Oil to copper fall on shutdown as Asian stocks rise; gold drops: TOKYO, Oct 2 — Crude oil slid a fourth day and most industrial metals dropped amid concern the US government’s first shutdown in 17 years will sap demand for resources. Asian stocks rose while gold extended declines. West Texas Intermediate oil lost 0.5 per cent to US$101.54 (RM328) a barrel by 9:54 a.m. in Tokyo after closing at a three-month low yesterday. Copper and zinc dropped 0.2 per cent. The MSCI Asia Pacific Index added 0.2 per cent as shares from Japan to Australia climbed. Standard & Poor’s 500 Index futures were little changed after stocks jumped 0.8 per cent in New York. New Zealand’s currency weakened 0.3 per cent versus the dollar. Gold fell a third day while silver and palladium sank. The US has begun final extraordinary measures to avoid breaching its debt limit, Treasury Secretary Jacob J. Lew said today, after Congress’ inability to pass a budget caused the partial closure of government services. A shutdown or failure to raise the debt ceiling could have “very serious consequences” for the economy, Federal Reserve chairman Ben S. Bernanke said last month. Australia issues trade data today and the European Central Bank meets on monetary policy. “People see this is a short-term impact, but the key question is around the debt ceiling and that’s what people are looking forward to,” Chris Weston, chief market strategist at IG Markets Ltd in Melbourne, said by phone. “This isn’t helpful and it’s something that could’ve been avoided.” Brent crude futures also declined, falling 0.3 per cent to US$107.60 a barrel, while contracts on gasoline slipped a fourth day, losing 0.5 per cent. Crude Supplies A US government report today may show crude supplies rose last week as refineries idled units for seasonal maintenance, according to a Bloomberg survey of analysts. The American Petroleum Institute reported yesterday that inventories rose 4.55 million barrels last week. Copper for three-month delivery on the London Metal Exchange slid a second day, decreasing 0.2 per cent and headed for the lowest close since Sept. 24. Zinc and tin also fell 0.2 per cent, while nickel gained 0.2 per cent after two days of declines. The partial shutdown put as many as 800,000 federal employees out of work yesterday and halted some government services. An extended government stoppage may prevent the release of payrolls and jobs reports Oct 4, data watched by investors to help gauge the outlook for reductions in Fed asset purchases. Japan Stimulus Japan’s Topix Index snapped a three-day drop, gaining 0.4 per cent, while the yen was little changed at 98.03 per dollar after strengthening 0.3 per cent versus the greenback yesterday. Prime Minister Shinzo Abe ordered the first sales-tax increase since 1997 yesterday and a ¥5 trillion (RM164.96 billion) economic stimulus plan. While mainland Chinese markets are shut for the National Day holiday until Oct 8, trading in Hong Kong resumes today after a one-day break. The Bloomberg China-US Equity Index of the most-traded Chinese stocks in New York rallied 1.4 per cent, the most since Sept. 18. Australia’s S&P/ASX 200 Index gained 0.2 per cent before data projected to show the nation’s trade deficit narrowed to A$400 million (RM1.21 billion) in August from A$765 million in the previous month. New Zealand’s dollar, known as the kiwi, weakened 0.3 per cent to 82.52 US cents, falling a second day. The baht dropped 0.3 per cent to 31.240 per dollar, depreciating the first day this week. Avoiding Default Yields on 10-year Treasuries rose one basis point, or 0.01 percentage point, to 2.66 per cent, while Australian bonds fell a second day, pushing yields up four basis points to 3.99 per cent today. The US can still avoid a “catastrophic” default on its Treasury securities even if lawmakers fail to extend the nation’s debt limit, Pacific Investment Management Co’s Bill Gross, manager of the world’s biggest bond fund, said on Bloomberg TV yesterday. A US default would be “unimaginable” as it would trigger a “complex series of events worldwide” that would ripple through global financial markets, he said. The US won’t have enough money to pay all of its bills at some point between Oct 22 and Oct 31 without action by Congress, according to the Congressional Budget Office. The shutdown may pose a buying opportunity for stock investors, if history is any guide. The S&P 500 has risen 11 per cent on average in the 12 months following past government shutdowns, according to data compiled by Bloomberg on instances since 1976. That compares with an average return of 9 per cent over 12 months. In all the cases examined, the US equity benchmark was higher by the end of the next two years. Gold fell 0.4 per cent to US$1,283.11 an ounce, after sinking 3.1 per cent yesterday in the biggest one-day drop since Sept. 12. The precious metal declined on concern the shutdown will be shortlived, damping demand for gold as a haven asset, according to FuturePath Trading in Chicago. Palladium lost 0.6 per cent, falling a third day, while silver slid 0.5 per cent and platinum dropped 0.4 per cent. – Bloomberg dlvr.it/441dJD
Posted on: Wed, 02 Oct 2013 01:57:12 +0000
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