Asian Stocks Retreat From 7-Month High Before U.S. Jobs

Asian stocks fell, with regional benchmark index retreating from a seven-month high, as investors await a report on U.S. jobs and a decision from the European Central Bank on monetary policy. 

HTC Corp. (2498) tumbled 5.7 percent after sales slumped at the Taiwanese smartphone maker. Tokyo Electric Power Co. dropped 1.8 percent, leading a decline among Japanese utilities. Australand Property Group. climbed to a six-year high in Sydney after Frasers Centrepoint Ltd., a Singapore property company spun off from Fraser & Neave Ltd., trumped Stockland’s offer to buy the firm. 

The MSCI Asia Pacific Index (MXAP) slid 0.2 percent to 142.78 as of 12:29 p.m. in Hong Kong nine of the 10 industry groups on the measure retreated. A private survey on the U.S. labor market is due today, while investors are assessing European inflation data to gauge if the ECB will announce an interest-rate cut tomorrow. 

“With U.S. economic data starting to ramp up, some investors feel this warrants a bit of caution,” Stan Shamu, a markets strategist in Melbourne at IG Ltd., said by e-mail. “At the same time, we have the European situation where traders just continue to speculate what action the ECB will take this week.”

Japan’s Topix index gained 0.3 percent. Australia’s S&P/ASX 200 Index slipped 0.3 percent as a report showed gross domestic product rose 1.1 percent from the previous quarter, beating economist forecasts. New Zealand’s NZX 50 Index (NZSE50FG) was little changed. South Korea’s market is closed for a holiday. 

Hong Kong’s Hang Seng Index and the Hang Seng China Enterprises Index of mainland shares traded in the city both lost 0.6 percent. Taiwan’s Taiex Index added 0.1 percent and Singapore’s Straits Times Index declined 0.4 percent. Thailand’s SET Index was little changed and India’s BSE S&P Sensex Index slid 0.1 percent.

Europe Inflation

Euro-area inflation slowed more than economists projected in May. ECB President Mario Draghi has signaled he will act to prevent deflation in the 18-nation bloc. Of 50 economists surveyed by Bloomberg, 44 predict the ECB will become the first major central bank to take interest rates negative by cutting its deposit rate. All but two of 58 respondents said the benchmark rate would also be reduced.

Today’s ADP National Employment report in the U.S. is expected to show an increase of 210,000 workers for May after recording a gain of 220,000 in April, a Bloomberg survey of economists showed.

Futures on the Standard & Poor’s 500 Index lost less than 0.1 percent today after the U.S. gauge closed little changed, near a record high.

Relative Value

The Asia-Pacific index traded at 13.1 times estimated earnings at the last close compared with 16.3 times for the S&P 500 and 15.3 on the Europe Stoxx 600 Index, according to data compiled by Bloomberg. 

HTC lost 5.7 percent to NT$141.50 in Taipei after sales in May dropped 27 percent. The stock is on course for a three-month low. 

Japanese utilities retreated. Tepco fell 1.8 percent to 436, Kansai Electric Power Co. declined 1.1 percent to 918 yen and Tohoku Electric Power Co. retreated 1.4 percent to 1,092 yen. 

Australand surged 5.9 percent to A$4.565 and Stockland gained 2.5 percent to A$4.04. Frasers offered A$4.48 per share compared with Stockland’s A$4.43 all-share bid. Australand’s board said it intends to recommend the offer in the absence of a superior proposal. 

JFE Holdings Inc. climbed 3.1 percent to 2,031 yen after Credit Suisse Group AG advised buying shares of the Japanese steelmaker. 

Courtesy: bloomberg

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