Severe bout of sell off for Asian stocks

Markets back to losing ways as weak US data continues to fan worries

The Asian markets eased today, witnessing a severe bout of sell off as the weak overnight US cues hurt the sentiments. Traders were seen selling in the wake of a very poor labor market data, which came in as a rude shock after a couple of decent reports in the middle of the week. It also underpinned that the US is in the middle of what could be called as a jobless recovery that the safe haven assets continued to gain, inflicting a heavy damage to the equities. US initial claims for unemployment benefits rose by 12,000 in the week ended Aug. 14, the Labor Department said. Claims totaled 500,000 in the week, the highest number since Nov. 14, 2009. Dow slumped around 200 points in intraday moves and closed down 144.33 points or 1.4 % to 10,271.21



The manufacturing activity in the Philadelphia area has unexpectedly deteriorated in the month of August, the Federal Reserve Bank of Philadelphia revealed in a report on Thursday, with the index of regional activity unexpectedly falling into negative territory. The Philly Fed said its diffusion index of current activity fell to a negative 7.7 in August from a positive 5.1 in July, with a negative reading indicating a contraction in manufacturing activity. With the decrease, the index turned negative for the first time since July of 2009.

Japanese shares dropped nearly 2% today, following the rout on Wall Street as export-oriented issues were hurt by a stronger yen. The Nikkei 225 Stock Average lost 183.3 points, or 1.96%, to close at 9,179.38 while the broader Topix index was down 8.33 points, or 1.71%, at 829.59. A stronger yen makes Japanese exports less competitive and erodes overseas earnings when the revenues are repatriated. The tempo of economic upturn in the country is softening and recent leading indictors expect a continued deceleration in the industrial production. The Nikkei has fallen nearly 13% this year, the most among benchmark indexes in the world's five-largest developed countries,

The Australian stocks ended firmly in the red today, adding to the recent string of bearishness. The metals and crude oil prices continued to drop and resource-oriented units witnessed mega-selling pressure. The activity in the markets was stirred earlier in the week as the global mining major BHP Billiton, which announced plans to acquire Potash Corp of Saskatchewan for a consideration of A$42.59 billion, witnessed a mega sell off. The overall activity in mining shares was frail. Shares in BHP were down 40 cents 1.04% while fellow mining giant Rio Tinto backtracked 2.19%. The benchmark S&P/ASX 200 index closed down 48.1 points, or 1.07%, at 4430.9 points, while the broader All Ordinaries index shed 47.5 points 1% to 4462.1 points.

In China, a broad retreat was seen after gains in the last session. The benchmark Shanghai Composite Index closed at 2,642.31, down 45.67 points, or 1.7%, while the Shenzhen Component Index dipped 230.71 points, or 2.04%, to end at 11,090.46. Index linked counters dropped following the feeble overnight cues. Real estate developer stocks continued to drop on expectations that the government would maintain its tough stance on the property market. The Ministry of Land and Resources stated yesterday that it would continue to crack down on land hoarding in the real estate sector.

In Mumbai, the stocks were seen witnessing a slide in late trades as the European bourses eased sharply, Weakness persisted right from the start as select pivotals fell on profit booking. IT, telecom and select auto stocks declined. The benchmark BSE SENSEX dropped 57.67 points or 0.31% to close at 18397.27 points. Inflation worries continue to make the rounds as multilateral lender Asian Development Bank may raise inflation forecast for India at its next Economic Outlook slated for 28 September 2010, depending on progress of the monsoon rains.

In other markets, the Hang Seng index in Hong Kong shed 0.43%, TSEC in Taiwan dropped 0.0.2% while Strait Times index in Singapore slid by 0.35%.

Dollar appreciated near 1.2700 against in the Asian trades, recovering from its earlier lows to top a four-day high. Dow futures gave away initial gains to trade down 9 points right now. The crude oil futures pared modest gains in early moves and slumped near a six week low yet again, bottoming out at $74.02 and quoting at $74.10 right now, down 67 cents on the day.