Hong Kong (BBN)-Asian stocks outside Japan slipped and the dollar climbed to a four-year high as surging U.S. new-home sales signaled improvement in the world’s biggest economy.
Gold retreated and New Zealand’s dollar plunged after the central bank said again that its strength is unjustified, reports Bloomberg.
The MSCI Asia Pacific excluding Japan Index dropped 0.3 percent at 1:02pm in Tokyo.
Chinese shares in Hong Kong dropped with copper after the country’s foreign exchange watchdog said it uncovered $10 billion of trade fraud. Japan’s Topix index advanced 1 percent.
Standard & Poor’s 500 Index futures dropped 0.1 percent. The U.S. currency strengthened against most major peers as the yen slid and the so-called kiwi plunged to a one-year low. Gold fell to $1,214.76 and silver dropped 0.6 percent.
Some banks had played roles in fake trade at the port of Qingdao, Wu Ruilin, deputy head of China’s State Administration of Foreign Exchange said, pledging to severely punish perpetrators. The U.S. reports durable-goods orders and initial jobless claims numbers today after new-home sales surged in August to the highest level in more than six years.
Reserve Bank of Australia Governor Glenn Stevens will speak in Melbourne.
“The dollar has gone near vertical,” said Imre Speizer, a markets strategist at Westpac Banking Corp. in Auckland. “In the near term, the momentum is very strong. And the economic data has continued to surprise on the upside more often than not.”
The Bloomberg Dollar Spot Index is climbing for a fifth straight day after yesterday closing at the highest in more than four years. The measure is heading for its biggest quarterly gain since the period ended Sept. 30, 2011.
The greenback was stronger against all 16 major peers today, buying 109.12 yen. The Australian dollar weakened 0.6 percent to 88.35 U.S. cents.
‘DOWNWARD ADJUSTMENT’
The kiwi tumbled as much as 1 percent to 79.95 U.S. cents, the least since September last year, as Reserve Bank of New Zealand Governor Graeme Wheeler said in a statement that the currency is “susceptible to a significant downward adjustment.”
“The real exchange rate has not adjusted materially to the recent downward movement in commodity prices,” Wheeler said in the statement, citing a 45 percent decline in dairy prices since February. “The Bank’s analysis indicates that the real exchange rate is well above its sustainable level.”
The euro slid to $1.2768 after falling 0.5 percent yesterday to below $1.28 for the first time in 14 months on bets the European Central Bank will add further monetary stimulus. The Stoxx Europe 600 Index gained 0.7 percent following two days of losses.
SILVER SLUMP
Gold dropped 0.2 percent today and silver retreated to $17.6025, taking its loss since the end of June beyond 16 percent, the fourth-biggest quarterly decline in data going back to 1998.
The yield on 10-year Treasuries was little changed at 2.56 percent after the U.S. notes fell yesterday for the first time in five days. The U.S. received the lowest demand at a five-year auction this year, with investors speculating the Fed is moving closer to raising interest rates. The yield on 10-year Treasuries rose 4 basis points yesterday.
Six of 10 industry groups advanced on the Asia-Pacific gauge that includes Japanese shares today. The measure trades at 13.6 times estimated earnings compared with 15.5 times projected profit for the Stoxx Europe 600 index and 16.7 times for the S&P 500.
The Nikkei 225 Stock Average increased 1 percent, while Australia’s S&P/ASX 200 Index climbed 0.1 percent. South Korea’s Kospi index slipped 0.2 percent and Taiwan’s benchmark index dropped 0.7 percent.
CHINA STOCKS
Hong Kong’s Hang Seng Index retreated for the third time in four days. The Hang Seng China Enterprises Index of mainland firms listed in the city swung to a 0.5 percent drop after rising as much as 0.7 percent.
The Shanghai Composite Index rose 0.5 percent after closing at the highest since March 2013.
Chinese President Xi Jinping is considering replacing People’s Bank of China Governor Zhou Xiaochuan, the Wall Street Journal said yesterday, citing unidentified officials. The China Times this month published an opinion piece on prospects for ex-securities regulator Guo Shuqing taking the job.
Six of 13 economists in a Bloomberg News survey this month cited Guo, 58, as the most likely successor when Zhou does leave. Five predicted it would be People’s Bank of China Deputy Governor Yi Gang, 56.
Copper retreated 0.3 percent to $6,720 a ton as industrial metals dropped after the allegations of fake trade documents in China. Lead, tin and zinc declined at least 0.4 percent.
METALS DEMAND
“Qingdao is not over,” said Chae Un Soo, a metals trader at Korea Exchange Bank Futures Co. The news will “definitely” have an impact on demand for metals, he said.
Data yesterday showed sales of new U.S. houses jumped 18 percent to a 504,000 annualized pace, the most since May 2008. The median forecast of 74 economists surveyed by Bloomberg called for the pace to accelerate to 430,000. The one-month increase was the biggest since January 1992.
“The U.S. economy continues to exhibit strength,” Matthew Sherwood, head of investment markets research at Perpetual Ltd. in Sydney, which manages about $29 billion, said by e-mail. “U.S. data overnight was more constructive, with a strong surge in new home sales and upward revisions to the historic data also supportive for the U.S. economy.”
The Chicago Board Options Exchange Volatility Index, the gauge known as the VIX (VIX), decreased 11 percent to 13.27 yesterday for the largest decline since Aug. 4. The index had surged 24 percent over the prior three days.
A measure of health-care stocks had the biggest gains among 10 groups in the S&P 500 yesterday, jumping 1.7 percent, amid signs that cross-border deals may continue despite the government’s efforts to curtail inversions.
The S&P 500, which rallied 0.8 percent yesterday, had dropped 1.4 percent during a three-day losing streak after closing Sept. 18 at a record.
BBN/JF-25Sept14-12:00pm (BST)