The Stoxx Europe 600 Index slipped 0.4 percent by 8:13 a.m. in London, extending yesterday&rsquo s 1.3 percent drop. The MSCI Asia Pacific Index slipped 1 percent. Standard & Poor&rsquo s 500 Index futures (DJA) added 0.1 percent following a 2 percent tumble that wiped out the U.S. gauge&rsquo s July gain. The dollar strengthened against the Korean won and is on track for the longest streak of gains versus the yen since 2001. U.S. oil dropped a fifth day after commodities capped their worst month since May 2012.

&ldquo Investors have been looking for an excuse to sell,&rdquo Angus Gluskie, who helps oversee more than $550 million at White Funds Management in Sydney, said by phone. &ldquo We&rsquo ve got a range of convenient reasons for investors to take some money off the table. The geopolitical risks have been rising and data flow in the U.S. is suggesting that the Fed may have to raise interest rates sooner rather than later. The Argentine issue is another piece of adverse news flow.&rdquo

Investors are looking to today&rsquo s U.S. payrolls data as they speculate over the timeline for Federal Reserve interest-rate increases after faster-than-estimated economic and wage growth. The International Swaps & Derivatives Association will meet at 11 a.m. New York time to determine whether credit-default swaps linked to Argentina have been triggered by a failure-to-pay credit event. Chinese manufacturing expanded in July, according to two gauges today, with a private measure falling short of estimates.

Asian Gauges

The Stoxx 600 dropped 1.7 percent in July, the second-biggest retreat this year. Construction and materials firms led today&rsquo s retreat, with just four of the 19 industry groups on the measure climbing.

Vinci SA plunged more than 8 percent after Europe&rsquo s biggest builder, reported first-half earnings that missed analysts&rsquo estimates and cut its 2014 sales forecast amid falling demand in France and in U.K. construction.

Iliad SA, the French mobile-phone carrier founded by billionaire Xavier Niel, plunged 12 percent after it offered $15 billion in cash for a controlling stake in T-Mobile US Inc., rivaling a proposal from Sprint Corp. Arkema SA fell in Paris trading after the French chemicals maker shifted back the deadline for achieving mid-term targets for profitability and sales by a year after disappointing results.

Europe&rsquo s equity benchmark trades at 15.2 times estimated earnings compared with 16.2 for the S& P 500 and 13.5 times projected profit for the MSCI Asia Pacific Index. Yesterday&rsquo s selloff erased this year&rsquo s gains in the Dow (INDU) Jones Industrial Average.

Hang Seng

The Asia-Pacific gauge fell 0.4 percent yesterday, still recording a 2.1 percent increase in July, its third monthly climb.

The Hang Seng Index fell 0.8 percent after jumping 6.8 percent in July, the most since September 2012. The Hang Seng China Enterprises Index retreated 1.2 percent today after a 7.7 percent surge in July saw it close at the highest level since Dec. 10 yesterday.

China&rsquo s official manufacturing purchasing managers&rsquo index climbed to 51.7 for July, up from 51 in June and exceeding the 51.4 median estimate of economists surveyed by Bloomberg. The final reading on the HSBC Holdings Plc/Markit Economics China factory PMI was 51.7, missing estimates for it to match the preliminary reading of 52, an 18-month high.

Japan, Korea

The Topix index in Japan fell 0.6 percent in a second day of declines. The Kospi gauge in Seoul slipped 0.2 percent after reaching the highest level since August 2011 earlier this week. Samsung Electronics Co. fell 3.8 percent and capping its biggest two-day retreat since August 2012 after a disappointing earnings report.

In Taiwan, China Petrochemical Development Corp. (1314) shares tumbled 6.9 percent after a gas explosion in the southern city of Kaohsiung left 24 people dead and hundreds injured.

The Dow lost 317.06 points to 16,563.30, leaving it down 0.1 percent in 2014. The index had climbed 1.8 percent this year as of yesterday. Futures on the Dow rose 0.3 percent today, snapping a three-day drop.

