SINGAPORE, Feb 4 — Lingering concerns about the global economy and a host of negative local factors pushed Asian stocks lower today, with Toyota Motor hitting a 10-month low as investors fretted over its massive vehicle recall.
Hong Kong led losses in the region with the Hang Seng index dropping 1.8 per cent to snap a three-day winning streak, as investors sold Chinese lenders after an arm of China’s sovereign wealth fund denied a newspaper report that it would buy new shares from top lenders.
Concerns over more new listings weighed on the Shanghai stock market, pulling it down 0.3 per cent.
Chinese officials reacted coolly to a vow by US President Barack Obama to get much tougher with China over the yuan’s exchange rate, which Washington believes is artificially undervalued.
Dariusz Kowalczyk, chief investment strategist at SJS Markets in Hong Kong, said both countries had too much at stake to let disputes over the yuan, trade and Taiwan derail ties.
“When it comes to market reaction, I doubt it will be major as long as the tension is contained to the political arena,” Kowalczyk said. “I think Beijing will resume gradual appreciation of the renminbi in the second quarter and it will probably defuse the currency tensions to some degree by doing so.”
China effectively froze the yuan in July 2008 to help its exporters weather the global economic crisis. Most market analysts expect China to let the yuan start climbing gently again sometime in 2010 since year-on-year export growth has resumed.
Asia Pacific stocks outside Japan as measured by MSCI fell more than a per cent, with virtually all sectors in the red as traders took profits from recent gains and awaited more concrete signs that the US economic recovery is gaining traction.
Data yesterday showed signs of a stabilisation in the US job market but only scant growth in its vast services sector, while other reports this week have pointed to a slow but painful recovery for the troubled housing market.
Investors are now awaiting the key nonfarm payrolls report tomorrow. A Reuters poll of top 20 forecasters estimated 8,000 jobs were added to the economy.
“The US government is going to release important data tomorrow, keeping players cautious,” said Kenny Tang, research head at Redford Securities. “Sentiment may improve after the Lunar New Year holiday, with a lot of bargain-hunting interest.”
Japan’s Nikkei average lost 0.5 per cent as Sharp Corp tumbled after reporting a smaller-than-expected quarterly profit and the slide in Toyota shares weighed.
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 a fifth of their value since a recent high on Jan. 21.
After the Tokyo market close, Toyota said its biggest-ever safety recall would cost it up to US$2 billion (RM6.84 billion) this quarter, but raised its outlook for the financial year ending in March after a forecast-beating third quarter.
Resource shares also skidded across the region on lower metals prices.
Australian stocks fell 0.6 per cent with major retailers and miners leading the fall on poor December retail sales and a strong US dollar that dragged commodity prices lower.
“It was a struggle all day for Australian shares. The retail numbers meant the discretionary sector was down and commodities had a pretty rough night. Money has exited the miners today,” David Taylor, a market analyst at CMC Markets, said.
South Korean shares, however, outperformed with a 0.1 per cent rise, led by auto issues such as Hyundai Motor even as banks and retailers, including KB Financial Group and Lotte Shopping, fell.
Indian shares fell 1.6 per cent, while Taiwan and Singapore shed less than a per cent.
The euro hit a seven-month low against the dollar, knocked by concerns over the fiscal health of peripheral euro zone countries ahead of a European Central Bank policy decision later on Thursday. Gold prices inched lower toward US$1,100 an ounce as some investors feared a bullish U.S. job report could further boost the dollar, which would undermine bullion’s appeal as a currency hedge.
Oil fell towards US$76 a barrel as rising crude inventories in the United States signalled a rebound in economic activity was failing to translate into higher demand. — Reuters
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