Declining metal prices bring Asian mining shares down
A slide in commodities prices pressured resources shares in Australia and Hong Kong on Tuesday, while investors elsewhere in the region tried to navigate global central banks' split approaches to monetary policy.
Expectations are firming that the Federal Reserve will raise interest rates at its December meeting while European Central Bank has hinted it stands prepared to boost stimulus next month.
The Fed's recent rhetoric has strengthened the U.S. dollar which, coupled with slackening demand, helped push base metals from copper to aluminum and nickel to multiyear lows on Tuesday.
Australia's S&P/ ASX 200 fell 1% to finish at the day's low of 5226.40 and the materials sector fell 1.8%. Australian shares receded from their highest level in about a month, reached Monday.
Hong Kong's Hang Seng Index slipped 0.4%, as its materials sector lost 1%.
Meanwhile, Japan's Nikkei Stock Average finished up 0.2% at 19924.89, its highest level since late August. South Korea's Kospi gained 0.6%. The Shanghai Composite Index rose 0.2%, even as authorities scrapped brokerages' selling restrictions, put in place in the throes of the summer selloff.
The U.S. dollar has strengthened as investors wager that the Fed will raise interest rates for the first time since June 2006 at its December policy meeting. The euro hit a seven-month low Monday in Asia at $1.0591 but strengthened slightly to $1.0634 on Tuesday.
On Tuesday, several base metals traded near multiyear lows as a stronger dollar adds to worries about weaker global demand. Many metals are priced in dollars and become more expensive to global buyers as it strengthens.
Three-month copper futures on the London Metal Exchange last traded at $4,511 a ton, from the opening price of $4,480 per ton, after sinking to a 6 1/2-year low on Monday.
Aluminum last traded at $1,456 per ton, higher than the opening price of $1,438.50 a ton. The metal also slipped to a 6 1/2 -year low on Monday.
On Tuesday, nickel hit a fresh 12-year low at $8,145 per before rising ton, to $ $8,400 per ton.
Among mining stocks, BHP Billiton Ltd. and Rio Tinto Ltd. fell 1.8% and 1.5%, respectively. South32 Ltd. fell 2.5% and iron-ore producer Fortescue Metals Group Ltd. shed 3.2%.
In Singapore, shares of commodities trader Noble Group fell 1.2% after Standard & Poor's put the firm's investment-grade rating on a negative credit watch. The move means the rating agency could downgrade the company in the next three months. By comparison, Singapore's FTSE Strait Times Index rose 0.9%.
In China, authorities are allowing brokerages to freely buy and sell shares in daily proprietary trading, according to an internal directive seen by The Wall Street Journal. Since early July, regulators required brokerages to buy more stocks than they sold, as part of an effort to stem a stock-market crash. The measure signals officials' growing confidence in the market's recovery, which has risen 24% since its low in August.
Still, lingering worries that a wave of initial public offerings before the year-end limited China's gains. A rash of IPOs could trigger volatility as investors free up holdings to invest in new share listings. Some 28 companies are expected to list before the end of 2015, after authorities froze new listings during the summer stock selloff.
"Investors have little incentive to raise positions, especially ahead of the [imminent] launch of 10 initial public offerings, which may lock up around 1 trillion yuan ($156 billion)," said Zhou Xu, an analyst at Nanjing Securities, of expectations for the first batch of listings.
Brent crude oil, the global benchmark, rose 1% to $45.28 a barrel. In the U.S., crude-oil futures lost 0.4% overnight to $41.75 a barrel.
Gold prices rose 0.5% at $1,071.80 a troy ounce.
