Asian shares mixed after Italy downgrade
HONG KONG—Asian stock markets were mixed on Tuesday as the eurozone debt crisis deepened after ratings agency Standard & Poor’s downgraded Italy’s sovereign debt.
The move further depressed the already weak euro, which sent Tokyo shares tumbling, but a late bargain-hunting spree helped several regional indexes post small gains.
However, despite the late rise there are mounting concerns Athens is close to defaulting on its debt obligations as Greek and European leaders make very little progress on solving the country’s financial woes, which analysts say could spread to other economies.
“The S&P downgrade itself is not a surprise, but the concern is whether Greek’s sovereign debt crisis will spread to Italy and Spain,” said Hiroichi Nishi, general manager at SMBC Nikko Securities.
Tokyo ended 1.61 percent, or 142.92 points, lower at 8,721.24 and Sydney lost 1.01 percent, or 41.3 points, to close at 4,040.2
However, Seoul added 0.94 percent, or 17.03 points, to finish at 1,837.97 and Shanghai picked up 0.41 percent, or 9.96 points, to 2,447.76, while Hong Kong gained 0.51 percent, or 96.85 points, to 19,014.80.
Regional bourses opened soon after S&P said it had downgraded Italy’s debt to “A/A-1” from “A+/A-1+”, citing economic, fiscal and political weaknesses in the eurozone’s third-largest economy.
It said Rome’s weak governing coalition would “limit the government’s ability to respond decisively” to events.
“We believe the reduced pace of Italy’s economic activity to date will make the government’s revised fiscal targets difficult to achieve,” S&P said in a statement.
“The picture in Europe, full stop, is not getting any better. They can patch up any way they want the Greek situation, but the problem is going to persist,” HiFX senior trader Stuart Ive in Auckland told Dow Jones Newswires.
“If it doesn’t persist in Greece, it will persist in Portugal or Ireland, or Italy or Spain,” Ive said.
Greek Finance Minister Evangelos Venizelos was due Tuesday to continue talks with the International Monetary Fund, European Union and European Central Bank to agree a deal that would see Athens receive the next tranche of a bailout.
The euro fell in Europe, buying $1.3667, down from $1.3679 late Monday in New York, while it slipped to 104.63 yen from 104.89 yen.
The dollar edged down to 76.55 yen from 76.59 yen.
On oil markets, New York’s main contract, WTI light sweet crude for October delivery, turned
Brent North Sea crude for November climbed 21 cents to $109.35.
Gold fetched $1,791.95 an ounce by 0930 GMT, well down from the $1,819.15 level it was at by 1000 GMT Monday.
In other markets:
— Singapore added 0.86 percent, or 23.61 points, to 2,780.84.
Property developer CapitaLand was 3.18 percent higher at Sg$2.60 and container shipping firm Neptune Orient Lines advanced 1.37 percent at Sg$1.11.
— Taipei edged up 0.16 percent, or 11.97 points, to 7,492.85.
Leading design house MediaTek rose 5.49 percent to Tw$326.5 while Taiwan Semiconductor Manufacturing Co fell 0.98 percent at Tw$70.5.
— Manila fell 2.05 percent, or 88.17 points, to 4,219.82.
Metropolitan Bank and Trust slipped 2.39 percent to 69.30 pesos while International Container Terminal Services shed 1.55 percent to 50.65 pesos.
Philippine Long Distance Telephone Co. dropped 0.95 percent to 2,294 pesos.
— Wellington ended flat, edging up 2.31 points to 3,290.62.
Contact Energy gained 3.0 percent to NZ$5.43 and Telecom was 0.4 percent higher at NZ$2.57 but Fletcher Building lost 0.7 percent to end at NZ$7.40.
— Jakarta closed flat, edging down 2.94 points to 3,752.11
— Kuala Lumpur shares closed down 0.18 percent, or 2.48 points, at 1,410.64.
AmBank slid 2.0 percent at 6.01 ringgit while Malaysia Marine and Heavy Engineering slipped 0.5 percent to 6.10 as financial service firm RHB Capital climbed 0.5 percent to 8.20 ringgit.
— Bangkok edged up 0.89 percent, or 9.09 points, to 1,026.28.
— Indian shares rose 2.11 percent or 353.93 points to 17,099.28 as a weak rupee helped outsourcers gain even as Asian markets were mixed.
India’s largest private aluminium producer Hindalco advanced 4.31 percent to 150.2 while leading software outsourcer TCS climbed 3.94 percent to 1,057.9.
