WELLINGTON (BLOOMBERG) - Resource stocks drove declines across Asia as copper and nickel traded near their lowest prices in at least six years following a rout in industrial metals.
Australian stocks snapped a five-day climb, while Japanese shares returned from holiday to declines as the metals slump soured sentiment toward commodity producers.
A Bloomberg gauge of mining companies fell for a third day. Copper traded below US$4,500 a metric ton in London and nickel fluctuated near its lowest level since 2003. While crude's climb back above US$42 a barrel bolstered Malaysia's ringgit, the US dollar held its advance versus major peers amid the prospect for higher US interest rates this year.
Expectations that the Federal Reserve will raise benchmark US rates at its meeting next month have underpinned gains in the US dollar, making metals more expensive for buyers holding other currencies. Meanwhile, an increase in output from some producers coupled with concern over the impact of China's slowdown on demand is also fueling anxiety.
The MSCI Asia Pacific Index fell 0.1 per cent by 10:17 am Tokyo time as Japan's Topix index retreated 0.2 per cent.
Singapore's Straits Times Index was barely changed, up 2.5 points at 2,905.99 as of 9:47 am.
Australia's S&P/ASX 200 Index fell 0.7 per cent, with the gauge, which counts materials producers as its biggest sector after banks, dropping for the first time since Nov. 16. The Bloomberg World Mining Index, which tracks 81 of the world's biggest mining companies, fell 0.3 per cent. BHP Billiton, the world's biggest miner, sank 1.7 per cent in a second day of losses.
In neighboring New Zealand, the S&P/NZX 50 Index added 0.3 per cent, extending a record high, while the Kospi index in Seoul rose 0.2 per cent. Taiwanese shares fell 0.3 per cent.
Energy and materials stocks have led equity declines in Asia this year, sliding at least 13 per cent compared with the 2.7 per cent retreat in the wider Asia-Pacific measure.
"The commodity sector is really being hit hard, primarily by global growth concerns but also the oversupply issue," Yogesh Dewan, founder and chief executive officer at Hassium Asset Management, told Bloomberg TV.
The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, was little changed on Tuesday after rising 0.5 per cent over the past two sessions. The gauge has climbed 9.1 per cent in 2015 as the prospect of an end to near-zero borrowing costs in the US burnishes its appeal.
Fed chair Janet Yellen said in a letter released on Monday in Washington that she expects policy will be tightened "gradually" after the initial increase. Odds on the US central bank raising rates at its December meeting have climbed to 74 per cent, according to futures trading tracked by Bloomberg, from 36 per cent a month ago.
The ringgit strengthened 0.4 per cent after slipping 0.4 per cent last session.
Copper for three-month delivery was little changed at US$4,491 after sinking to its lowest level since May 2009 on Monday. The metal sank 2 per cent in London last session as nickel tumbled 4.9 per cent.
The Bloomberg Commodity Index was little changed on Monday near its lowest level since 1999 as the London Metal Exchange's index of six industrial metals extended its worst year since the global financial crisis.
West Texas Intermediate crude added 0.9 per cent to US$42.12 a barrel after swinging about in Monday trading.
Saudi Arabia will work with OPEC and other producers to stabilize global crude markets, according to a report by the Saudi Press Agency. Barclays said this doesn't reflect any policy shift by the kingdom, the biggest member of the Organization of Petroleum Exporting Countries, which will meet Dec 4, as Saudi oil minister Ali al-Naimi made similar comments last week.