Asian Stocks Pare Monthly Gain as Fed Fuels Tapering Bets

Asian stocks fell, trimming the best two-month rally for the regional benchmark gauge since the start of 2012, after the Federal Reserve fueled bets it may start paring stimulus sooner than previously forecast.

Alacer Gold Corp. sank 3.5 percent in Sydney as the price of the precious metal declined. Honda Motor Co. (7267) lost 1.8 percent after Japan’s third-largest carmaker reported second-quarter profit that missed analysts’ estimates amid slowing motorcycle sales in Southeast Asia. National Australia Bank Ltd. (NAB) retreated 2.3 percent as expenses climbed at the country’s largest lender by assets.

The MSCI Asia Pacific Index dropped 0.4 percent to 142.70 as of 9:37 a.m. in Hong Kong, with eight of the 10 industry groups on the measure retreating. While the Fed said fiscal policy is “restraining economic growth,” policy makers see signs of “underlying strength.”

“Tapering is inevitable, and that’s what you read from last night’s statement,” said Donald Williams, Sydney-based chief investment officer at Platypus Asset Management Ltd., which oversees about A$1.6 billion ($1.5 billion). “The timing is still unsure, but the market is going to price in the likelihood of tapering in the next six months at the latest.”

The odds of the Fed starting to taper its stimulus in January rose to 45 percent from 25 percent before yesterday’s statement, Citigroup Inc. said. Economists surveyed by Bloomberg Oct. 17-18 predicted the Fed would begin paring stimulus in March.

(Source: Bloomberg)