Asia firmly entrenched in a bearish spell

Markets mostly end lower on worries over global macroeconomic front



Asian stocks were firmly entrenched in a bearish spell today, heaved off by worries on the global macroeconomic front as US and China- the economic powerhouses of the world seemed to be in for a less robust recovery. Traders booked profits heavily ahead of the weekends and bought the markets back to their senses after an very good outing in the risky assets for the last few days. Dollar continued to dip though, providing a good start for the European equities though the day was almost over for the traders in Asia to factor in any of the slide in greenback.

The U.S. said yesterday that its factory output dropped 0.4% in June, the most in a year, because of a slump in production of automobiles, home-building materials and processed food. Earlier in week, the US Federal Reserve saw the U.S. economic recovery was proceeding at a "moderate pace," Top officials of the Fed said that they continued to anticipate a moderate recovery in economic activity through 2011, supported by accommodative monetary policy. Yesterday, China's economic growth eased to 10.3 percent in the second quarter, sending across worries that the emerging economy is likely to witness for a moderation in growth in the second half of the year.

Japanese equities slumped as a direct effect of a weak US growth took a toll on the exporters. Nikkei average fell about 3%, led by exporters, as a stronger yen dampened the earnings outlook for exporters and worries that the U.S economic recovery may be faltering added to the selling pressure.

The Nikkei 225 average ended down 277 points or 2.86% at 9,408, its lowest close since July 7. The stocks in Japan had witnessed a substantial sell off in the last session too and it seems that the conditions do not remain conducive for a further scaling up unless a break above 10000 points take place for the Nikkei. The broader Topix index of all First Section issues on the Tokyo Stock Exchange also dipped 1.87% to 841.

Australian market also faced a brunt of the investors' wrath as miners and energy counters witnessed a mega sell off after the recent flurry of gains. Traders also focused on domestic worries as Australia's Prime Minister Julia Gillard may call an election for late August. The benchmark S&P/ASX 200 eased 20 points or 0.45% at 4,423, while the broader All Ordinaries index lost 0.44%.

In China, Shanghai's Composite Index was steady, as some gains emerged after a massive sell off in the last session. The Shanghai Composite Index closed on a flat note at 2,424.271 points. The country's gross domestic product expanded by 10.3 percent in the second quarter from a year earlier, down from 11.9 percent growth in the first quarter

In other markets, Singapore's Straits Times index added 0.34%, Hong Kong's Hang Seng slipped 0.03% while TSEC in Taiwan dropped 0.52%.

The US dollar rose in the early moves in Asia today but then flipped the direction to topple to a fresh two and half month low in the early London trades. This boosted the stocks in Europe and commodities too. Oil is trading up 16 cents at $76.78 per barrel while copper is also steady around $3.014 per pound in the electronic trades on GLOBEX.