Asia’s benchmark stock index fell for a fifth day, with the regional benchmark index set for its worst weekly loss in nearly three months, as Japanese traders returned from a three-day holiday and investors awaited the monthly U.S. jobs report for clues on the strength of the world’s largest economy.
The MSCI Asia Pacific Index slid 0.7 percent to 126.69 as of 12:51 p.m. in Hong Kong, on course to drop 3.5 percent this week, the biggest since Feb. 12. Equity markets across the region have fallen this week, while the yen has weakened since Japanese stocks last traded on Monday. South Korea, Indonesia, and Thailand markets are closed for holidays.
“We’ve turned a little bit cautious,” John Woods, chief investment officer for Asia-Pacific at Credit Suisse Private Banking, told Bloomberg TV. “One of the reasons why we’ve gone underweight equities recently is because valuations look stretched at the top of the range but also because the two interest-rate hikes we expect are not being fully priced in by the market.”
The global equity rally is faltering as investors gauge prospects for higher U.S. interest rates amid persistent signs of tepid to slowing growth in major economies. While Fed officials signaled in recent days that borrowing costs could rise as soon as June, futures traders assign only a 10 percent probability for such a move after recent data indicated the U.S. economy remains sluggish.
Japan’s Topix index slipped 0.5 percent. The yen traded at 107.08 per dollar. The Bloomberg Dollar Spot Index is heading for its biggest weekly advance in six months, buoyed by comments from Federal Reserve officials that a June U.S. rate hike is possible.
“It’s not as bad as it could have been with Japan coming back, and that’s been helped by a bit of weakening in the yen during the past couple of days,” Angus Nicholson, a Melbourne-based market analyst at IG Ltd., said by phone. “If we see a strong non-farm payrolls number tonight it will help the dollar move in the right direction and help Japanese equities.”
Hong Kong’s Hang Seng Index fell 1.3 percent and the Hang Seng China Enterprises Index of mainland firms listed in the city retreated 1.6 percent. The Shanghai Composite Index plunged 1.9 percent as tumbling commodity prices weighed on raw material producers and concern grew that a pickup in economic indicators will falter. China trade data are due this weekend.
Alibaba Group Holding Ltd., Asia’s largest Internet company, posted a 39 percent surge in revenue as China’s dominant e-commerce operator shrugged off a slowing economy with promotions to woo cash-rich consumers.
Australia’s S&P/ASX 200 Index dropped 0.1 percent, paring losses of as much as 1.5 percent, after the nation’s central bank lowered its inflation forecast. That revision spurred traders to increase bets of an August rate cut, pricing in a 57 percent chance compared with 42 percent yesterday.
Taiwan’s Taiex Index declined 0.2 percent and India’s S&P BSE Sensex Index fell 0.6 percent. New Zealand’s S&P/NZX 50 Index, the best-performing developed market this year, rose 0.4 percent.
Futures on the S&P 500 slipped 0.1 percent after the underlying U.S. equity gauge closed little changed on Thursday.