World Index

The MSCI&rsquo s All-Country World Index dropped 0.3 percent after plunging 1.5 percent yesterday. That drop was only the fifth time this year the gauge lost more than 1 percent. The S& P 500 (SPX), which is still up 4.5 percent this year and reached a record July 24, has gone without a 10 percent correction since 2011. It trades at 17.6 times the reported earnings of its companies, near the highest level since 2010.

&ldquo The market is at a point where it&rsquo s vulnerable to some sort of correction,&rdquo Chris Green, director of economics and strategy in Auckland at First NZ Capital Ltd., said by phone. &ldquo It&rsquo s a reflection of the fact that investors&rsquo risk aversion had been at muted levels and the market had got itself pretty extended.&rdquo

The selloff started on the eve of the U.S. Labor Department&rsquo s employment report, which economists predict will show that companies added 230,000 workers to nonfarm payrolls in July. A measure of wages, the employment cost index, rose 0.7 percent in the second quarter, faster than predicted, data yesterday showed.

Rupiah NDF

The won declined a second day to 1,037.1 per dollar, while Malaysia&rsquo s ringgit dropped 0.5 percent to 3.212 a dollar. One-month non-deliverable forwards on Indonesia&rsquo s rupiah fell as much as 1.1 percent to 11,955 per dollar today, the lowest level since July 4, data compiled by Bloomberg show.

The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 major peers, was little changed after rising for a sixth day yesterday, closing at the highest level since Feb. 26. The gauge jumped 1.9 percent in July, the best performance since May last year.

The dollar gained against all but one of its 16 counterparts in July, with the Singaporean dollar adding 0.1 percent. The yen was down 1.5 percent last month and lost 0.2 percent to 102.96 per dollar today, headed for its 11th straight weakening day today, the worst run of losses since 2001.

The cost of insuring corporate and sovereign bonds against non-payment in the Asia-Pacific region increased. The Markit iTraxx Asia index jumped four basis points to 108.5 as of 8:37 a.m. in Singapore, according to Australia & New Zealand Banking Group Ltd. prices. That&rsquo s poised for the biggest daily increase since April 3 and highest close since May 29, according to data provider CMA.

Default Deadline

Argentina missed a deadline July 30 to pay $539 million in interest after two full days of negotiations in New York failed to produce an accord with creditors from its last default in 2001. A U.S. judge ruled that the payment couldn&rsquo t be made unless those investors, a group of hedge funds led by Elliott Management Corp., got the $1.5 billion they claimed.

Argentine notes due in 2033 tumbled 6.82 cents to 88.75 cents on the dollar yesterday and the nation&rsquo s Merval stock index fell from a record, plunging 9 percent. Moody&rsquo s today affirmed Argentina&rsquo s Caa1 issuer rating, while placing the long-term issuer rating was placed on negative outlook. The company said it considers non-payment of debt obligations to creditors after a grace period has expired a default.

The ISDA committee will meet at 11 a.m. New York time and a decision that an event has occurred would lead to payouts on all contracts, according to ISDA&rsquo s rules.

A total of 2,652 contracts insuring a net $1 billion of Argentina&rsquo s debt were outstanding as of July 25, according to the Depository Trust & Clearing Corp.

&ldquo When events like this happen, investors try to figure out whether this is an isolated occurrence or the first domino in a chain,&rdquo Lawrence Creatura, who helps oversee $350 billion as a fund manager at Pittsburgh-based Federated Investors Inc., said by phone. &ldquo There is always a bit of uncertainty as to which we have on our hands.&rdquo

 

[HONG KONG] Asian markets ended their recent rally Friday after the Dow posted its biggest single sell-off since February on weak eurozone data and as news of Argentina' s debt default and a rise in US jobless claims shook the market.

Traders said there was no single catalyst for the dip, and also pointed to geopolitical concerns over the situation in Gaza and Ukraine as having an effect.

Tokyo was off 0.33 per cent by the break, Hong Kong fell 0.66 per cent, Sydney slumped 1.2 per cent, Shanghai edged down 0.08 per cent, and Seoul lost 0.20 per cent.

China' s official purchasing managers index hit 51.7 last month, the government said Friday, up from 51.0 in June and its best showing since 53.3 in April of 2012 Australia, Japan, South Korea, Indonesia and India are also expected to release their PMI figures, which are a leading indicator of overall economic activity.

