Asian stocks follow Wall Street down on poor US homes data
Thursday, 24 June 2010
HONG KONG, June 23 (Agencies): Asian markets mostly slipped Wednesday as optimism over China's move to make its currency more flexible was replaced by concerns over the global economy caused by weak US housing data.
The strong gains Monday after Beijing's weekend announcement that it would allow the yuan to strengthen were almost wiped out due to the realisation that there would no major near-term changes to China's exchange controls.
Tokyo shed 1.87 per cent, or 189.19 points, to end at 9,923.70 and Sydney closed down 1.58 per cent, or 72.2 points, at 4,486.1.
Shanghai slipped 0.73 per cent, or 18.83 points, to 2,569.87.
However, Hong Kong staged a late rally to end up 0.18 per cent, or 37.53 points, at 20,856.61.
Wall Street was off 1.43 per cent after figures showed the property market in the world's biggest economy was struggling.
Existing-home sales fell 2.2 per cent in May after two consecutive rises, the National Association of Realtors said Tuesday, despite support from a government tax-incentive programme.
The report "suggests that there may be greater fundamental weakness in housing demand than anticipated", said Celia Chen at Moody's Economy.com.
"The optimism we saw a few days ago has been snuffed by that weak US home sales data," BBY senior institutional trader Peter Copeland told Dow Jones Newswires in Sydney.
The euro fell back as traders became more risk averse because of the falling stock markets.
The single currency bought $1.2263 and 110.93 yen in Tokyo afternoon trade, down from 1.2270 and 111.12 in New York late Tuesday. The dollar slipped to 90.49 yen from 90.54 yen.
On Tuesday US Treasury Secretary Timothy Geithner welcomed China's announcement but called for "vigorous implementation" of the move.
China's central bank let the yuan weaken Wednesday, setting the central parity rate -- the centre point of its allowed trading band -- at 6.8102 to the dollar, 0.18 per cent weaker than Tuesday's 6.7980.
In afternoon trading Wednesday, the yuan weakened slightly to 6.8124.
"The yuan-dollar rates have not moved much since the announcement. This confirmed anew that the Chinese authorities are aiming for an extremely gradual liberalisation of the currency system," Credit Suisse said in a report.
Eyes will now be on the end of a two-day policy meeting at the US Federal Reserve, where analysts will be looking for clues to the state of the economy.
Chinese shares were also hit after the government said it would scrap an export tax rebate on some commodities including metal products and chemicals, dealers said.
The removal of the rebate, from July 15, aims to reduce excess capacity in certain sectors by discouraging exports and comes after Beijing said it would ban capacity expansion plans in the steel industry as of the end of 2011.
The strong gains Monday after Beijing's weekend announcement that it would allow the yuan to strengthen were almost wiped out due to the realisation that there would no major near-term changes to China's exchange controls.
Tokyo shed 1.87 per cent, or 189.19 points, to end at 9,923.70 and Sydney closed down 1.58 per cent, or 72.2 points, at 4,486.1.
Shanghai slipped 0.73 per cent, or 18.83 points, to 2,569.87.
However, Hong Kong staged a late rally to end up 0.18 per cent, or 37.53 points, at 20,856.61.
Wall Street was off 1.43 per cent after figures showed the property market in the world's biggest economy was struggling.
Existing-home sales fell 2.2 per cent in May after two consecutive rises, the National Association of Realtors said Tuesday, despite support from a government tax-incentive programme.
The report "suggests that there may be greater fundamental weakness in housing demand than anticipated", said Celia Chen at Moody's Economy.com.
"The optimism we saw a few days ago has been snuffed by that weak US home sales data," BBY senior institutional trader Peter Copeland told Dow Jones Newswires in Sydney.
The euro fell back as traders became more risk averse because of the falling stock markets.
The single currency bought $1.2263 and 110.93 yen in Tokyo afternoon trade, down from 1.2270 and 111.12 in New York late Tuesday. The dollar slipped to 90.49 yen from 90.54 yen.
On Tuesday US Treasury Secretary Timothy Geithner welcomed China's announcement but called for "vigorous implementation" of the move.
China's central bank let the yuan weaken Wednesday, setting the central parity rate -- the centre point of its allowed trading band -- at 6.8102 to the dollar, 0.18 per cent weaker than Tuesday's 6.7980.
In afternoon trading Wednesday, the yuan weakened slightly to 6.8124.
"The yuan-dollar rates have not moved much since the announcement. This confirmed anew that the Chinese authorities are aiming for an extremely gradual liberalisation of the currency system," Credit Suisse said in a report.
Eyes will now be on the end of a two-day policy meeting at the US Federal Reserve, where analysts will be looking for clues to the state of the economy.
Chinese shares were also hit after the government said it would scrap an export tax rebate on some commodities including metal products and chemicals, dealers said.
The removal of the rebate, from July 15, aims to reduce excess capacity in certain sectors by discouraging exports and comes after Beijing said it would ban capacity expansion plans in the steel industry as of the end of 2011.