Asian markets slip on lower China growth target
HONG KONG – Asian markets fell on Tuesday after China cut its growth target for this year and caution over Greece’s debt deal overshadowed upbeat numbers from the United States.
Hong Kong lost 1.18 percent, Shanghai shed 0.75 percent, Tokyo was 0.44 percent lower by the break, Seoul slipped 0.66 percent and Sydney gave up 0.95 percent.
Traders said Monday’s announcement by Premier Wen Jiabao at the opening of the National People’s Congress – the annual parliamentary meeting – that China would target 7.5 percent growth in 2012 cast a pall over global markets.
It represents a further slowing in the world’s number two economy – following 9.2 percent growth last year and 10.4 percent in 2010 – as its exports are buffeted by weak demand from US and European markets.
A slowdown in China would have a huge knock-on effect for other economies as they rely on it to drive their own growth.
“The forecast served as a reminder that while China is expected to engineer a soft landing, it remains a decelerating growth story,” said Stewart Hall, senior currency strategist at RBC Dominion Securities in a note.
“In a world starved for growth this is an unwelcome forecast,” he added, according to Dow Jones Newswires.
The prospect of slower Chinese growth also weighed on Wall Street where the Dow Jones Industrial Average ended 0.11 percent lower, the S&P 500 shed 0.39 percent and the tech-rich Nasdaq lost 0.86 percent.
And in Europe London’s FTSE 100, the DAX 30 in Frankfurt and the Paris CAC 40 all ended in the red.
US stocks fell despite figures showing the crucial services sector strengthened last month, according to a closely watched index released Monday.
The Institute for Supply Management’s services index rose to 57.3 percent from 56.8 in January, with the ISM’s business activity subindex jumping to 62.6 from 59.5.
A reading above 50 means the sector is growing.
On forex markets the euro bought $1.3208 and 107.54 yen in early Asian trade, compared with $1.3218 and 107.76 yen in New York late Monday. The dollar was at 81.24 yen compared with 81.52 yen.
Adding to the downbeat sentiment is caution over the outcome of Greece’s deal with private-sector bondholders as the deadline for them decide on whether or not to sign up for a debt writedown approaches Thursday.
If all creditors agree to the offer it would cut 107 billion euros from Greece’s total 350-billion-euro debt mountain.
Oil prices continued to get support from Iran’s stand-off with the West over its nuclear program, which Washington is convinced is being used to make an atomic bomb.
New York’s main contract, West Texas Intermediate crude for delivery in April, gained 37 cents to $107.09 per barrel while Brent North Sea crude for April was up 36 cents at $124.16.
In the latest development Israel’s Prime Minister Benjamin Netanyahu on Monday told US President Barack Obama that Israel must remain the “master of its fate” in a firm defence of his right to mount a unilateral strike on Iran.
Israel fears tough US and European sanctions on Iran will not convince Tehran to renounce a nuclear arsenal but Iran insists its nuclear program is solely for peaceful civilian purposes.
Gold was at $1,705.45 an ounce at 0215 GMT, compared with $1,696.80 late Monday.
