian Stocks Decline on China Growth
By - Apr 15, 2011 2:22 PM GMT+0700
Asian stocks fell, extending the regional benchmark index’s first weekly decline in four, and the yen gained on concern China and India will act to cool growth after inflation accelerated. Silver rallied to a 31-year high.
The MSCI Asia Pacific Index sank 0.5 percent at 4:05 p.m. in Tokyo. The Stoxx Europe 600 Index added 0.2 percent. Futures on the Standard & Poor’s 500 Index were little changed. The yen rose to 120.45 per euro from 120.97 yesterday. Europe’s shared currency weakened after Moody’s Investors Service cut Ireland’s credit rating. Silver increased 0.6 percent, while gold climbed to a record. Copper erased gains of as much as 1.1 percent.
Bank of America-Merrill Lynch and HSBC Holdings Plc said further policy tightening may be imminent after China’s consumer prices climbed 5.4 percent in March from a year earlier, the fastest pace since 2008. The world’s second-largest economy grew 9.7 percent in the first quarter, beating the 9.4 percent median estimate in a separate survey. India’s wholesale price index rose more than forecast, while the U.S. and European Union are also set to release inflation data.
“China’s economic growth remains robust,” said Benjamin Tam, a Hong Kong-based portfolio manager at IG Investment Ltd., which manages about $1.98 billion. “The overall market will remain optimistic because of the stronger growth, but there could be some concerns on the rate hike. The government may continue to step up tightening measures in the second quarter.”
About two shares retreated for each that advanced on MSCI’s Asia Pacific index, which has declined 0.6 percent this week. Japan’s Nikkei 225 Stock Average fell 0.7 percent, paced byToyota Motor Corp. (7203), after the Nikkei newspaper said the automaker will delay its earnings forecast. Infosys Technologies Ltd. (INFO) dropped 8.2 percent after the Indian software exporter posted fourth-quarter profit that missed analyst estimates.
China Stocks Fall
The Shanghai Composite closed 0.3 percent higher, after earlier sliding as much as 0.7 percent. Jiangxi Copper Co., the nation’s largest producer of the metal, slid 0.7 percent. Inflation beat the 5.2 percent forecast by economists surveyed by Bloomberg News.
Fixed-asset investment excluding rural households rose 25 percent in the first quarter from a year earlier and industrial production climbed 14.8 percent in March, the statistics bureau said. Retail sales grew an annual 17.4 percent in March and producer prices jumped 7.3 percent, today’s report showed.
The People’s Bank of China has raised interest rates four times since October and lifted banks’ reserve requirements three times this year. An increase in banks’ reserve requirements may be “imminent,” according to Ting Lu, Bank of America-Merrill Lynch economist. The central bank may act in “coming weeks, if not coming days,” Qu Hongbin, HSBC’s chief China economist, said in a Bloomberg Television interview following the data.
‘Complicated’ Problem
The yuan touched 6.5290 per dollar today, the strongest level since the country unified official and market exchange rates at the end of 1993. The currency has gained 0.09 percent this week, amid speculation policy makers will allow appreciation to reduce cost of imports.
“The inflation problem is getting more complicated because it’s not only about domestic costs but rising import bills as well,” said Kenix Lai, a foreign-exchange analyst at Sun Hung Kai Securities Ltd. in Hong Kong. “China needs a package of tools, including currency appreciation, to deal with the price pressure.”
India’s wholesale prices jumped 8.98 percent last month, following a 8.31 percent gain in February. Economists surveyed by Bloomberg had forecast an increase of 8.36 percent. Euro- region inflation may have quickened in March from the previous month, while U.S. consumer prices are forecast to rise 0.5 percent, separate surveys showed.
Yen Strength
Japan’s currency strengthened against all 16 most actively traded counterparts on concern China will act to cool economic growth. The yen traded at 83.23 per dollar from 83.50. The euro bought $1.4477 from $1.4488 after Moody’s downgraded Ireland’s foreign- and local-currency government bond ratings to Baa3 from Baa1. The outlook on the ratings remains negative.
The S&P 500 closed little changed yesterday. Google Inc. (GOOG) sank more than 5 percent in extended trading after the world’s largest Internet-search company reported profit that missed estimates. Bank of America Corp. and Mattel Inc. are scheduled to release their earnings today.
Immediate-delivery gold rose as much as 0.4 percent to a record $1,479.35 an ounce before trading at $1,476.75. Cash silver traded at $42.4259 an ounce after earlier surging to a 31-year peak of $42.4388.
Oil for May delivery climbed 0.3 percent to $108.37 a barrel. Futures earlier gained 0.6 percent to $108.74, after a Saudi Arabia-based economist said the holder of the world’s biggest crude reserves cut production this month. Prices have dropped 4 percent this week, the biggest weekly decline since the period ended Aug. 13.
Copper rose 0.1 percent to $9,415 a metric ton in London, after earlier rising to $9,512 a ton. The metal snapped a four- day drop that was its worst run since January.
To contact the reporters on this story: Shiyin Chen in Singapore at schen37@bloomberg.net; Kana Nishizawa in Tokyo at knishizawa5@bloomberg.net.
To contact the editor responsible for this story: Clyde Russell at crussell7@bloomberg.net
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