By Willa Plank
Asian markets were broadly lower Thursday, in response to strong economic data out of the U.S. overnight that raised the odds of rate increases, dollar strengthening and more capital flight from Asia..
Durable goods orders in the U.S. rose 4.8% in October from a month earlier, well above the 2.7% gain predicted by economists surveyed by The Wall Street Journal. In addition, a measure of U.S. consumer sentiment rose in November, signaling rising confidence in the economy.
Australia’s S&P/ASX 200 /zigman2/quotes/210598100/delayed AU:XJO -0.33% was flat, Hong Kong’s Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI -1.09% was down 0.3%, South Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 -1.49% sank 0.8%, but Japan’s Nikkei /zigman2/quotes/210597971/delayed JP:NIK -0.39% was up 0.9%.
The data pointed to likely improved U.S. demand for goods and commodities from Asia-Pacific.
“I was very surprised to see strong European PMIs [purchasing managers indices] and very strong U.S. data as well…it’s boding well for risk appetite,” said Christoffer Moltke-Leth, director of global sales trading at Saxo Capital Markets.
But more significant for Asia, the data also ramped up expectations for interest rate increases in the U.S., rising yields and more capital outflows from emerging Asia.
“There are concerns about emerging markets,” said Moltke-Leth, pointing to Malaysia, Indonesia and the Philippines.
Minutes from the U.S. Federal Reserve’s November meeting indicated officials believed a rate increase could become appropriate “relatively soon” if data continued to show an improving economy. This has seen the U.S. dollar strengthen against most currencies in Asia.
The Korean won fell 0.3% against the dollar Thursday, the Indonesian rupiah was off 0.4%, and Japanese yen slipped 0.2% and the Malaysian ringgit was 0.4% lower.
Japanese stocks benefited from the weaker yen, which boosts the competitiveness of the country’s exporters.
Yen weakness continues to be “very favorable” for equities, said Hisao Matsuura, chief strategist at Nomura Japan. He said he expects Japanese firms to post positive earnings revisions as early as next quarter. “How much they recover will show how much things have improved,” Matsuura said.
Hong Kong stocks slipped as continued yuan slippage hurt offshore interest in Chinese companies listed in the city. The Shanghai Composite /zigman2/quotes/210598127/delayed CN:SHCOMP +0.31% was up slightly.
China’s central bank fixed the yuan 0.26% weaker against the U.S. dollar on Thursday. It has guided the currency weaker for most of this month, as the U.S. dollar has experienced a broad-based rally.
“The [yuan] depreciation will be more negative to Chinese companies that have offshore [listings],” said Alexander Lee, research director at DBS Vickers. “These tend to be China properties, airlines and some of the environmental companies.”
Copper, however, has been a bright spot. The industrial metal jumped 3% to $5,916 a metric ton in early Asia trade, buoyed by positive U.S. economic data and expectations that U.S. President-elect Donald Trump will spend heavily on infrastructure.
This has boosted shares of copper stocks in China, including Jiangxi Copper /zigman2/quotes/201334192/delayed CN:600362 +0.13% , up 7.1% in Hong Kong trade Thursday, and Yunnan Copper /zigman2/quotes/200847298/delayed CN:000878 -0.33% , up 6% in Shenzhen trade.
Singapore stocks also fell after the city state narrowed its growth forecast for this year. The FTSE Straits Times Index /zigman2/quotes/210597985/delayed SG:STI -0.55% was down 0.2%.
Jingyi Pan, market strategist at IG, says the manufacturing sector and construction sector were growing slower, on a year-on-year basis, while the services sector saw no growth.
Asia-Pacific government bond yields rose Thursday, tracking the movement of U.S. Treasurys as market expectations for a December Fed rate increase stayed strong. Yields rise as bond prices fall. Singapore’s 10-year debt yield added 6.8 basis points. Bond yields of similar maturities in Indonesia, Australia, Hong Kong, Thailand, South Korea, Japan and Malaysia also edged up.
<STRONG>— Suryatapa Bhattacharya, Saumya Vaishampayan, Saurabh Chaturvedi, Biman Mukherji, Carol Chan and Ese Erheriene contributed to this article.</STRONG>