Asian Stocks Fall, Paring Monthly Gain, Over U.S. Budget

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Asian stocks fell, with the benchmark index paring its biggest monthly gain since 2012, on concern the U.S. government is headed for a shutdown amid a budget stalemate.

Toyota Motor Corp., which gets 31 percent of its revenue in North America, declined 1.7 percent. BHP Billiton Ltd., Australia’s biggest oil producer, dropped 1.3 percent as crude fell. Mizuho Financial Group Inc., Japan’s third-largest bank, lost 2.7 percent after its lending unit was penalized by Japan’s banking regulator for failing to end transactions with “anti-social” groups.

The MSCI Asia Pacific Index dropped 1.1 percent to 139.33 as of 1:43 p.m. in Tokyo, with all 10 industry groups on the gauge falling. It’s headed for a 7 percent increase this month, the most since January 2012, and is up 6.8 percent this quarter. Even if Congress resolves the budget fight by the Oct. 1 deadline, U.S. lawmakers would move to the next fiscal dispute over raising the $16.7 trillion debt ceiling.

“There’s no agreement among the government at the moment, and if they can’t agree on the budget, there’s no way they are going to agree on the debt ceiling,” said Andrew Sullivan, director of sales trading at Kim Eng Securities in Hong Kong. “It’s the end of quarter and so you may see people looking to sell into the recent strength, locking gains, on expectations the U.S. government does shut down.”

The September gains pushed valuations on the Asia-Pacific measure to 13.7 times estimated earnings as of Sept. 27 from 12.7 at the end of August, according to data compiled by Bloomberg. That compares with 15.4 for the Standard & Poor’s 500 Index and 14.3 for the Stoxx Europe 600 Index, the data show.

Regional Gauges

Japan’s Topix index slumped 1.2 percent as the yen gained, weighing on exporters, and a report showed industrial production fell more than expected in August. Prime Minister Shinzo Abe is scheduled to speak tomorrow on his plans for a sales-tax increase and an economic-support package,

South Korea’s Kospi index lost 0.4 percent and New Zealand’s NZX 50 Index dropped 1 percent. Australia’s S&P/ASX 200 Index fell 1.2 percent, paring its biggest quarterly gain in four years as record-low interest rates boost profits.

Hong Kong’s Hang Seng Index dropped 1.1 percent. China’s Shanghai Composite Index rose 0.6 percent. Hong Kong’s markets are shut tomorrow for a holiday, while today is the last day of trading for mainland markets until Oct. 8. Taiwan’s Taiex Index and Singapore’s Straits Times Index both fell 0.6 percent.

Budget Impasse

Futures on the S&P 500 Index slipped 0.7 percent today after the gauge declined 0.4 percent on Sept. 27. Congress is leaving itself just one day to end a budget stalemate that raises the risk of the first government shutdown in 17 years.

The House of Representatives voted 231-192 yesterday to stop many of the Affordable Care Act’s central provisions for one year, tying it to an extension of U.S. government funding through Dec. 15. Should the Senate reject the bill today the government could be shut down from tomorrow.

Companies that do business in the U.S. dropped. Toyota, Asia’s biggest carmaker, declined 1.7 percent to 6,330 yen. Honda Motor Co., a Japanese carmaker that generates 47 percent of its sales in North America, fell 1.8 percent to 3,770 yen. Techtronic Industries Co., a maker of power tools that gets 73 percent of sales from North America, lost 0.7 percent to HK$20.10 in Hong Kong.

A Chinese manufacturing gauge was 50.2 for September compared with 50.1 in August, according to a HSBC Holdings Plc and Markit Economics Performance of Manufacturing Index. The reading missed a preliminary estimate. Fifty is the threshold between contraction and expansion. China releases its official manufacturing PMI tomorrow.

West Texas Intermediate crude oil fell to the lowest price in almost three months on concern over the U.S. budget and speculation threats to the Middle East oil supply are subsiding.

BHP Billiton lost 1.3 percent to A$35.90 in Sydney. Energy explorer PetroChina Co. slid 1.7 percent to HK$8.56 in Hong Kong.

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