Asian Stocks Extend Slide as Aussie Bonds Rise

Asian stocks fell, with the regional index headed toward its longest slump since 2002. Australian bonds followed a rebound in Treasuries before the Federal Reserve reviews interest rates, while oil declined.

The MSCI Asia Pacific Index lost 0.1 percent by 9:37 a.m. in Tokyo, on track for a ninth day of declines, the most since a 10-day drop in June 2002. Japan’s Topix (TPX) index fell 0.2 percent as markets resumed following a holiday. Nasdaq 100 Index futures were little changed after the U.S. gauge of technology stocks sank 1 percent in New York. Ten-year Australian notes rose for the first time in six days after Treasuries snapped their longest drop in more than a year. U.S. oil fell 0.3 percent.

Fed officials meet to review policy from today, with an unexpected decline in American factory output damping speculation the timeline for interest-rate increases could be brought forward. China’s Alibaba Group Holding Ltd. (BABA) boosted the size of its U.S. initial share sale amid strong demand, putting it on track to break global fundraising records. Morning trading in Hong Kong is delayed because of a typhoon, while Australia’s central bank releases minutes of its last meeting today.

"The big issue is whether the Fed will change its forward guidance to indicate they are getting closer to the decision on putting interest rates up," Stephen Halmarick, head of investment markets research at Colonial First State Global Asset Management, which oversees about A$170 billion ($154 billion), said by phone from Sydney. "The transition period as the Fed tightens will be difficult for markets in the Asian region. I think we are in for a few months of increased volatility in markets."

Considerable Time

The Fed is gauging the strength of the U.S. economy as it winds down a bond-buying program that's on track to end this year. The bank has been saying since March that interest rates would stay low for a "considerable time" after it completes the asset purchases known as quantitative easing. Speculation the Fed may bring forward rate increases has boosted the allure of the dollar this month and depressed Treasuries.

Japan's Nikkei 225 Stock Average declined 0.2 percent, snapping a five day advance, while the NZX 50 Index in Wellington dropped 0.3 percent. The Kospi gauge in Seoul added 0.1 percent as Australia's S&P/ASX 200 Index fell 0.2 percent.

The morning session on the Hong Kong Stock Exchange will be delayed due to Typhoon Kalmaegi, according to a statement on the exchange group's website. The city's third-highest storm signal was issued for the first time this year early today. Markets in Malaysia are closed for a holiday today.

Source: bloomberg.com