By Carla Mozee, MarketWatch
LOS ANGELES (MarketWatch) -- Asian stocks pulled lower Monday,
weighed by an unexpected drop in exports from China and the threat
of default by the world's largest economy later this week.
Most regional benchmarks struggled in the wake of data out
Saturday showing exports from China fell 0.3% in September from the
year-earlier period, according to China's General Administration of
Customs, marking the weakest performance in three months.
Private-sector economists had been looking for an increase of 5.5%,
according to a Wall Street Journal survey.
Australia's S&P/ASX 200 fell 0.4%. China is Australia's
largest trading partner which makes Australian assets particularly
sensitive to Chinese data. Taiwan's Taiex fell 0.9%, and
Singapore's Straits Times Index shed 0.5%.
Meanwhile, reports cited no sign of progress toward reaching a
deal that would end the partial U.S. government shutdown and steer
the nation away from a potential default on its debt
obligations.
Senate Republicans and Democrats met Sunday in a bid to broker a
budget deal as the Republican-led House and President Barack Obama
remained deadlocked. The Republicans want compromises on Obama's
health-care law, while Democrats have called for "clean" budget and
debt-ceiling resolutions that have no cutbacks in funding for the
health-care program. The administration puts the deadline for
Congress to authorize the Treasury to pay its bills at Oct. 17.
But stocks in mainland China bucked the losing trend, with the
Shanghai Composite higher by 0.4% at 2,237.77. The market held to
higher ground after Chinese government data showed consumer prices
in September rose faster than anticipated, while wholesale prices
extended their long string of declines.
South Korea's Kospi fell 0.2%.
Equity trading in Japan and Hong Kong was closed for
holidays.
In Australia, shares of gold producer Newcrest Mining Ltd.
(NCMGF) dropped 3.8% after gold futures late last week fell below
$1,300 an ounce as a possible breakthrough for the U.S. budget
impasse hurt assets viewed as relatively safe.
Shares of Oz Minerals Ltd. (OZMLF) fell 9.3% after the company
lowered its full-year copper-production outlook earlier Monday.
"The 'deal or no deal' game being played in Washington, D.C.,
continues to wear down the markets," and sentiment is "definitely
bearish," Invast Financial Services senior technical strategist
Vito Henjoto wrote Sunday.
He said that with the U.S. dollar under more pressure the longer
the shutdown continues, the Japanese yen (USDJPY) is gaining more
ground as a safe haven. The dollar bought 98.29 yen on Monday, less
than Yen98.48 late Friday. The dollar had gained Friday after
Washington lawmakers said they would keep talking throughout the
weekend.
In Shanghai, investors considered a report that China plans to
allow insurers to invest a larger share of their portfolios in
stocks and real estate. The Friday report from the China Securities
Journal said investment in equities may be allowed to rise to 30%
from 25% of total assets, and to 30% from 20% for real estate and
infrastructure.
China trade data
China's trade report logged a decline in shipments to Europe and
South Korea, and demand growth slowed sharply to Southeast Asia.
Shipments to the U.S. rose 4.2% in September, but that was slower
than the 6.1% increase in August.
Barclays analysts said the 0.3% decline in September exports was
likely exaggerated by two technical factors: a high base from the
"dubious" trade reporting that started last June, and the two fewer
working days in September in Hong Kong, South Korea and Taiwan --
which account for 20% of China's exports -- compared with a year
ago. Barclays said that with adjustments for the two factors, it
estimates exports rose roughly 3.5% year-over-year in September.
Still, the "outlook for external demand in [the fourth quarter] is
murky, given the uncertainties stemming from U.S. fiscal and
monetary policies," wrote Barclays chief China economist Jian
Chang.
Imports to China, meanwhile, rose 7.4%, beating expectations for
a 7% increase.
"The September trade report painted a mixed picture of soft
external demand and resilient domestic demand," said Société
Générale economist Yao Wei in a note. "Together with the less
upbeat PMI surveys, the chance of large upside surprises from other
September activity data, including industrial production and
fixed-asset investment, seems to be limited." The other Chinese
data she mentioned -- as well as third-quarter gross domestic
product -- were due out Friday.
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