Asian stocks outside China climbed and treasuries traded in the narrowest range in more than a week before the Federal Reserve decides monetary policy. Nickel extended a rally that saw it enter a bull market yesterday and oil dropped.
The MSCI Asia Pacific Index gained 0.2% by 2:24pm in Tokyo, as Japanese shares reversed a drop. A measure of Chinese shares in Shanghai and Shenzhen slid 1.3%. Standard & Poor’s 500 Index futures were little changed. Nickel advanced 0.3% to $16,243 a tonne, near the highest price since April. Oil decreased 0.3% as US crude supplies rose. Benchmark 10-year Treasury yields traded in a range of four basis points, the least since March 11. Thailand’s baht held near a three-month high as the government lifted an emergency order.
The Fed will press on with cuts to its bond buying program and switch to qualitative guidance for assessing interest rates, according to economists surveyed by Bloomberg before a two-day meeting that ends today. Chinese lenders and developers declined after a private builder collapsed as the government allows market forces to play a greater role in the world’s second- largest economy. Russian Vladimir Putin told lawmakers he didn’t intend to further divide Ukraine as the U.S. and U.K. pushed for more sanctions.
“Investors still remain highly cautious,” Matthew Sherwood, who helps manage about $25 billion as the Sydney-based head of investment markets research at Perpetual Ltd., said by phone. “Risk assets have recovered most of their lost ground since the Ukraine crisis was sparked a few weeks ago but there’s still a lot of volatility. The Fed will probably water down their forward guidance and keep U.S. interest rates low for at least another 18 months.”
Hong Kong
About five stocks advanced for every three that dropped on the Asia-Pacific gauge, which is down 4.9% so far this year. Eight of the 10 industry groups on the measure climbed.
The Hang Seng Index slid 0.1 per cent in Hong Kong, with a gauge of developers heading for a sixth straight decrease. The Hang Seng China Enterprises Index fell 0.1 per cent. The CSI 300 Index dropped toward the lowest in a week and the Shanghai Composite Index retreated 0.8 per cent. China’s central bank said it didn’t participate in an “emergency meeting” yesterday on the collapse of a developer with 3.5 billion yuan ($565 million) of debt.
Zhejiang Xingrun Real Estate Co., a closely held developer based in Fenghua, near the eastern city of Ningbo, doesn’t have enough cash to repay creditors, government officials familiar with the matter said March 17. The failure to pay back debts comes two weeks after the country saw its first onshore bond default and coincides with efforts by the government to reduce risks in the financial system.
Further Defaults
“There will be further defaults in this industry as these themes will persist, but they will be limited to smaller companies like Zhejiang Xingrun,” Fitch Ratings Ltd. analysts Andy Chang and Kalai Pillay said in a note today. “The manner in which the Chinese authorities resolve these defaults will have important implications on the industry. We believe the authorities will force shareholders and some of the lenders, especially from the non-traditional sectors, to realize their losses.”
The Kospi index in Seoul increased 0.1%, while Australia’s S&P/ASX 200 Index added 0.2%.
Japan’s Topix index climbed 0.9% after declining as much as 0.8% before the yen dropped 0.1% against the dollar. Nikkei 225 Stock Average jumped 1.4% as Fast Retailing Co., the heaviest-weighted stock on the index, snapped five days of losses to surge 2.7%.
The owner of the Uniqlo clothing chain backed out of acquisition talks with J.Crew Group Inc. management and its private-equity owners late last month, the Wall Street Journal reported, citing unidentified people familiar with the situation.
Bull Market
Nickel climbed on Tuesday on speculation Russian supplies will be disrupted at a time when some shipments of the metal are already banned in Indonesia. Prices have rallied more than 20 per cent from the $13,285-a-tonne level reached Nov 27, meeting the common definition of a bull market.
Russia was slapped with sanctions from the US and the EU after supporting a bid by Crimea, a breakaway region of neighboring Ukraine, to rejoin its territory. The peninsula voted in favor of becoming a part of Russia in a March 16 referendum, which was called after Ukrainian President Viktor Yanukovych fled the country following protests.
During a Kremlin speech to Russian lawmakers that was met with cheers and standing ovations, Putin on Tuesday blamed Western encroachment for forcing him to take control of Crimea, a move he described as reversing a historic wrong.
Forward Guidance
Fed officials have said they will probably hold the central bank’s target interest rate near zero “well past the time” that unemployment falls below 6.5%, “especially if projected inflation” remains below its longer-run goal of 2%.
The baht appreciated 0.1% for a fifth straight increase, trading at 32.11 per dollar after touching the highest level since Dec 18. Thailand’s Cabinet approved the removal of a state of emergency imposed Jan 22 amid anti-government protests.