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Asian stocks retreat on Libya worries
Asian stocks dropped, with the benchmark regional index declining for the first time in three days, after the conflict in Libya escalated and oil prices surged, threatening to derail the global economic recovery.
Air China Ltd. and Korean Air Lines Co. fell at least 2.7 per cent on speculation higher fuel costs will crimp earnings growth among airlines. Kajima Corp., a Japanese construction company, slid 1.9 per cent in Tokyo after saying its highway project in Algeria may incur losses of more than 80 billion yen ($971 million). James Hardie Industries SE, the biggest seller of home siding in the US, lost 1.4 per cent in Sydney as American wages trailed forecasts.
“The higher oil prices will definitely dampen economic recovery,” said Pauline Dan, Hong Kong-based chief investment officer at Samsung Asset Management, which oversees about $72 billion in assets globally. “U.S. consumers are not really in the mood to spend and now they are faced with higher oil prices.”
The MSCI Asia Pacific Index dropped 0.7 per cent to 138.49 as of 11:22 a.m. in Tokyo, with more than two stocks declining for each that rose. The gauge climbed 1.9 per cent last week as better-than-estimated economic data from South Korea to the U.S. bolstered confidence in the global economic recovery will be sustained.
Japan's Nikkei 225 Stock Average sank 1.3 per cent. South Korea's Kospi Index retreated 0.5 per cent. Australia's S&P/ASX 200 Index dropped 1.1 per cent, while New Zealand's NZX 50 Index gained 0.5 per cent. China's Shanghai Composite Index increased 1.2 per cent. The Hang Seng Index rose 0.1 per cent on the first day of extended trading hours in Hong Kong.
Oil advances
Futures on the Standard & Poor's 500 Index fell 0.2 per cent today. The index slipped 0.7 per cent on March 4 in New York after fighting in Libya cut crude oil production in the North African nation by as much as 1 million barrels a day, spurring concern that there will be a slowdown in U.S. consumer spending, which makes up about 70 per cent of the world's biggest economy.
Crude oil for April delivery increased 2.5 per cent to $US104.42 a barrel in New York on March 4, the highest settlement since Sept. 26, 2008. Fighting between Libyan rebels and troops loyal to Muammar Qaddafi intensified yesterday as the opposition advanced west from the oil hub of Ras Lanuf toward the leader's hometown of Sirte.
The MSCI Asia Pacific Index increased 1.2 per cent this year through March 4, compared with gains of 5.1 per cent by the S&P 500 and 2.2 per cent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 14 times estimated earnings on average, compared with 13.7 times for the S&P 500 and 11.3 times for the Stoxx 600.