Bank of Japan
(Bloomberg) Asian stocks fell for a sixth day as South Korea unexpectedly cut interest rates and Australia’s jobless rate rose, adding to concern the global economic slowdown is deepening. The won and the Australian dollar slid.
The MSCI Asia Pacific Index (MXAP) dropped 1.2 percent in Tokyo, heading for the longest losing streak in two months. The Nikkei 225 Stock Average retreated 1.3 percent. Futures on the Standard & Poor’s 500 Index declined 0.3 percent. The won touched a two-week low against the dollar, while the so- called Aussie sank 0.7 percent. The yen rallied against all 16 of its major peers after the Bank of Japan kept its benchmark interest rates unchanged.
Australian employers unexpectedly cut payrolls in June while a report today may show manufacturing output in the euro region remained stagnant in May. Chinese companies from Cosco Shipping Co. to Dongfeng Automobile Co. reported slumping profit before the country releases economic data tomorrow. A few U.S. Federal Reserve policy makers said the central bank will probably need to take more action to boost the labor market, according to minutes of their meeting.
“The global economy is deteriorating faster than central banks can ease policy,” said Tomomi Yamashita, a senior fund manager in Tokyo at Shinkin Asset Management Co., which oversees about $6.3 billion. “Your best bet is to hold on to cash.”
Rate Cuts
Governor Kim Choong Soo and his board at the central bank lowered the benchmark seven-day repurchase rate by 25 basis points to 3 percent, the first cut since February 2009, the central bank said today. Two of 16 economists surveyed by Bloomberg News predicted the move. Brazil cut its benchmark interest rate for an eighth straight time late yesterday.
Japan’s central bank kept its benchmark interest rates between zero and 0.1 percent and monthly bond purchases at 1.8 trillion yen ($22.7 billion), the bank said in the statement today.
Almost four stocks fell for each one that rose on MSCI’s Asian Pacific gauge, which is extending a five-day, 2.3 percent decline. Commodity producers and technology companies reliant on discretionary spending by consumers led losses. Infosys Ltd., India’s second-largest software exporter, tumbled 10 percent after cutting its dollar sales forecast.
The Hang Seng China Enterprises Index (HSCEI) sank 1.9 percent, heading for its lowest close since October.
China’s economy grew 7.7 percent in the three months through June from a year earlier, according to a Bloomberg poll. That compares with an 8.1 percent increase in the previous quarter.