Asian stocks mixed amid US economic weakness
Friday, 20 November 2009
HONG KONG, Nov 19 (AP): Asian stock markets turned in a mixed performance Thursday as signs of weakness in the US economy aggravated worries about the strength of the global recovery.
It was the second day of middling trade in Asia and followed modest losses on Wall Street. Oil and gold prices were little changed, while the dollar fell against the yen and rose against the euro.
A recent rally that's lifted several Asian benchmarks to new highs this month lost more steam after an unexpected drop in US home building added to concerns a turnaround in the world's largest economy will be tepid at best.
Also weighing on investors in Asia was news Japan's Mitsubishi UFJ Financial Group, the country's biggest bank, was seeking to raise some $11.2 billion to shore up its balance sheet. It was more evidence the financial sector has still not fully healed more than a year after the crisis erupted.
Daniel McCormack, a strategist for Macquarie Securities in Hong Kong, said the growing economic gloom was dulling the effects of easy money worldwide that has helped inflate stock prices this year.
"On one hand you've got fundamentals working against you. On the other hand you've got liquidity supporting the markets," McCormack said. "The fundamentals are weakening, so I think things will drift sideways or lower."
In Japan, the Nikkei 225 stock average lost 134.10 points, or 1.4 per cent, to 9,542.70 and Hong Kong's Hang Seng fell 121.18 points, or 0.5 per cent, to 22,719.15.
China's Shanghai market was fractionally lower, India's key index lost 0.6 per cent and Taiwan's benchmark shed 0.1 per cent.
Elsewhere, South Korea's Kospi added 1.3 per cent to lead the region. Markets in Singapore, Indonesia and Australia also gained.
Overnight in the US, the Dow fell 11.11, or 0.1 per cent, to 10,426.31, after sliding as much as 77 points in morning trading.
The broader S&P 500 index slipped 0.52, or 0.1 per cent, to 1,109.80, while the Nasdaq fell 10.64, or 0.5 per cent, to 2,193.14.
Wall Street futures suggested a lower open Thursday. S&P futures were off 3.8, or 0.3 per cent, at 1,104.70 and Dow futures fell 34, or 0.3 per cent, to 10,370.
Meanwhile, market fears over possible capital curbs by Indonesia have eased after the central bank Wednesday played down the threat of immediate curbs, but investors sentiment was hurt by Brazil's move to curb capital inflows, traders said.
Brazil took another step Wednesday to try to contain the appreciation of its currency, unveiling a 1.5 per cent tax on certain trades involving American Depositary Receipts issued by Brazilian companies.
The Indonesian rupiah fell one per cent to 9,510 per dollar, prompting the central bank to intervene to support the unit, which remained the best performing currency in Asia.
The Indian rupee slipped 0.7 per cent to 46.51 per dollar as investors worried that authorities there may start looking at steps to temper surging capital inflows.
Taiwan has banned foreigners from investing in time deposits and South Korea announced measures Thursday aimed to tightening controls over currency liquidity to make the banking system less vulnerable to the capital flight.
But analysts believe most Asian countries will refrain from imposing harsh measures to stem hot money inflows that could distort policy signals, but market jitters could persist.
"Few things scare a foreign investor more than the thought that the rules could be changed on them after they have invested and they will be either unable to access their funds easily or will be suddenly driven out," said Westpac strategist Sean Callow.
"Given that it is so widely expected that USD/Asia will decline for many months and quarters to come, investors will wonder why would the flurry of restrictions and proposals end here?" he added.
It was the second day of middling trade in Asia and followed modest losses on Wall Street. Oil and gold prices were little changed, while the dollar fell against the yen and rose against the euro.
A recent rally that's lifted several Asian benchmarks to new highs this month lost more steam after an unexpected drop in US home building added to concerns a turnaround in the world's largest economy will be tepid at best.
Also weighing on investors in Asia was news Japan's Mitsubishi UFJ Financial Group, the country's biggest bank, was seeking to raise some $11.2 billion to shore up its balance sheet. It was more evidence the financial sector has still not fully healed more than a year after the crisis erupted.
Daniel McCormack, a strategist for Macquarie Securities in Hong Kong, said the growing economic gloom was dulling the effects of easy money worldwide that has helped inflate stock prices this year.
"On one hand you've got fundamentals working against you. On the other hand you've got liquidity supporting the markets," McCormack said. "The fundamentals are weakening, so I think things will drift sideways or lower."
In Japan, the Nikkei 225 stock average lost 134.10 points, or 1.4 per cent, to 9,542.70 and Hong Kong's Hang Seng fell 121.18 points, or 0.5 per cent, to 22,719.15.
China's Shanghai market was fractionally lower, India's key index lost 0.6 per cent and Taiwan's benchmark shed 0.1 per cent.
Elsewhere, South Korea's Kospi added 1.3 per cent to lead the region. Markets in Singapore, Indonesia and Australia also gained.
Overnight in the US, the Dow fell 11.11, or 0.1 per cent, to 10,426.31, after sliding as much as 77 points in morning trading.
The broader S&P 500 index slipped 0.52, or 0.1 per cent, to 1,109.80, while the Nasdaq fell 10.64, or 0.5 per cent, to 2,193.14.
Wall Street futures suggested a lower open Thursday. S&P futures were off 3.8, or 0.3 per cent, at 1,104.70 and Dow futures fell 34, or 0.3 per cent, to 10,370.
Meanwhile, market fears over possible capital curbs by Indonesia have eased after the central bank Wednesday played down the threat of immediate curbs, but investors sentiment was hurt by Brazil's move to curb capital inflows, traders said.
Brazil took another step Wednesday to try to contain the appreciation of its currency, unveiling a 1.5 per cent tax on certain trades involving American Depositary Receipts issued by Brazilian companies.
The Indonesian rupiah fell one per cent to 9,510 per dollar, prompting the central bank to intervene to support the unit, which remained the best performing currency in Asia.
The Indian rupee slipped 0.7 per cent to 46.51 per dollar as investors worried that authorities there may start looking at steps to temper surging capital inflows.
Taiwan has banned foreigners from investing in time deposits and South Korea announced measures Thursday aimed to tightening controls over currency liquidity to make the banking system less vulnerable to the capital flight.
But analysts believe most Asian countries will refrain from imposing harsh measures to stem hot money inflows that could distort policy signals, but market jitters could persist.
"Few things scare a foreign investor more than the thought that the rules could be changed on them after they have invested and they will be either unable to access their funds easily or will be suddenly driven out," said Westpac strategist Sean Callow.
"Given that it is so widely expected that USD/Asia will decline for many months and quarters to come, investors will wonder why would the flurry of restrictions and proposals end here?" he added.