Asian Markets Feels European Pain

Taiex lead losers pack with 4% fall, Hang Seng, Kospi follows with 3% loss

Stock markets in Asian region fell further to near five month low on Friday, 5 February 2010, as investors dumped riskier assets after rising sovereign debt problems in the euro zone and poor jobs data sent US and European stocks tumbling.

On Wall Street, stocks nosedived and closed near their lows Thursday, pressured by global debt fears and labor market uncertainty ahead of Friday's government jobs report. The Dow Jones Industrial Average plunged 268 points, or 2.6%, to 10,002. The S&P 500 lost 34 points, or 3.1%, to 1063 and the Nasdaq stumbled by 65 points, or 3%, at 2125.

On the economic front, the Labor Department said initial jobless claims rose by 8,000 to 480,000 in the final week of January. In other economic news, the Labor Department also said U.S. nonfarm productivity in the fourth quarter rose at a swifter-than-expected pace of 6.2%. Unit labor costs, meanwhile, fell 4.4% in the fourth quarter. The figure, which is watched as a measure of inflation and profit margins, was expected to decline only 2.5%. In separate release from the Census Bureau showed the factory orders growing at 1% in December.

In the commodity market, crude oil traded near $73 a barrel after falling yesterday as an increase in U.S. jobless claims raised concern fuel consumption may be slow to recover and a stronger dollar reduced demand for commodities.

Crude oil for March delivery was at $73.46 a barrel, up 32 cents, in electronic trading on the New York Mercantile Exchange at 3:18 p.m. Singapore time. It earlier fell as much as 33 cents, or 0.5 percent, to $72.81 a barrel.

Brent oil for March settlement was at $72.26 a barrel, up 13 cents, on the London-based ICE Futures Europe exchange at 3:19 p.m. Singapore time. It earlier fell as much as 50 cents, or 0.7 percent, to $71.63 a barrel. The contract declined $3.79, or 5 percent, to settle at $72.13 a barrel yesterday.

Gold fell to a three-month low in London as the dollar’s rally cut bullion’s appeal as an alternative investment. Gold for immediate delivery fell as much as $14.13, or 1.3 percent, to $1,049.57 an ounce and traded at $1,056.22 at 9:42 a.m. London time.

In the currency market, the US dollar rose in Asian trading Friday ahead of a key U.S. jobs report later in the session, getting a lift from safety-seeking investors as Asian equities markets sold off.

The Japanese yen softened slightly in afternoon trade against its major counterparts after surging up yesterday on growing concerns over the global economy. The unexpected rise in U.S. jobless benefit claims and growing fears about the sovereign debt crisis in Greece and other parts of Europe pushed the yen up sharply yesterday. Japan’s currency yen was quoted at 89.49 against the greenback.

The Hong Kong dollar was trading at HK$ 7.7718 against the dollar. Actually the Hong Kong dollar is pegged at HK$ 7.8 to the U.S. dollar but can trade between HK$ 7.75 and HK$7.85 to the U.S. dollar.

In Sydney trades, the Aussie dollar fell to multi-month lows today as investors fretted about sovereign debt problems in Europe amid concerns strained budgets could force fiscal retrenchment in many developed nations. The Aussie hit a 4-month low at $0.8639, shedding two US cents overnight as risk appetite collapsed on worries about the health of the global economy. At the local close, the dollar was buying $0.867 US cents. The 2.1% drop against the US dollar was the biggest daily slide in over seven months.

In Wellington trades, the New Zealand dollar had a volatile session reacting to offshore markets after taking a pounding yesterday from worse-than-expected unemployment statistics. Investors were increasingly worried about the levels of sovereign, or government debt, in Europe. They were seen dumping shares and non-US dollar currencies. Non-farm payroll data due in the US tonight adds another uncertainty to the mix. The NZ dollar was US 69.01 cents at 5 pm from US68.83c at 8 am and US 69.80 cents at 5 pm yesterday. It fell to a five-month low of US 68.45 cents on Thursday night and spent today's session between around US 69 cents and US 68.58 cents.

