BLBG: Asia Stocks, U.S. Index Futures Fall as Credit Crisis Widens
By Chua Kong Ho and Nick Baker
Oct. 6 (Bloomberg) -- Asian stocks, U.S. and European index futures fell as deteriorating credit markets forced new bailouts of Hypo Real Estate Holding AG and Fortis. The euro slumped to a 13-month low, while Treasuries advanced.
Japan's Mitsubishi UFJ Financial Group Inc. and Australia's Macquarie Group Ltd. tumbled more than 9 percent after Germany agreed on a $68 billion package for Hypo and BNP Paribas SA said it will take control of Fortis in Belgium and Luxembourg. Sumitomo Metal Mining Co. lost 7.1 percent after copper and gold prices sank amid concern a $700 billion U.S. bank bailout won't prevent a slowdown in global economic growth.
``It will probably be a rough week for global investors as they realize the credit crisis has a long way to play out,'' said Frederic Dickson, who helps oversee $25 billion as chief market strategist at D.A. Davidson & Co. in Lake Oswego, Oregon. ``U.S. action was an absolutely essential first step, and global intervention is needed.''
The MSCI Asia Pacific Index fell 4.1 percent to 100.31 as of 3:54 p.m. in Tokyo, headed for the lowest close since July 20, 2005. The U.S. Standard & Poor's 500 Index futures fell 1.8 percent, while the Dow Jones Euro Stoxx 50 Index futures sank 5.3 percent. The euro fell 1.5 percent to $1.3569.
Japan's Topix index lost 4.7 percent to 999.05, its lowest since December 2003. Japan may consider additional measures to stimulate growth after today's stock-market declines, Prime Minister Taro Aso said. Mitsui Fudosan Co., the country's largest real-estate company, tumbled after UBS AG slashed its recommendation.
All markets open for trading in Asia declined apart from Sri Lanka. South Korea's Kospi lost 4.3 percent and the won dropped 3.7 percent. China's CSI 300 Index fell 4.5 percent, as trading resumed after a one-week holiday.
The MSCI Asia Pacific last week posted the biggest weekly drop since August 2007 on concern the U.S. bank bailout will fail to stimulate demand for the region's exports. That took the gauge's valuation to 11.7 times estimated profit, which is cheaper than the U.S. S&P 500 index's 13.1 times.
The S&P 500 fell 9.4 percent last week, the most since the September 2001 terrorist attacks, as U.S. President George W. Bush signed the rescue package into law to stem a crisis that has claimed Bear Stearns Cos. and Lehman Brothers Holdings Inc.
The legislation enables the government to purchase non- performing assets from institutions and suspend an accounting rule requiring businesses to report losses if asset values fall.
U.S. payrolls dropped 159,000 last month, the most in five years, the Labor Department said on Oct. 3. The world's largest economy has lost 760,000 jobs this year, compared with the 1.1 million created last year.
Mitsubishi UFJ, Japan's largest bank, fell 9.2 percent to 806 yen, the most since Oct. 23, 2003. Mizuho Financial Group Inc. dropped 7.8 percent to 402,000 yen. Macquarie, Australia's largest investment bank, lost 10 percent to A$35.
Germany and the nation's banks and insurers agreed on a 50 billion euro ($68 billion) package for commercial property lender Hypo after commercial banks withdrew support for an earlier proposal. BNP Paribas, France's biggest lender, also agreed to pay 14.5 billion euros to purchase Fortis units in Belgium and Luxembourg bank after a government bailout failed.
The U.K. government, which took over Bradford & Bingley Plc last week, is ready to offer further support to banks that may get into financial difficulty, said Chancellor of the Exchequer Alistair Darling.
The euro earlier reached $1.3610, the lowest since Sept. 5, 2007. It fell to 140.19 yen, the weakest since March 7, 2006, as investors cut holdings of higher-yielding currencies funded in the Japanese currency.
``The euro zone is the second domino of the globe to be falling over after the U.S.,'' said Alex Sinton, a senior currency dealer at ANZ National Bank Ltd. in Auckland.
Asian money-market rates stayed at the highest in more than nine months. Hong Kong's three-month interbank offered rate rose to 3.85 percent. The Tokyo interbank offered rate for such loans was unchanged at a nine-month high of 0.868 percent.
Sumitomo Metal, Japan's second-largest copper smelter, lost 7.1 percent to 853 yen. Newcrest Mining Ltd., Australia's biggest gold mining company, fell 4.2 percent to A$26.44. Woodside Petroleum Ltd., Australia's second-biggest oil and gas producer, declined 2 percent to A$49.
Bullion for immediate delivery was down 0.5 percent at $831.64 an ounce. Copper declined 4.7 percent to $5,730 a metric ton on the London Metal Exchange today. Crude oil fell for a fourth day in New York, dropping as much as 3 percent to $91.03 a barrel. Power station coal prices at Australia's Newcastle port dropped 6.1 percent last week, a seventh decline.
Datong Coal Industry Co., China's second-largest producer of the fuel by capacity, slumped by the 10 percent daily limit to 15.29 yuan in Shanghai. PT Bumi Resources, Indonesia's biggest power-station coal producer, tumbled 22 percent to 2,500 rupiah, extending a six-day, 19 percent slide.
The value of the 19 commodities in the Reuters-Jefferies CRB Index fell $280.6 billion, or 43 percent, from its July 3 peak, a loss larger than their total worth two years ago, data compiled by Bloomberg show.
UBS AG's Hong Kong-based economist Duncan Wooldridge reduced his growth forecast in Asia excluding Japan next year to 6.1 percent from 6.9 percent, saying the region will face ``recession-like conditions.''
Mitsui Fudosan slumped 5.9 percent to 1,761 yen, while Mitsubishi Estate Co., the second biggest, lost 4.5 percent to 1,860 yen. Sumitomo Realty & Development Co. slid 5.9 percent to 1,934 yen. UBS cut its ratings on the three companies to ``neutral'' from ``buy.''
Treasuries rose for a fourth day, sending two-year notes to their longest winning streak in six weeks. Two-year note yields fell 9 basis points to 1.5 percent as UBS AG, the largest Swiss bank, said the Federal Reserve will halve its benchmark interest rate to 1 percent by March 31 to combat a recession.
``It's time to start buying,'' said Hiroyuki Bando, chief manager for fixed income, equities and currencies in Tokyo at Mitsubishi UFJ Trust & Banking Corp. ``The economy will become weaker. Interest rates will go lower.''
To contact the reporter for this story: Chua Kong Ho in Shanghai at kchua6@bloomberg; Nick Baker in New York at email@example.com.