MSCI MSCI Inc

By Chao Deng 

Increasing odds of a December rate increase in the U.S. is pushing Asian shares lower this week, overshadowing global central banks' stimulus cues, which drove a rebound in the region just last month.

The MSCI AC Asia Pacific Index is on track to slip 0.1% this week through its close Thursday, and is up only 2.3% so far this month. It rallied 8.1% in October.

Individual stock benchmarks in Australia, South Korea and Hong Kong all lost more than 2% this week. The Nikkei Stock Average, however, gained 1.7% and was at its highest in 2 1/2 months earlier in the week as the Japanese yen reached its weakest level since late August, a boon for the country's exporters.

On Friday, most markets in the region fell sharply, with the Hang Seng Index down 2.2%, amid sliding oil prices and jitters about the prospect of higher borrowing costs.

According to a recent poll of business and academic economists by The Wall Street Journal, about 92% said they expect the Fed to raise its benchmark federal-funds rate at its Dec. 15-16 policy meeting, a sharp increase since immediately after the October meeting.

On Thursday, comments from Fed officials--including Chairwoman Janet Yellen and regional Fed presidents William Dudley, Charles Evans and Jeffrey Lacker--provided little clarity on the central bank's stance.

"People are on edge," said Andrew Sullivan, managing director at Haitong Securities. Investors "aren't going to change their positions" substantially before December.

The renewed focus on U.S. rates is a switch from recent weeks when hopes for easing measures by central banks in Europe, Japan and China buoyed shares.

Expectations of higher rates have strengthened the dollar, one of the major factors pressuring commodities prices recently. Many materials are priced in dollars, so a stronger currency makes them more expensive to global buyers. China's slackening demand for industrial materials has also sent commodities prices back to multiyear lows.

This week, falling commodities prices pressured Australia's S&P/ASX 200. The index has shed the bulk of its 6% bounce from late September to late October.

The benchmark is off 3.6% month-to-date, with the heft of those losses this week. Australia's shares fell 1.5% on Friday, dragged by its energy sector, after crude oil tumbled overnight.

On Thursday, three-month copper prices hit a fresh six-year low of $4,800 per ton and gold settled at the lowest price in more than five years.

Copper last traded at $4,825.50 per ton, up from their opening price of $4,823 a ton. Gold prices were last flat at $1,081.80 an ounce from late in Asia Thursday.

A stronger U.S. dollar pushed down the Japanese yen earlier in the week to as weak as Yen123.14 to the dollar. The yen was last at Yen122.77 to one U.S. dollar, weakening by 0.2% from its late level yesterday.

An imminent move by the Fed is sidelining investors in Hong Kong, too, analysts say.

The Hang Seng Index lost 2.1% this week, while the Hang Seng China Enterprises Index was off 3.6%.

Trading volumes in Hong Kong, at a daily average of 75 billion Hong Kong dollars ($9. 68 billion), are down roughly a third from a peak of HK$292 billion in April.

Meanwhile, some analysts say that Chinese firms listed in Hong Kong have gotten increasingly attractive. They now trade near their cheapest in two months compared with their mainland counterparts.

A-shares or yuan-denominated mainland shares are roughly 40% more expensive than H-shares or Hong Kong-listed Chinese firms, compared with 21% in late October, a recent low.

On Friday, shares of BHP Billiton Ltd., Australia's largest mining company, were down 1.8%, after the company said it was in a dispute with the tax office in the Australian state of Queensland over coal royalty payments.

Shares of Singapore-listed Noble Group Ltd. fell 10%, after the commodities trader's chief financial officer resigned on Thursday.

The company also said its net profit slid 84% in the third quarter, following nine months of criticism of the company's financial reporting. Shares are off 60% since the beginning of the year.

Write to Chao Deng at Chao.Deng@wsj.com

(END) Dow Jones Newswires

November 13, 2015 03:46 ET (08:46 GMT)

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