Resources and financials pull Asian stocks lower

Regional benchmarks end in red ahead of weekend

Asian stocks pared their recent advances, stumbling ahead of the weekends as the worries about an overheated property market in China resurfaced and strength in US Dollar hurt the resources and mining stocks. The overnight US cues were modestly positive but Asian stocks were under a swoon right from the start. Selling aggravated as the day proceeded as the Friday factor soon kicked into the action.

The Japanese stocks snapped recent gains as traders resorted to locking gains after the local currency strengthened against the US dollar. Modest gains on Wall Street in the previous session despite weaker jobless claims data failed to enthuse markets after internet search engine giant Google failed to impress traders despite reporting a 38% surge in first quarter revenues. Concerns about the steps being taken by China to cool off its real estate market and weak trading across other markets in the region also impacted market sentiment.

The benchmark Nikkei 225 Index dropped 171.61 points, or 1.52%, to 11,102, while the broader Topix index of all First Section issues was down 10.06 points, or 1.01%, to 989.

Steel stocks led the decline on profit taking. JFE Holdings declined 2.88%, Pacific Metals shed 1.36%, Sumitomo Metal Industries lost 2.83%, Kobe Steel fell 2.69% and Nissan Steel was down by 2.04%.

The Australian stocks slipped on profit selling today; closing under 5000 mark for the benchmark S&P/ASX 200 index as weak cues from the Asian markets and selling pressure in commodities triggered profit booing in the resources and broad markets. Financials also slipped as rising inflation worries domestically hurt the investor sentiments. However, the stocks managed to record their tenth consecutive week of rises. The benchmark ASX200 share index yesterday closed above the 5000-point mark for the first time in 19 months, ending the day at 5001.9 points.

As the closing bell rang, the benchmark S&P/ASX200 index was down 17.2 points, or 0.3 per cent, at 4984.7, while the broader All Ordinaries index fell 16.8 points, or 0.3 %, to 5007.3. Among the sectors, energy shares dropped 1.5 %, financials fell 0.2 % and materials lost 0.5 %.

Chinese equities eased, taking the centre state amid a broadly bearish day for world markets. Despite the Chinese economy recording a growth rate, highest in three years without signs yet of a surge in inflation, the Chinese stock market closed lower more than 1% today, as investors remained vigilant that these positive developments have given the government some leeway in making two crucial decisions: raising interest rates and revaluing the Chinese currency.

Adding to the investors concerns are the unemployment rate and booming real estate prices, which will further pressurize the government to hike the interest rates further, to cool the overheating property market. China's property market continued to hot up in March with home prices in major cities growing at a double-digit pace, even as the government tries to rein in prices.
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The Property section yielded mix performance after the government raised the down payment to 50 % when a family purchases its second property. Interests of the loans should not be lower than 110 % benchmark interest rates. Mixed performance by the property sector dragged down financial and real estate heavyweights.

In China, the benchmark Shanghai Composite Index, which tracks both A and B shares, ended down 1.1%, or 34.67 points, at 3130.30. China's stock index futures rose on their first day of trading Friday, mostly due to initial enthusiasm about the derivatives product, which for the first time allows investors to make trades based on their expectations the overall market will fall--not just rise. The most actively traded May futures contract closed up 0.5% at 3145.6.

In overnight trades, US stocks crawled up after the A U.S. Labor Department report that said initial claims for unemployment benefits rose unexpectedly for a second straight week raised doubts about the strength of the U.S. economic recovery and also weighed on stocks. The Dow Jones industrial average climbed by 0.2 % Thursday to 11,144.57 — its highest finish since Sept. 19, 2008.

In Mumbai, the key benchmark indices edged lower in volatile trade as an imminent hike in key short-term interest rates by the Reserve Bank of India (RBI) at a policy review next week weighed on investor sentiment. Stocks fell for the fourth straight trading session. In global cues, European stocks turned positive from negative and US index futures were off lows. Earlier, Asian stocks edged lower. The BSE 30-share Sensex was provisionally down 68.71 points or 0.39%, off close to 95 points from the day's high and up close to 40 points from the day's low. The market breadth was weak.

In other markets, Hong Kong's Hang Seng index fell 1.5 %, Indonesia slid 0.8 %, Singapore was down 0.6 % while South Korea and Malaysia skidded 0.5 %. Thailand's benchmark stock index fell 2.1 %

Greek/German bond spreads continue to widen to new all time highs despite the successful placement of Greek sovereign issues. Reports that Greece will need far more funding than has been initially promised by the EU/IMF as well EU comments that Portugal will need further fiscal consolidation have been instrumental in supporting the US dollar after the greenback plummeted to its three week low against the Euro earlier.

Light sweet crude oil futures for May delivery slipped by more than a dollar after its recent advances. The counter quotes at 84.49 a barrel in electronic trading, down $1.02 per barrel from previous close as traders eyed the weakness in equities and ideas that the latest slide in the US crude inventories might not push the prices up much given that the inventories are still at a seasonally high level.