Asian stocks slip as commodity woes return; Aussie dollar, gold decline

Pedestrians passing by a share prices board in Tokyo.
Pedestrians passing by a share prices board in Tokyo. PHOTO: AFP

WELLINGTON (BLOOMBERG) - Mining companies dragged Asian stocks down for a second day after a selloff in crude oil reignited concern over the outlook for commodities. Gold and copper extended losses, while Australia's dollar dropped before a rate review.

The MSCI Asia Pacific Index lost 0.3 per cent by 9:23 a.m. in Tokyo, with materials producers and energy stocks down at least 0.3 per cent. Japan's Topix index fell 0.3 per cent, while US index futures dropped 0.1 per cent.

Brent crude lingered below US$50 a barrel following Monday's 5.2 per cent tumble, as copper slipped a fifth day and gold lost 0.3 per cent.

The Aussie dollar hovered near its weakest level since 2009 and Korea's won resumed declines.

Brent's rout and angst over China's slowing economy has reverberated through commodity markets, which were already close to a 13-year low after last month's selloff. China imposed limits on equity short selling late Monday in its latest salvo aimed at quelling stock volatility.

Treasury yields slipped to the lowest level in two months on the tumble in energy prices, and as a pullback in US manufacturing boosted the case for keeping American rates lower for longer.

The Bloomberg Commodity Index slid 1.5 per cent to its lowest level since February 2002 on Monday, while the Bloomberg World Oil & Gas Index of 65 of the leading producers declined 2 per cent to its weakest position in six years. The Bloomberg World Mining Index of the biggest mining stocks fell 1.9 per cent to near its lowest since March 10, 2009.

Focus will turn later this week to the US monthly payrolls report, as the Federal Reserve waits for further signs of a pickup in the labor market before tightening monetary policy. The Institute for Supply Management's manufacturing index slid from a five-month high Monday, fueling concern that without stronger overseas markets and a rebound in business investment, acceleration in factory output may prove difficult to achieve.

"We're a little worried about global growth with commodities crashing down," said Randy Warren, who manages more than US$100 million at Warren Financial Service & Associates Inc. "The Fed's saying they're data dependent, but so far you have to look at the data and say, really? You're thinking about raising rates here? It doesn't make a lot of sense."