Asian stocks fell for the first time in seven days, led by financial and real-estate companies, after Macquarie Group Ltd.
Stocks dropped Tuesday in Europe and Asia, weighed down by retailers and property companies as the relentless climb in oil prices fueled inflation fears.
U.S. crude oil futures for June delivery was trading at $127.20 a barrel, up 15 cents from its Monday close. Prices rose after the OPEC president, Chakib Khelil, said the cartel would not increase output at its next meeting in September.
Oil has risen around 33 percent since the year began. Higher energy costs have spread fear among investors that consumers and businesses around the world would reel in their spending at a time when the global economy is slowing.
In early trading, the FTSE 100 index was down 0.6 percent. The DJ Euro Stoxx 50 index, a barometer of euro zone blue chip companies, was down 0.7 percent. The CAC 40 in Paris was 1 percent lower, while the DAX in Frankfurt was down 0.6 percent.
EADS, the parent of Airbus, fell 3.2 percent, after UBS cuts its recommendation on the stock to “sell” from “neutral,” saying there are “many more reasons to sell than buy” the stock
We have identified nine reasons to sell the stock and only two reasons to buy,” UBS wrote in a note. “We believe the main reason investors should buy the stock is because they believe the euro will depreciate against U.S. dollar. Against that we believe the news flow from the airline industry, aircraft financiers, the Power8 cost reduction program and program execution will continue to deteriorate.”
The Tokyo benchmark Nikkei 225 stock average fell 0.8 percent, while the Hang Seng index in Hong Kong slid 2.5 percent. The S&P/ASX 200 index in Sydney fell 0.7 percent. Macquarie Group was one of the biggest drags on the index after the bank said it faced a challenging year.
The Shanghai composite index fell 4.5 percent, led by bank shares and other large caps as investors worried about the economic impact of the Sichuan earthquake last week.
“We’re seeing a lot of the same trends as yesterday – trading houses and steel firms are up on strong commodity prices, while retailers are down since their general outlook is not so good due to concerns about consumption, with oil prices so high,” said Hiroaki Osakabe, a fund manager at Chibagin Asset Management.
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Stocks around the world rose to a four-month peak Monday on optimism that the worst of the credit crisis had passed and an economic recovery was under way.
However, technology shares dropped in late trade after grim comments from a chip maker, spreading unease about the outlook for business and consumer spending.
Australia’s Central Bank Considered Raising Rates Again to Cool Inflation Australia’s central bank said it spent “considerable time” discussing the case for an interest- rate increase this month, sending the nation’s currency to a 24- year high.
Australian Dollar Gains to 24-Year High as RBA Says Considered Rate Rise The Australian dollar rose to its highest level in 24 years after the central bank said policy makers spent a “considerable time” at their last meeting discussing an interest-rate increase.
Macquarie’s Moore Says 16-Year Streak of Record Profits May Come to an End Macquarie Group Ltd., Australia’s biggest securities firm, said a 16-year streak of rising annual earnings may be coming to an end in the aftermath of the subprime mortgage meltdown.
Fletcher Building Drops Most in 2 Months as U.S. Housing Slump Curbs Sales Fletcher Building Ltd., the world’s biggest maker of laminated building board, dropped the most in two months in Wellington trading after saying the U.S. housing slump curbed sales at its 10-month-old Formica unit.
BHP Says It Requires Extra Vessels to Ship Iron Ore to Meet Chinese Demand BHP Billiton Ltd., the world’s largest mining company, needs extra vessels to ship iron ore from its mines in Australia’s Pilbara region to China because of increased production.
U.S. wheat futures rose sharply on worries that a lack of rain in key growing areas could have tightened supply in Australia. Wheat futures rose as much as 1.7 percent, while soybeans, corn and rice were also up.
“From the bank managers to the farmers to the consumers, there’s a definite strong unease felt by everyone,” said Garry Booth, at the commodities broker MF Global. “You can hear it in the back of their minds, ‘oh no, not again.”‘
Australia’s central bank considered raising interest rates earlier this month as inflation was uncomfortably high, but in the end it decided to give its already restrictive monetary policy time to work, minutes of the May policy meeting showed.
The news sent the Australian dollar to a 24-year high against the U.S. dollar, at around 96 U.S. cents.
The U.S. dollar fell against other major currencies after an overnight rebound that followed a report showing the U.S. leading economic indicators unexpectedly rose in April, suggesting that the world’s largest economy was turning the corner.
The euro was at $1.5602, up from $1.5509 in New York afternoon trading Monday, while the pound was at $1.9567, up from $1.9465. The dollar was at ¥103.80, down from ¥104.60, and at 1.0440 Swiss francs, down from 1.0552 francs.
INDIA PAKISTAN STOCK MARKET UPDATE FROM BLOOMBERG
Suzlon Energy’s Fourth-Quarter Profit Increases 29% to 4.64 Billion Rupees Suzlon Energy Ltd., India’s biggest maker of wind-turbine generators, said fourth-quarter group profit rose 29 percent after sales to customers in the U.S., Europe and India increased.
Ten-Year Bond Yields Near Three-Week High as Oil Costs May Stoke Inflation India’s 10-year bond yields were near the highest level in three weeks on concern crude oil prices close to an all-time high will stoke inflation.
Asian Stocks Drop For First Time in Seven Days, Led by Banks, Developers Asian stocks fell for the first time in seven days, led by financial and real-estate companies, after Macquarie Group Ltd. said a 16-year streak of rising profits may be ending and Credit Suisse Group downgraded Japanese developers.
Oil Trades Above $127 as Refiners Seek Crude to Produce Diesel, Gasoline Crude oil traded above $127 a barrel after closing at a record yesterday on speculation Saudi Arabia’s increased output won’t meet the demand of refiners seeking grades that yield more gasoline and diesel.
Benchmark Sensex Drops, Led by IL&FS Investmart, Lanco Infratech, Maruti The Bombay Stock Exchange’s Sensitive Index, or Sensex, fell 0.7 percent to 17,308.94 as of 10:20 a.m. local time. The S&P CNX Nifty Index on the National Stock Exchange slid 0.7 percent to 5,122.25.
Rupee Drops on Speculation Refiners to Buy More Dollars With Oil at Record India’s rupee fell on speculation crude oil near a record high will increase demand for dollars needed to pay for the commodity.
Wheat Prices Climb for Third Straight Session as Global Grain Demand Gains Wheat climbed for the third straight session on signs of increasing demand for cheap U.S. grain after prices last week touched an eight-month low.
Coal Prices May Rise Should South Africa Move to Limits Exports, Bank Says Global thermal coal prices may rise if South Africa, the biggest supplier of the fuel to European electricity companies, decides to limit exports, an analyst at National Australia Bank Ltd. said.