Asian Stocks Drop as US Payrolls, Manufacturing Growth Slow – Businessweek

Asian stocks fell for a second day
after weaker growth in U.S. payrolls and manufacturing added to
evidence of a slowdown in the world’s largest economy and as the
yen rose, curbing the earnings outlook for Japanese exporters.

Rio Tinto Group (RIO), the world’s second-largest mining company,
declined 2 percent in Sydney, leading raw-materials shares lower
as metals prices fell. Lenovo Group Ltd. dropped 4 percent as a
person familiar with the discussions said talks over the sale of
International Business Machines Corp.’s server division to the
Chinese computer maker broke down. Toyota Motor Corp., the
world’s biggest carmaker, slid 1.1 percent in Tokyo.

The MSCI Asia Pacific Index fell 0.4 percent to 140.85 as
of 3:25 p.m. in Tokyo, with about three shares falling for every
two that rose. Six of the 10 industry groups on the gauge
retreated. Markets in China reopened after a holiday.

“We all know that things are getting a little bit
slower,” said Sydney-based Kumar Palghat, a money manager and
founder of Kapstream Capital, which oversees at least $5.2
billion. “It’s way too early for the Fed to even contemplate
removing stimulus.”

Japan’s Nikkei 225 Stock Average fell 0.8 percent and the
broader Topix Index slipped 0.4 percent. Australia’s S&P/ASX 200
Index sank 0.7 percent, extending losses as a government report
showed building permits unexpectedly dropped in March. New
Zealand’s NSX 50 Index fell 0.6 percent. South Korea’s Kospi
index slid 0.3 percent.

Chinese Manufacturing

Hong Kong’s Hang Seng retreated 0.3 percent and China’s
Shanghai Composite lost 0.5 percent as a private gauge of
Chinese manufacturing declined last month, adding to signs that
growth in the world’s second-biggest economy will cool for a
second straight quarter. Taiwan’s Taiex Index rose 0.4 percent.

The regional MSCI Asia Pacific gauge climbed 9.3 percent
this year through yesterday amid optimism Japan will deploy more
measures to beat deflation and that policy makers in the U.S.
and China remain on standby to buoy growth.

Futures on the Standard & Poor’s 500 Index added 0.3
percent today, indicating U.S. markets will rebound from
yesterday’s decline following slower growth in American
payrolls. The S&P 500 yesterday dropped 0.9 percent, retreating
from a record high.

The Fed will maintain its bond buying at $85 billion a
month, the Federal Open Market Committee said at the conclusion
of a two-day meeting in Washington yesterday. It left unchanged
its statement that it plans to hold its target interest rate
near zero as long as unemployment remains above 6.5 percent and
the outlook for inflation doesn’t exceed 2.5 percent.

U.S. Jobs

Reports yesterday showed U.S. companies added fewer workers
than forecast in April and the Institute for Supply Management’s
factory index fell to 50.7 in April from 51.3 in March. The
Labor Department publishes its jobs and unemployment report on
May 3. It may show combined payrolls for companies and
government agencies increased by 148,000 workers in April after
rising 88,000 in March, according to a survey of economists by
Bloomberg.

Energy companies and raw-materials producers posted the
biggest declines among the 10 industry groups in the MSCI Asia
Pacific Index. Crude oil futures traded near a one-week low,
while the London Metals Exchange Index of six base metals lost
3.2 percent yesterday, the most in more than four months. The
index entered a bear market on April 23, commonly defined as a
retreat of more than 20 percent from its most recent peak.

Cnooc Ltd. (883), China’s largest offshore oil producer,
decreased 2.2 percent to HK$14.16 in Hong Kong. Rio Tinto slid 2
percent to A$53.91 in Sydney, while BHP Billiton Ltd. (BHP), the
world’s biggest mining company, lost 1.2 percent to A$31.79.

Lenovo Drops

Lenovo sank 4 percent to HK$6.81 in Hong Kong. Discussions
for the sale of IBM’s server business to Lenovo broke down after
the two sides couldn’t agree on a price, said a person familiar
with the discussions. Lenovo shares jumped 9.9 percent in the
past two weeks after Bloomberg reported the talks on April 19.

Japanese exporters fell as the yen strengthened for a sixth
day, reducing the value of overseas income at the nation’s
companies when repatriated. Toyota retreated 1.1 percent to
5,490 yen, paring this year’s 37 percent advance. Nissan Motor
Co. (7201) declined 2 percent to 979 yen.

Hyundai Merchant Marine Co. dropped 9.9 percent to 9,240
won after South Korea’s second-biggest shipping line announced
plans to sell $117.6 million worth of exchangeable bonds.

Among stocks that advanced, LG Uplus Corp., South Korea’s
smallest mobile-phone operator, surged 15 percent to 11,950 won,
the most on the MSCI Asia Pacific Index. The stock led a rally
in the nation’s carriers on speculation lower marketing costs
will boost profit.

DBS Group Holdings Ltd. jumped 4.4 percent to S$17.49 in
Singapore, heading for its highest close since May 2008.
Southeast Asia’s largest bank posted an unexpected increase in
profit as fees, commissions and trading income rose.

To contact the reporters on this story:
Adam Haigh in Sydney at
ahaigh1@bloomberg.net;
Jonathan Burgos in Singapore at
jburgos4@bloomberg.net

To contact the editor responsible for this story:
Nick Gentle at
ngentle2@bloomberg.net