Bloomberg

(Bloomberg) -- Most Asian stocks retreated and copper declined as Chinese manufacturing data painted a picture of lackluster growth in the world’s second-largest economy. Australia’s dollar climbed to a two-week high and the nation’s bonds fell after GDP growth beat estimates.

The MSCI Asia Pacific Index snapped a five-day winning streak after U.S. equities declined in the last session. Copper fell by the most in almost three weeks, while gold extended Tuesday’s rebound from its lowest level since February. Crude oil traded near $49 a barrel ahead of an OPEC meeting on Thursday. Australia’s dollar was the best-performing major currency, while the euro weakened.

China’s purchasing managers’ indexes for May threw up few surprises and added to evidence that economic growth is stabilizing. Similar manufacturing gauges for the euro area and the U.S. are also due Wednesday, with the latter likely to be closely scrutinized following a surge in speculation that the Federal Reserve will raise interest rates in the next two months. Reports Tuesday showed U.S. consumer spending climbed in April by the most in almost seven years, while confidence fell. 

“U.S. data is incredibly important at the moment as the market is looking for anything that may upset an increasingly expected July rate hike,” Angus Nicholson, a markets analyst in Melbourne at IG Ltd., said in an e-mail to clients. “Last night did not provide that, with most coming in largely in line with what the market was expecting.”

China’s official manufacturing purchasing managers index for May was 50.1, just above the dividing line between improvement and deterioration, while a comparable indicator for Japan was the lowest in at least three years. U.S. figures are likely to show factory output barely expanded in May, based on the median estimate in a Bloomberg survey. Australia’s gross domestic product advanced 1.1 percent in the first quarter from the prior three months, beating the 0.8 percent gain forecast by economists. Switzerland and Brazil also have GDP reports due.

Stocks

The MSCI Asia Pacific Index was little changed as of 11:46 a.m. Tokyo time, after climbing 3.3 percent over the last five trading days. Benchmarks declined in Japan and Australia, while Hong Kong’s Hang Seng Index rose and the Shanghai Composite Index was little changed.

Softbank Group Corp. rose more than 2 percent in Tokyo to its high for the year after announcing plans to sell at least $7.9 billion of its stake in Alibaba Group Holding Ltd.

Futures on the S&P 500 were little changed, after losses among energy producers kept the U.S. benchmark in negative territory Tuesday.

Currencies

The Bloomberg Dollar Spot Index fell 0.1 percent from this quarter’s high. The odds of the Federal Reserve raising interest rates in June almost tripled last month to 34 percent, while the chance of a move by July roughly doubled to 54 percent, Fed Funds futures show. The euro weakened 0.1 percent versus the greenback before a European Central Bank policy meeting on Thursday.

Australia’s dollar strengthened 0.7 percent as the GDP report damped speculation the central bank will add to May’s interest-rate cut anytime soon. New Zealand’s currency rose 0.4 percent after a gauge of the nation’s terms of trade increased by more than economists forecast.

The yen was little changed, after sliding 3.8 percent in May. Japanese Prime Minister Shinzo Abe will present a “large” extra budget on Wednesday that includes plans to delay a sales-tax increase, according to the Yomiuri Shimbun newspaper, which didn’t cite anyone on the information.

Commodities

West Texas Intermediate crude fell 0.5 percent to $48.87 a barrel, after climbing for a fourth month in May. The Organization of Petroleum Exporting Countries is unlikely to reach an agreement limiting production at this week’s meeting in Vienna as the group sticks with Saudi Arabia’s strategy of squeezing out rivals, according to analysts surveyed by Bloomberg. The global surplus that has caused prices to slump since 2014 is correcting itself, the oil minister of the United Arab Emirates said Tuesday in the Austrian capital.

Copper declined 1.5 percent in London, while zinc and lead were down at least 0.9 percent. Gold rose 0.3 percent, after sliding more than 6 percent in May.

Bonds

Japan’s 20-year bonds fell, pushing their yield up by the most in three weeks to 0.265 percent, after the central bank scaled back purchases of super-long tenors in its debt-buying plan for this month. Notes due in 30 years and 40 years also declined.

Australian government debt due in a decade fell for a third day, pushing its yield three basis points higher to 2.34 percent. Similar-maturity U.S. Treasuries were little changed and yielded 1.85 percent.

(Corrects third paragraph to show PMI reports are due Wednesday.)

--With assistance from Nao Sano To contact the reporter on this story: Emma O'Brien in Wellington at eobrien6@bloomberg.net. To contact the editors responsible for this story: James Regan at jregan19@bloomberg.net, Jeff Sutherland

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