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Asian markets fall after weak US, China data

June 1, 2012

HONG KONG: Asian markets fell today and the euro was at a near two-year low against the dollar amid Europe’s deepening debt woes, while disappointing US data and Chinese manufacturing numbers also weighed.

With investors scrambling for safer haven assets such as the yen, Japan’s finance minister pledged “decisive action” if it keeps rising, indicating a fresh intervention by Tokyo.

Tokyo fell 1.20%, or 102.48 points, to 8,440.25, Sydney dropped 0.30%, or 12.4 points, to 4,063.9 and Seoul eased 0.49%, giving up 8.96 points to close at 1,834.51.

Hong Kong slipped 0.38%, or 71.18 points, to 18,558.34 and Shanghai was flat, edging 1.20 points up to 2,373.44.

The weak start to June came after a miserable May in which most markets gave up almost all the gains they had made since the turn of the year as the eurozone’s debt crisis came back into sharp focus.

While Greece’s political and economic future remains uncertain, Spain’s banking sector is looking increasingly fragile, stoking fears that Madrid – already battling fiscal woes – could need an international bailout.

China today said manufacturing activity grew at a much slower rate than expected in May, further confirming the world’s number two economy is slowing rapidly after recent poor figures on trade, investment and industrial output.

The official purchasing managers index (PMI) fell to 50.4 from 53.3 in April, the China Federation of Logistics and Purchasing said in a statement.

A reading above 50 indicates expansion, while a reading below 50 suggests contraction.

Later, HSBC said its PMI for May stood at 48.4 compared with 49.3 in April.

“At this rate, the government may intervene with monetary stimulus towards the end of June once inflation slows to about three percent,” Zhou Xu, an analyst with Nanjing Securities, told Dow Jones Newswires.

In the United States, the government yesterday lowered its estimate for first-quarter economic growth, to 1.9% from 2.2%, raising questions over how much of a rebound could be expected in the current quarter.

Two jobs reports – weekly unemployment claims and private-sector job creation in May – both were disappointing, indicating slow improvement in the economy.

On Wall Street the Dow fell 0.21%, the S&P 500 lost 0.23% and the Nasdaq slipped 0.35%. Eyes are now on key non-payroll jobs data out of Washington later in the day for a guide to the US economy’s recovery.

The gloomy data sent dealers out of risk assets, pushing the euro lower.

The single currency was changing hands at US$1.2343 in Tokyo morning trade from US$1.2361 in New York late yesterady. Earlier today the unit briefly fell to US$1.2323, a 23-month low.

It also remained weak against the safe-haven Japanese currency at 96.86 yen, compared with 96.82 yen in New York late Thursday, where at one point it fell to 96.51 yen, its lowest level since December 2000.

The dollar bought 78.43 yen, from 78.33 yen in New York.

Japanese Finance Minister Jun Azumi said today he would take “decisive action” if the yen kept rising, with his remark interpreted as a threat of market intervention to curb the yen’s strength.

Japanese financial authorities have previously intervened in currency markets, including after the yen reached historic highs against the dollar last year. A stronger yen hurts exporters as it makes their goods more expensive overseas.

On oil markets New York’s main contract, West Texas Intermediate (WTI) crude for delivery in July, was down 60 US cents to US$85.93 per barrel while Brent North Sea crude for July shed 69 US cents to US$101.18 in the late afternoon.

Gold was at US$1,557.98 an ounce at 0810 GMT, compared with US$1,566.06 late yesterday.

In other markets:

  • Taipei tumbled 2.68%, or 195.41 points, to 7,106.09. Smartphone giant HTC shed 3.72% to Tw$414.0 while computer maker Acer was 1.64% lower at Tw$30.05.
  • Manila closed 0.56% lower, shedding 28.79 points to 5,062.44. DMCI Holdings fell 4.49% to 55.35 pesos and BDO Unibank ended 6.38% down at 66 pesos. Philippine Long Distance Telephone added 3.42% to 2,420 pesos.
  • Wellington fell 1.04%, or 36.29 points, to 3,452.00. Fletcher Building slumped 4.29% to NZ$6.02 and Telecom was down 1.55% at NZ$2.54.

- AFP


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