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Singapore - Asian stocks fell, with the regional benchmark index heading for its first decline in seven days, as Chinese equities resumed trading with less exuberance than some investors had expected after a week-long holiday during which global shares rallied.
Aeon slumped 7.2% in Tokyo after the Japanese shopping mall operator posted an unexpected net loss in the second quarter. Eclat Textile tumbled 10% in Taipei, after Macquarie Group downgraded its rating on the Taiwanese garment maker to neutral.
Golden Agri-Resources declined 5.4% in Singapore, leading losses among palm-oil producers, as crude palm-oil futures fell for a third day.
The MSCI Asia Pacific Index slipped 0.4% to 131.14 as of 10:11, erasing earlier gains of as much as 0.5%.
The Shanghai Composite Index advanced 3%, while the Hang Seng China Enterprises Index retreated 1 percent after an 11% rally during China’s holiday amid bets the Federal Reserve will keep interest rates near zero for longer.
“We’re seeing some profit-taking in other Asian markets,” said Bernard Aw, a strategist at IG Asia Pte. in Singapore. “The rally doesn’t have legs.
Fundamentally, the picture doesn’t look that good, especially with the IMF downgrading the global forecast for this year. The only thing holding up this rally is speculation we will get more stimulus measures for sometime, and that’s not a good sign.”
Fed liftoff
The International Monetary Fund (IMF) downgraded its economic outlook, citing concerns about how emerging markets will fare as the Fed tightens.
Hong Kong shares surged during China’s holiday after mainland policymakers cut mortgage requirements and some taxes on car sales, spurring speculation that more measures will be forthcoming to boost growth in the world’s second-largest economy.
Hopes for further stimulus in other economies, and the prospects for a delay in the Federal Reserve’s liftoff, have helped riskier assets stage a rebound after a miserable third quarter.
Odds of a Fed liftoff in 2015 have fallen below 50% after a weaker-than-expected US jobs report last week reduced the case for the Fed to raise interest rates this year.
Relief rally
“There’s been a little bit of a relief rally amid speculation the Fed will delay raising rates,” said Tim Schroeders, a portfolio manager who helps oversee about $1bn in equities at Pengana Capital in Melbourne.
“I wouldn’t hold my breath that the rally can continue until the end of the year. Ultimately investors will come around and start to realize that the rate increase is being delayed because the economy isn’t that strong.”
Hong Kong’s Hang Seng Index decreased 0.7%. Japan’s Topix index lost 0.8%. Taiwan’s Taiex index dropped 0.6%, while Singapore’s Straits Times Index fell 0.4%. New Zealand’s S&P/NZX 50 Index slid 0.4%, Australia’s S&P/ASX 200 Index rose 0.2% and South Korea’s Kospi index advanced 0.7%.
Emini futures on the Standard & Poor’s 500 Index slipped 0.5% on Thursday. The underlying equity measure advanced 0.8% on Wednesday as biotechnology companies rebounded and energy shares extended their longest rally since December 2013.
