Asian markets tumble on Cyprus bailout concerns
HONG KONG—Asian markets tumbled on Monday and the euro sank as eurozone fears returned on news that Cyprus was planning to tax bank depositors as part of a controversial bailout.
Wall Street also provided a weak lead, with the Dow seeing its first loss after a 10-day rally as data pointed to ongoing softness in the US economy.
Tokyo fell 2.71 percent, or 340.32 points, to end at 12,220.63, Sydney slipped 2.05 percent, or 104.8 points, to 5,015.4, a two-week low, while Seoul ended 0.92 percent lower, sliding 18.32 points to 1,968.18.
Hong Kong lost 2 percent, or 449.75 points, to end at 22,083.36 and Shanghai shed 1.68 percent, or 38.38 points, to 2,240.02.
Investors have been spooked by news that Cyprus agreed to a levy of up to 10 percent on bank depositors as part of a deal with fellow eurozone countries and international creditors in order to qualify for a $13 billion bailout.
Deposits of more than 100,000 euros ($129,000) will be hit with a 9.9 percent charge and a 6.75 percent levy will be imposed for anything below that threshold. The proposal must still be passed by parliament.
President Nicos Anastasiades said in a televised address Sunday the tax was the “least painful” option for the recession-hit island and vowed to try to persuade the eurogroup to “limit the impact on small depositors.”
While bank customers have voiced dismay and anger at the plan, global markets were jolted amid fears it could reignite the eurozone debt crisis and hit confidence in other troubled countries such as Spain and Italy.
In early European trading shares in London, Paris and Frankfurt slumped between 1.5 percent and 2.0 percent.
“The feeling is that the euro crisis could be back and that you could see full on contagion, that’s why you’re seeing the market reaction today,” said Shane Oliver, head of investment strategy and chief economist at Amp Capital in Sydney.
“But I suspect that we are going to hear reassurances from other countries that Cyprus is different and that this plan will not be put in place elsewhere,” he told Dow Jones Newswires.
On currency markets the euro fell to $1.2957 and 123.05 yen from $1.3075 and 124.61 yen in New York Friday. However, it clawed back some early losses in Asia that saw it fall to $1.2902 and 121.76 yen.
The dollar dropped to 94.95 yen from 95.26 yen, although it received some measure of support from expectations that the new leaders of the Bank of Japan will unveil a fresh round of monetary easing to jumpstart the economy.
The Dow on Wall Street finished down 0.17 percent, the first time in nine days it did not set a fresh record, while the S&P 500 lost 0.16 percent after moving within a whisker of its own all-time high. The tech-heavy Nasdaq dropped 0.30 percent.
Dealers went into sell mode after the University of Michigan Consumer index took a surprising dive to 71.8, its lowest since the end of 2011 and down from 77.6 in February. Analysts had expected a gain.
Oil prices fell, with New York’s main contract, light sweet crude for delivery in April, dropping 85 cents to $92.60 a barrel in the afternoon and Brent North Sea crude for May delivery shedding $1.22 to $108.60.
Gold was at $1,602.80 an ounce at 1025 GMT compared with $1,592.60 late Friday.
In other markets:
— Singapore fell 0.90 percent, or 29.58 points, to 3,256.47.
Real estate giant Capitaland gained 1.77 percent to Sg$3.46 while United Overseas Bank shed 0.45 percent to Sg$19.81.
— Taipei slumped 1.47 percent, or 116.15 points, to 7,811.34.
Taiwan Semiconductor Manufacturing Co. was 2.4 percent lower at Tw$100.5, while leading smartphone maker HTC rose 2.3 percent to Tw$240.0.
— Manila lost 1.78 percent, or 118.42 points, to 6,536.18.
Philippine Long Distance Telephone slipped 1.8 percent to 2,790 pesos and SM Investments plunged 4.2 percent to 1,033 pesos.
— Wellington fell 1.05 percent, or 46.03 points, to 4,341.02.
Fletcher Building eased 3.83 percent to NZ$8.80 and Contact Energy was down 1.25 percent at NZ$5.52 but Telecom rose 2.24 percent to NZ$2.28.
— Jakarta eased 0.34 percent, or 16.50 points, to 4,802.83.
Cigarette producer Gudang Garam fell 1.62 percent to 48,450 rupiah, Indah Kiat Pulp & Paper slid 1.11 percent to 890 rupiah, and retailer Ramayana Lestari Sentosa dipped 0.74 percent to 1,340 rupiah.
— Kuala Lumpur slipped 0.39 percent, or 6.28 points, to 1,621.36.
YTL Corp. fell 4.8 percent to 1.60 and UEM Land shed 2.0 percent to 2.48.
— Bangkok lost 0.41 percent, or 6.48 points, to 1,591.65.
Bangkok Land Public Co. dropped 5.61 percent to 2.02 baht but Thai Airways International jumped 7.62 percent to 28.25 baht.
— Mumbai fell 0.69 percent, or 134.36 points, to 19,293.20.
Coal India, the world’s largest coal miner, fell 5.41 percent to 302.7 rupees while passenger car giant Maruti Suzuki fell 2.98 percent to 1,363.15 rupees.—Danny McCord