The South Korean won declined 1.62% against the U.S. dollar Friday as fears about ballooning budget deficits in the euro-zone sparked a flight to safer assets. The South Korean won ended at 1,169.90 won to the greenback, down 19 won from Thursday’s close after the global concerns sent investors to flee to the safety of the U.S. currency. The Korean unit fell to as low as 1,177.50 won at one point, but its losses were trimmed later due to exporters' sale of the greenback.

The Taiwan dollar weakened against the greenback. The Taiwan dollar was trading lower against the US dollar at NT$ 32.0670, 0.0470 down from Thursday’s close of NT$32.0200

In equities, Asian equity markets tumbled Friday as heavy losses on Wall Street and heightened concerns over European sovereign debt prompted a sell-off across sectors.

In Japan, the share market tumbled to 7-week low, barely clinging to the 10,000 line, suffered by steep losses in Wall Street overnight on disappointing US jobs figures, escalating debt jitters in Europe, and a sharply strengthening yen. The Nikkei index stumbled 1.38% or 140.95 points in a week. At the closing bell, the Nikkei 225 Stock Average index was at 10,057.09, tumbled 298.89 points or 2.89%, after touching an intraday low of 10,036.33. The broader Topix of all First Section issues on the Tokyo Stock Exchange slumped 19.31 points, or 2.12%, to 891.78.

In Mainland China, the stock market tumbled with key indices breached the 3,000 line fist time since 30 October 2009, as investors abandoned riskier assets in a wake of triple digit slumps in Wall Street overnight on disappointing US jobs data and escalating debt jitters in Europe.

The benchmark Shanghai index registered weekly decline of 1.7% or 49.9 points. At the closing bell, the Shanghai Composite Index, measuring A shares and B shares on the Shanghai Stock Exchange, tumbled 55.91 points, or 1.87%, to 2,939.40, while the Shenzhen Component Index on the smaller Shenzhen Stock Exchange slipped 252.34 points, or 2.07%, to 11,917.14. The CSI 300 Index, measuring exchanges in Shanghai and Shenzhen, sank 2.04%, to 3,153.09.

On the economic front, China’s current-account surplus, the broadest measure of its trade balance, fell sharply in 2009, according to preliminary estimates by the State Administration of Foreign Exchange. The current-account surplus dropped to $284.1 billion, as compared surplus of $426.1 billion for 2008. The Ministry of Commerce Friday imposed preliminary duties of as much as 105.4% on US chicken products, saying the imports are hurting the domestic poultry industry.

In Hong Kong, the key benchmark indices fell on Friday, joining a global stock market rout, as broad based selling across the sector amid risk aversion after global markets plunged overnight on renewed concerns over global economic uncertainties. Selling was also intensified after unexpected rise in US jobless claims, cautious over Greece and other European nation’s debts, and sharp fall in commodity prices. The Hang Seng Index tumbled 676.56 points, or 3.33%, to 19,655.08, while the Hang Seng China Enterprise, which tracks the overall performance of 43 Mainland Chinese state-owned enterprises on the Hong Kong Stock Exchange, shrank 474.10 points, or 4.08%, to 11,131.78.

In Australia, the index fell sharply, ending a fourth consecutive week of losses on heavy selling across the sectors, hurt by falls in offshore markets and weaker commodity prices. Market participants pulling out money from risky asset after European and US share-markets plunged into the red overnight on concerns about the financial health of the Euro zone and unexpected rise in US jobless claim. The All Ordinaries registered weekly declines of 1.4% or 64.40 points. At the closing bell, the benchmark S&P/ASX200 index fell 107.50 points, or 2.33%, to 4,514.10, meanwhile the broader All Ordinaries shrank 111.60 points, or 2.4%, to 4,532.50.

On the economic front, the RBA issued its quarterly Monetary Policy Statement Friday in Sydney, saying that if the forecasts materialize, more interest rate hikes are possible. The RBA predicted modest increases in inflation and gross domestic product, along with a moderation in joblessness. The central bank forecasts underlying inflation will ease from about 3.25% through 2009 to 3% by mid 2010 and 2.5% by the end of 2010 before rising to 2.75% by the end of 2011 and into 2012. The bank previously forecast 2.25% inflation by the end of 2010.Gross domestic product is forecast to rise by 3.25% through 2010 and 3.5% through 2011.

