SINGAPORE, Feb 4 — Asian stocks fell today, with Toyota Motor hitting a 10-month low on investor concerns over its massive vehicle recall, which in turn helped rival carmakers buck the broader downward trend and post solid gains.
The US dollar was on a firm footing while the New Zealand dollar dived after a sharp jump in unemployment, dragging other growth-linked currencies such as the Australian dollar along with it.
Financial markets are expected to remain cautious ahead of the European Central Bank’s (ECB) rate decision and the Bank of England’s monetary policy meeting, both due later today.
Investors are also awaiting US non-farm payrolls data tomorrow after statistics yesterday showed signs of stabilisation in the job market in the world’s largest economy.
Asia Pacific stocks outside Japan as measured by MSCI were down 0.7 per cent, with virtually all sectors in the red, as traders took profits from gains in recent sessions and after a weaker close on Wall Street, where stocks slipped on fears of increasing US government regulation in a host of sectors from banking to healthcare.
Shares of resource firms were the biggest drag on Asian markets, with the resource sector index shedding 1.4 per cent after a rally in recent days on hopes that a revived global economy would mean greater demand for oil and metals.
Japan’s Nikkei average fell 0.6 per cent, weighed down by further selling in Toyota Motor Corp, which tumbled 3.5 per cent.
Toyota’s woes worsened after the Obama administration stepped up pressure on the world’s largest carmaker to address a range of safety issues.
Its shares have lost more than 20 per cent of their value since a recent high on Jan 21 as a deepening recall tarnishes the company’s reputation for safe vehicles. The carmaker is set to report third-quarter results after the market closes at 0600 GMT.
In contrast, Honda Motor Co jumped after the automaker, Japan’s second biggest, raised its annual outlook far beyond investor expectations and said it anticipated more growth next financial year. Honda was up 2.3 per cent.
“While Toyota has to halt production due to the recall and will probably have to review its supply chain into next fiscal year, Honda has surprised us with strong results and has returned nearly to its best shape,” said Yoshihiko Tabei, analyst at Kazaka Securities.
Shares in South Korean automakers also rallied on hopes they would pick up market share from Toyota. Hyundai Motor was up 3.5 per cent while Kia Motors gained 2.5 per cent.
In currency markets, the New Zealand dollar fell to its lowest in five months, dropping to as low as US$0.6965, from US$0.7070 late on Wednesday, after data showed the country’s jobless rate rising to a 10-year high.
Investors pushed back expectations of a rate rise to June from April after the surprising data, reducing some of the currency’s high-yield appeal.
The euro was also on the defensive, slipping to US$1.3888, from US$1.3894 late in New York on Wednesday. The single currency continues to be on shaky ground on fresh fears that Portugal could join Greece as the next country to face fiscal problems.
The ECB is widely expected to keep rates unchanged at its meeting today as financial woes in Greece, Portugal and Spain endanger the currency bloc’s recovery.
The US dollar was steady against a basket of major currencies, with euro zone troubles adding to the view that the greenback will gain further ground at the expense of the euro.
US data yesterday showed signs of a stabilisation in the jobs market while the Institute for Supply Management’s index of non-manufacturing companies rose to 50.5, from 49.8 in December.
All that bodes well for the nonfarm payrolls numbers due on Friday. A Reuters poll of top 20 forecasters estimated 8,000 jobs were added to the economy.
The Bank of England’s monetary policy meeting will also be in focus today. The BOE is expected to halt its quantitative easing programme, although interest rates are likely to be held at 0.5 per cent.
Shanghai copper was seen plunging at the open today, possibly to its 5 per cent downside limit, after a reversal in sentiment sent London metal sliding to 2-½ month lows in the previous session.
Nymex crude for March delivery dipped 17 cents to below US$76.81 a barrel, after slipping 25 cents yesterday, when data showed US crude oil stocks rose last week much more than forecast on higher imports and lower demand by refiners curbing operations. — Reuters
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