Asian Stocks Fall on Earnings as China Begins Audit; Yen Climbs

Asian Stocks Fall on Earnings as China Begins Audit; Yen Climbs

Bloomberg – Asian stocks fell for a fourth day as Japan’s biggest companies report earnings and China audits government borrowings. The yen and Japanese government bonds rose while silver and natural gas declined.

The MSCI Asia Pacific Index of regional equities sank 1.1 percent to 134.03 at 12:25 p.m. in Tokyo. The Topix index of Japanese shares lost 2.3 percent, poised for its lowest close since June 28, while the Shanghai Composite Index was down 1.6 percent. Standard & Poor’s 500 Index (SPX) futures fell 0.2 percent. The yen advanced 0.4 percent to a one-month high against the dollar as Japan’s 30-year government bond yield dropped. Silver slid 1.1 percent while natural gas was down 2.1 percent.

First-quarter earnings reporting by Topix companies will peak this week, with 688 scheduled to announce results, while Bank of Japan Governor Haruhiko Kuroda will speak in Tokyo today. China’s State Council requested the National Audit Office conduct a review of local government debt and data showed growth in earnings at the nation’s industrial companies slowed in June. The Federal Open Market Committee convenes July 30-31 and the European Central Bank and Bank of England also meet. U.S. data later this week will show employers added fewer workers this month, according to a Bloomberg survey.

“It’s a big week with earnings reports, central bank meetings, and of course U.S. payrolls,” Nader Naeimi, the Sydney-based head of dynamic asset allocation at AMP Capital Investors Ltd., which manages more than $130 billion, said by phone. “Investors will be paying a lot of attention to these and studying the implications for Fed tapering arguments. Where markets go from here depends a lot on the data and the Fed.”

Topix, Hang Seng

Kobe Steel Ltd., Daiwa Securities Group Inc., and Sumitomo Mitsui Financial Group Inc. are among Topix members scheduled to report earnings. Mitsubishi UFJ Financial Group Inc., Japan’s biggest publicly traded lender, dropped 4.1 percent, extending its biggest weekly loss in two months. Hong Kong’s Hang Seng Index slid 0.5 percent.

Net income for Chinese industrial companies rose 6.3 percent from a year earlier in June, down from growth of 15.5 percent in May, data from the government statistician showed on July 27. The State Council’s July 26 borrowing review was “urgent” and the audit office has suspended other projects, People’s Daily reported yesterday on its website, citing sources it didn’t identify.

The yen touched 97.64 per U.S. dollar, the highest since June 27, before trading at 97.76 in Tokyo. Australia’s dollar and South Korea’s won climbed 0.2 percent against the U.S. currency.

Central Banks

The Federal Reserve will start trimming bond purchases in September, according to a Bloomberg survey of economists. The International Monetary Fund cautioned last week that exiting from the quantitative easing program could spur excessive interest-rate volatility and have “adverse global implications.” Fed Chairman Ben S. Bernanke has said it’s “way too early to make any judgment” as to whether policy makers will start tapering in September.

U.S. gross domestic product probably rose 1 percent on an annualized basis in the second quarter, after gaining 1.8 percent in the previous period, data will show July 31, according to the median of economists’ estimates compiled by Bloomberg. Payrolls increased by 185,000 after a 195,000 gain in June, and the jobless rate fell to 7.5 percent from 7.6 percent, according to the median forecast of economists in a Bloomberg survey before Labor Department data on Aug. 2.

Japan’s 30-year government bond yield declined 1/2 basis point to 1.82 percent, the lowest since June 28. The benchmark 10-year yield also slid 1/2 a basis point to 0.78 percent, nearing the 0.77 percent level reached last week that matched the lowest since May 14. Yields on 10-year Treasuries were little changed at 2.56 percent, while Australian government debt due in a decade yielded 3.75 percent, down three basis points, or 0.03 percentage point.

Silver sank to $19.88 and platinum and palladium lost at least 0.2 percent. Gas futures retreated for a fourth day in New York.