In New Zealand, equities ended deep in the negative region on the last trading day of the week after inching up slightly yesterday despite loses in international markets. New Zealand benchmark index dipped sharply on Friday by almost 1.5%, reaching close to 3100; near its mid December 2009 lows after achieving a level close to 3300, early this year. NZ shares remained dull throughout the week except for edging forward yesterday. At the closing today, the NZX 50 lost 1.40% or 43.95 points to 3104.99. Meanwhile, the NZX 15 declined 1.69% or 96.04 points to close at 5592.69.

In South Korea, stocks closed lower as snowballing sovereign debt woes in Europe prompted skepticism over a fledgling global economic recovery. In a broad-based slump, the Korea Composite Stock Price Index (KOSPI) gave up 49.30 points or 3.05% to end at 1,567.12. Today’s steep losses pushed the key index back to the lowest level since it ended at 1,555.70 on 30 November 2009, after foreigners sold a net $293 billion in shares following three days of buying.

In Singapore, the key stock index tanked, driving the index to a fourth straight weekly losses on concerns the global recovery may falter on weak cues from Asian and European bourses and Wall Street overnight triggered by concerns over sovereign debt problems in Europe and U.S. unemployment. At the closing bell, the blue chip Straits Times Index was at 2,683.56, dropped 61.42 points or 2.24%. The gauge tumbled 2.1% or 58.2 points this week, its fourth week of decline.

In Taiwan, stock market flunked to five month low, by posting the biggest single day loss since 22 January 2008, as investors step up the selling activity following Wall Street losses on rising debt problems in Europe. All sectoral indices registered broad base losses. The benchmark Taiex share index followed the global cues by extending the losses for the fourth session, finishing the day lower by 324.21 points or 4.30% at 7217.83 – the biggest single day fall since 22 January 2008 when market tanked 528.54 points. It is also the lowest closing since 4 September 2009 when market finished the day at 7153.13.

On the economic front, Taiwan’s industrial production index jumped 47.34% year-on-year to reach 114.51 points in December last year, a historical high, thanks to the relatively low comparison base and the widely-reported economic recovery globally,.

According to statistics compiled by the statistics department under the Ministry of Economic Affairs (MOEA), the production index for the manufacturing industry also hit a historic-high record with an annual growth of 50.16% in the same month.

In Philippines, cautiousness and risk aversion once more ruled the Philippines stock market, with PSEi plummeting more than 2% following a two-day rebound. Market players remained jittery following the razor sharp losses on Wall Street overnight. Aside from that, investors remained pessimistic over the monetary board’s moves over the interest rates. Though the CPI figures released today, slightly eased for the first time in five months in January, it is still holding near an eight months high level, supporting the central bank's view that current policy settings were appropriate. At the final bell, the benchmark index PSEi plummeted 2.03% or 59.23 points to 2,855.64, while the All Shares index declined 1.68% or 31.22 points to 1,822.56.

In India, sustained selling pressure kept key benchmark indices suppressed throughout the day. World stocks fell as Europe’s sovereign debt, indications of weak US jobs data and a crash in commodity and energy prices raised fresh concerns over global economic recovery. The barometer index slipped below the psychological 16,000 mark. The BSE 30-share Sensex was down 434.02 points or 2.68% to 15,790.93. The S&P CNX Nifty was down 126.70 points or 2.61% to 4718.65.

Elsewhere, Malaysia’s Kula Lumpur Composite index finished slightly lower at 1247.90 while stock markets in Indonesia’s Jakarta Composite index gave up by 74.24 points ending the day lower at 2518.98.

In other regional market, European shares fell for the third straight day on Friday, as investors continued to fret about the health of Greek, Portuguese and Spanish finances ahead of the release of U.S. jobs data. The major European regional markets held up a bit better, with the German DAX index down 1.3% or 74.31 points at 5,459, the French CAC-40 index lost 2.4% or 89.29 points to 3,600 and the U.K. FTSE 100 index down 1.7% or 87.32 points to 5,052.