Yen Gains as Stocks Fall With Commodities; Bonds Drop

By Glenys Sim 

The yen strengthened and Asian shares retreated after a third quarterly advance as economic data from Japan, China and South Korea missed estimates. Commodities declined, while U.S. equity-index futures erased losses and Treasuries retreated.

The yen appreciated 0.5 percent against the dollar at 7:50 a.m. in New York, after declining for a sixth month in March, the longest losing streak in 12 years. The MSCI Asia Pacific Index sank 1.2 percent. Standard & Poor’s 500 Index (SPXL1) futures added less than 0.1 percent after reaching a record last week. The yield on 10-year Treasuries rose three basis points. The S&P GSCI Index of 24 commodities fell 0.6 percent, with copper and oil sliding in New York. Markets in Australia, New Zealand, Hong Kong and most of Europe are closed. The Bank of Japan’s Tankan index of confidence among large manufacturers improved less than estimated in March, South Korean exports rose 0.4 percent, missing the 1.8 percent gain predicted in a Bloomberg survey, and a pickup in China’s factory output trailed forecasts. Shares retreated today after global stocks beat all other investments for a second quarter in the first three months of the year, the first back-to-back outperformance since 2009.

“We need to see the economy showing signs of improvement and inflation numbers picking up in Japan,” Vasu Menon, head of content and research at OCBC Bank Ltd. in Singapore, said on Bloomberg Television’s On the Move with Rishaad Salamat. “China is recovering, but the recovery is going to be a modest one.”

Yen Gains

The yen strengthened against all of its 16 major peers, advancing 0.5 percent versus the euro. South Korea’s won slipped 0.3 percent against the dollar, after touching a one-week low of 1,116.88.

The euro declined against most of its main counterparts. It was little changed at $1.2818, after depreciating 1.8 percent last month.

Unemployment in the euro area probably climbed to an all- time high of 12 percent in February, economists estimated before a report tomorrow. European Central Bank officials meet this week to set interest rates.

The Stoxx Europe 600 Index advanced 1.3 percent in March, extending this year’s gain to 5 percent, even amid concernEurope’s debt crisis will worsen as leaders struggled to push through a bailout for Cyprus.

“Structural issues in the euro zone are far from over, and from time to time these issues will come up to the surface and affect market sentiment,” Kelvin Tay, chief investment officer for the southern Asia-Pacific region at UBS AG’s wealth management unit, told Bloomberg Television. “We need continually positive numbers to come out from the U.S. economy to show that the recovery in the U.S. is sustainable.”

S&P Record

The S&P 500 Index climbed to a record on March 28, taking the quarter’s advance to 10 percent, as data bolstered confidence in the world’s largest economy. U.S. markets were closed on March 29.

A report today will probably show the Institute for Supply Management factory index was 54 in March, little changed from February’s 54.2, which was the highest since June 2011, economists estimated before data today.

About three stocks fell for every one that rose on the MSCI Asian gauge, which has rallied in the past five months on signs the U.S. economy is recovering, gaining 4.8 percent last quarter.

Japan’s Topix Index slid 3.3 percent, the most since March 2011, and the Nikkei 225 Stock Average declined 2.1 percent. The Tankan rose to minus 8 in March from minus 12 in December, the Bank of Japan (8301) said today. The median estimate in a Bloomberg News survey was minus 7.

Emerging Markets

The MSCI Emerging Markets Index slid 0.2 percent, extending last quarter’s 1.9 percent decline. South Korea’s Kospi index slipped 0.4 percent. The Shanghai Composite Index fell 0.1 percent. The official Purchasing Managers’ Index was at an 11- month high of 50.9 in March, data showed today. That compares with 50.1 in February and the 51.2 median estimate in a Bloomberg News survey.

Copper futures in New York, which lost 6.9 percent last quarter, slid 1.4 percent. The London Metal Exchange is closed today. China is the largest user of industrial metals. U.S. crude oil slipped 0.5 percent to $96.74 a barrel.

Corn led declines in agricultural commodities after the U.S. government said inventories were bigger than forecast and acreage may climb to the highest since 1936. Corn in Chicagoslumped 5.2 percent to $6.59 a bushel.

To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net

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