 

" There is no shortage of liquidity now, which is an issue, because everyone is waiting for that 10-15 per cent decline in property prices," said Song Seng Wun, executive director and regional economist at CIMB Research, noting that a lot of liquidity in Asia is now waiting on the sidelines.

This is keeping the government from lifting its cooling measures on the property market before the US Federal Reserve raises interest rates. The Fed hike, however, may come sooner than expected given the recent positive economic data in the US, Mr Song predicted.

For now, developers will have to contend with the double whammy of falling residential prices and rising land costs as a result of a reduction of residential land supply in the second half of the Government Land Sales programme.

Also speaking at the seminar, Chua Yang Liang, head of research for South-east Asia and Singapore at JLL, noted that the government has historically intervened in periods when the property price movement deviates from economic growth by a certain margin. He is expecting the government to step in when the gap between the change in the property price index and GDP growth is wider than two percentage points and deems a 10-15 per cent price correction by 2016 " an acceptable level" .

In the absence of any further government intervention, home sale volumes are likely to stay tepid and this market adjustment could be prolonged, Dr Chua said.

Residential prices started to correct only in the third quarter of 2013 after the total debt servicing ratio was introduced, as earlier cooling measures had short-lived impact on residential sales by developers.

" In this environment," said Mr Song, " unless you see a huge external shock that triggers a crisis of confidence, that triggers cashflow problems for businesses and households, the government is quite happy to keep the total debt servicing ratio in place. I don' t think that is going to disappear."

" What will happen is that it may be tweaked. And how much it may be tweaked will depend on whether the economy is still generating jobs. Broadly speaking, we are seeing fundamentals still supporting the property market," he added, referring to rising wages and the full employment situation in Singapore.

Meanwhile, the office sector is holding up well with healthy business formations even though businesses are facing a tight labour market and wage inflation, property consultants at the seminar observed.

Toby Dodd, managing director at Cushman & Wakefield, said at the seminar that he expects office rents to rise in 2014 and 2015 and occupancy rates to improve on the back of tight supply of prime grade space in the next two years. He forecast that net demand would exceed 1.5 million square feet by end-2016, underpinned by economic growth and a positive business outlook. While he expressed optimism on the plan to decentralise commercial activities to regional centres outside the city centre, he stressed that it would require the right price offerings and discounts to draw tenants from the CBD to these new commercial clusters.

 

AT yesterday' s close, these were the main market statistics - the Straits Times Index fell 2.43 points to 3,353.65, volume was a low 1.8 billion units worth S$988 million and there were 145 rises versus 294 falls, excluding warrants.

Optimists might choose to interpret these figures in isolation, in which case the conclusion might be a market in " wait-and-see" mode, possibly because of this week' s Federal Open Market Committee meeting.

Pessimists, on the other hand, might opt for a more pragmatic interpretation, namely, that when placed in the context of daily figures from the past six months, yesterday' s numbers suggest a market struggling for ideas and one that is looking for inspiration from any source but finding none.

Rotational playing of the second line has been an outstanding feature of trading this year, but although it was evident once again yesterday, it was also very apparent in the blue- chip banking sector as OCBC took over as the sector' s main play.

 

THE banks and Jardine group have played a pivotal role in propelling the Straits Times Index to new 14-month highs in recent weeks and so it came as no surprise that the same counters were largely responsible for the index recording a 5.91-point rise to 3,356.08 yesterday.

Also not surprising was that volume done was a low 1.4 billion units worth S$985 million, or that the advance-decline score of 194-253 excluding warrants was weaker than the index' s reading might suggest since narrow index support amid thin volume has been the pattern for many months now.

As a result, there was also no surprise among retail dealers at how trading went - observations being identical to those made at any time over the past 3-4 months. " Our market is a few blue chips and the same old penny stock names," said one weary dealer.

United Overseas Bank (UOB) has been in the limelight for many weeks now, and has even been queried by Singapore Exchange (SGX) for reasons for the unusual activity in its shares. So it was again yesterday that a 30-cent rise in UOB to S$23.98 with three million traded added 4.2 points to the STI, almost all of its final gain. Rises in Jardine Matheson and Jardine Cycle & Carriage added a further 2.5 points.