Shares in Asia fell, paring the benchmark index’s first back-to-back monthly advance since April, as the Federal Reserve starts a two-day policy meeting. Australia’s dollar dropped to a two-week low after the central bank said the currency may weaken, and metals declined.
The MSCI Asia Pacific Index slid 0.3 percent to 142.22 at 1:55 p.m. in Tokyo while the Shanghai Composite Index (SHCOMP) fell to a seven-week low after the size of a central bank cash injection disappointed the market. The so-called Aussie declined against all 16 of its major peers. Standard & Poor’s 500 Index futures decreased 0.1 percent as Apple (AAPL) Inc.’s stock fell in after-hours trading. Copper and lead lost at least 0.3 percent, snapping three days of gains.
The Fed starts a two-day meeting today to consider whether to start trimming its $85 billion-a-month of bond purchases which have buoyed emerging-market assets globally. Reserve Bank of Australia Governor Glenn Stevens said the nation’s terms of trade are likely to worsen and its currency may be “materially lower” than current levels. The People’s Bank of China added 13 billion yuan ($2.13 billion) into the system via the first reverse-repurchase operations in two weeks.
“We’ve had such a good run in equities and this is a fairly healthy correction,” said Adrian Zuercher, a global strategist at Credit Suisse (Hong Kong) Ltd., part of the Swiss bank’s asset-management unit that oversees about $433 billion. “U.S. data is showing some impact of the government shutdown and our best guess is that markets are in consolidation mode for now.”
Although the Australian dollar declined 0.6 percent to 95.15 U.S. cents and weakened against 16 major currencies tracked by Bloomberg, its 2.1 percent gain since Sept. 30 is the most among its peers versus the greenback. Stevens said it’s “quite likely” it will depreciate, according to the text of a speech delivered in Sydney.
“The Aussie’s dropped on Stevens’ comments but it was already under a bit of pressure anyway,” said Tim Kelleher, the head of institutional foreign-exchange sales in Auckland at ASB Bank Ltd. “The market got a little carried away on the topside.”
The rupee weakened 0.2 percent to 61.6550 per dollar. Economists predict the Reserve Bank of India will raise its repurchase rate to 7.75 percent from 7.5 percent today, 32 of 42 analysts in a Bloomberg News survey said. One saw a rise to 8 percent, while the rest expected no change.
Komatsu, SK Hynix
In Asia, about one stock fell for each that gained in the MSCI Asia Pacific gauge. The index has risen 2.6 percent this month, following a 6.4 percent rally in September, the best back-to-back advance since the first two months of 2012.
Of 148 companies which have reported their financial results this quarter, 53 percent trailed earnings projections while 54 percent missed sales forecasts, according to data compiled by Bloomberg.
Komatsu Ltd. (6301), the world’s second-largest maker of construction equipment, slumped 8.5 percent in Tokyo after trimming its full-year profit forecast. SK Hynix fell 2.7 percent in Seoul after its quarterly profit missed analysts’ estimates.
The Shanghai Composite Index fell 1.1 percent to a seven-week low, reversing an earlier 1.4 percent advance as the PBOC cash injection failed to reduce money-market rates.
The S&P 500 rose 0.1 percent in New York yesterday to close at a record high. Shares of Apple, the world’s most-valuable company, traded at $523 after the official market close versus their $529.88 finish in New York.
Apple said revenue in the current period will be $55 billion to $58 billion. While that topped the $55.5 billion average of analysts’ estimates, it represents a modest increase from the $54.5 billion reported a year earlier. Gross margins will be 36.5 percent to 37.5 percent, Apple said, versus the 38 percent analysts estimated.
Some 42 companies in the S&P 500 Index (SPX) will report earnings today, including Pfizer Inc. (PFE) and health-care firm Aetna Inc. Among the 256 companies which have reported already since Sept. 30, 76 percent beat earnings estimates while 54 percent exceeded sales projections.
The Federal Open Market Committee meets following data on Oct. 22 that showed U.S payrolls rose less than projected last month. The Senate Banking Committee plans to hold a nomination hearing for Fed Chairman candidate Janet Yellen on Nov. 14, a Senate aide said today.
Yields on 10-year Treasury notes were little changed at 2.5215 percent. The Treasury plans to sell $35 billion of five-year securities today and $29 billion of seven-year debt tomorrow.
Copper futures on the London Metal Exchange declined 0.2 percent to $7,172.50 a tonne while lead slid 0.2 percent to $2,209.00. Palladium decreased 0.4 percent.
West Texas Intermediate crude oil fell from the highest level in a week, down 0.2 percent to $98.45 a barrel, before government data that’s forecast to show crude stockpiles rose to a four-month high in the U.S., the world’s biggest consumer of the fuel.