China stocks tumble as money rates rise

Beijing / Bloomberg

China’s stocks slumped by the most in a month after money-market rates jumped. The Australian dollar fell on concern investment is weakening while oil resumed declines and gold advanced.
The MSCI Asia Pacific Index of shares halted two days of losses, while China’s equities slumped as concern increased that recent gains were overdone relative to the outlook for the economy. US crude fell back under $32 a barrel and copper extended a rebound. Japan’s Topix index snapped a two-day decline after reports the government may increase spending. The nation’s 40-year bond yield fall below 1 percent for the first time.
Crude’s gyrations and concern that China can’t regain momentum has dominated financial markets this year, spurring central banks to ponder further stimulus. Global equities have swung between gains and losses in the past week as investors tried to get a handle on the world economy’s prospects. US Treasury Secretary Jacob Lew said Group-of-20 finance ministers wouldn’t deliver an “emergency response” to the market turmoil when they meet this week as we aren’t in a crisis environment.
“The new information that has been processed by the markets is the question of whether central banks are nearing the limit of their ability to soothe market fears and keep financial variables stable,” said Sam Tuck, a senior currency strategist at ANZ Bank New Zealand Ltd. in Auckland.

Stocks
The MSCI Asia Pacific Index rose 0.1 percent as of 7:01 a.m. London time.
The Shanghai Composite Index dropped 6.4 percent, the most since Jan. 26, and Hong Kong’s Hang Seng Index retreated 1.5 percent.
Agile Property Holdings Ltd. plunged the most in six months in Hong Kong after estimating a 70 percent drop in profits. A gauge of liquidity in the financial system jumped the most since Feb. 6, the day before the week-long Lunar New Year break began. South Korea’s Kospi index rose 0.3 percent, paring gains of as much as 0.8 percent.
The Topix jumped 1.8 percent. Construction companies and iron and steel producers drove gains after Asahi TV reported the government is considering an extra budget of about 5 trillion yen ($44.5 billion), citing unidentified ruling party officials.
Standard & Poor’s 500 Index futures dropped 0.4 percent after the gauge reversed a slump of as much as 1.6 percent in the last hour ofWednesday trade, ending the session up 0.4 percent. European stock futures gained 1.3 percent.

Commodities
West Texas Intermediate crude declined 0.4 percent to $32.02 a barrel, after ending last session up 0.9 percent.
Stockpiles of gasoline in the US fell 2.24 million barrels to 256.5 million, according to the Energy Information Administration, as demand climbed on pump prices near a seven-year low. American crude inventories, however, rose by 3.5 million barrels to an 86-year high of 507.6 million last week, according to the EIA.
Crude has slumped more than 13 percent this year on speculation a global glut in the commodity will persist amid the outlook for increased shipments from Iran and brimming US supplies. Oil ministers from Iran and Saudi Arabia signaled Tuesday they may not be willing to curtail production, which weighed on prices earlier in the session.
Gold climbed for a third day, advancing 0.7 percent to $1,236.70 an ounce, heading for its longest run of gains in more than two weeks.

Currencies
Australia’s dollar weakened 0.3 percent to 71.77 US cents after a government report showed businesses’ annual investment plans fell to the lowest level in nine years.
The yen strengthened 0.1 percent to 112.14 per dollar, while the pound lingered above $1.39 after dropping to an almost seven-year low of $1.3879 on Wednesday amid concern voters will decide to exit the European Union at a referendum in June.

Bonds
Japan’s longer-maturity bonds advanced after an auction of two-year notes drew a record-low yield of minus 0.183 percent. The yield on 40-year debt dropped as low as 0.975 percent and the rate on benchmark 10-year securities declined to an unprecedented minus 0.065 percent.
Treasuries advanced, with the 10-year yield declining two basis points to 1.73 percent.