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By V. Phani Kumar, MarketWatch , Colin Ng and John Phillips
HONG KONG (MarketWatch) -– Asian stocks declined Wednesday as worries that Beijing may act soon to check inflation and a steep recent fall in several commodities made investors less willing to take on risk.
China’s Shanghai Composite Index CN:SHCOMP -2.26% tumbled 2.3% to 2,866.02.
Hong Kong’s Hang Seng Index HK:HANGSENG -1.35% gave up 1.4% to 23,315.24, Australia’s S&P/ASX 200 lost 0.9% to 4,740.10, and South Korea’s Kospi shed 0.9% to 2,180.64.
In afternoon trading, India’s Sensex XX:SENSEX -0.35% was little changed at 18,533.41. Japanese markets, shut for public holidays, will reopen Friday.
Steve Cheng, associate director at brokerage Shenyin Wanguo, said that in addition to fears that Beijing may control the money supply and lift interest rates, concern about the approaching end to the U.S. Federal Reserve’s $600 billion asset- purchase program in June was also weighing on commodities.
“Interest-rate increases are negative for the equity market. In the short term, the expiry [of the Fed’s asset purchases] will also ease the fear of inflation, so investors may not buy commodities” as a protection against inflation,” Cheng said.
Over the past few months, the Fed’s asset-purchase program has been cited as a reason for easy global liquidity conditions and as a force behind a sharp rally in commodities.
Dow Jones Industrial Average DJIA +0.0012% futures were up 25 points in screen trade.
Resource-sector stocks were among those hit after prices of several commodities declined overnight and stretched those losses well into the Asian day.
Jiangxi Copper Co. JIXAY -4.15% CN:600362 -5.95% slumped 6% and PetroChina Co.PTR -0.76% CN:601857 -2.22% gave up 2.2% in Shanghai, in addition to dropping 1.9% and 1.5%, respectively, in Hong Kong.
Woodside Petroleum Ltd. AU:WPL -2.51% WOPEY -1.33% sank 2.5% and Rio Tinto Ltd.RIO -0.84% AU:RIO -1.50% shed 1.5% in Sydney.
The weak sentiment toward commodities also prevailed after The Wall Street Journal reported, citing people familiar with the matter, as saying that several big hedge-fund managers, including George Soros, and other leading investment firms have been selling gold and silver.
In commodities trading, spot gold fell as low as $1,530.60, and was more recently at $1,536.50, down 60 cents from its New York settlement.
Spot silver, meanwhile, was being bid at $42.12 an ounce, rising 46 cents after heavy losses earlier this week.
June Nymex crude-oil futures were down 2 cents at $111.03 a barrel on Globex, after tumbling 2.2% overnight.
source: marketwatch.com
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