Asian markets tumble on China data, eurozone fears
HONG KONG—Asian markets sank Tuesday after China posted lower-than-expected economic growth, while ratings agency Moody’s warned France it may lower its credit rating amid growing eurozone debt worries.
Tokyo closed down 1.55 percent, or 137.69 points, at 8,741.91, Sydney slumped 2.07 percent, or 88.5 points, to 4,186.9, while Seoul lost 1.41 percent, or 26.28 points, to finish at 1,838.90.
Hong Kong’s benchmark Hang Seng index plunged 4.23 percent, or 797.53 points, to 18,076.46 with Shanghai losing 2.33 percent, or 56.91 points, to 2,383.49.
The broad drop across the major regional stock markets reversed an Asian rally Monday largely driven by a weekend meeting where Europe vowed to its G20 partners to take swift and decisive action on tackling its debt crisis.
Investor sentiment was dented by warnings from Germany against too much hope that an EU summit this weekend will produce a comprehensive solution to Europe’s fiscal woes.
“Both last night’s announcement in Germany and (Tuesday’s) Chinese figures have given the market reason to take profits,” said Ben Taylor, sales trader at CMC Markets in Sydney.
Beijing said third-quarter gross domestic product growth slowed to 9.1 percent, and factory output growth fell slightly in the first nine months of the year.
“If the (third quarter) GDP growth reading was 9.2 percent or 9.3 percent, the market may think it’s acceptable, but 9.1 percent looks worrisome,” said Qian Qimin, an analyst at Shenyin Wanguo Securities.
The figures would likely stoke concerns that a slowdown in orders from the US and Europe was denting the world’s second-biggest economy, as Beijing also works to fight stubbornly high inflation.
Berlin sought to dampen expectations for Sunday’s European Union summit in Brussels, with government spokesman Stefan Seibert warning that “dreams that everything will be resolved and dealt with by next Monday cannot be fulfilled.”
Finance Minister Wolfgang Schaeuble said that decisions would be part of “important measures to be taken over the long term, and this long term is likely to last into next year.”
The tone was a marked change from the weekend when, speaking after a meeting of G20 finance ministers and central bankers in Paris, French Finance Minister Francois Baroin said the eurozone answers at the summit would be “decisive.”
Ric Spooner, chief market analyst at CMC Markets in Sydney, said the latest news from Europe was “another indication of the political obstacles to forging a workable solution for the Eurozone.”
“Investors have been reminded of the need for caution until details of any proposal are formally released and agreed on,” he told Dow Jones Newswires.
The market was also spooked by ratings agency Moody’s warning to France that it may place a negative outlook on its cherished Aaa credit rating in the coming months, saying the government’s financial strength “has weakened.”
The annual credit report is a shot across the bow for the second-largest economy in the eurozone, which currently enjoys the top credit rating from Moody’s and rival ratings agencies.
The warning comes just days after Standard and Poor’s downgraded Spain’s credit rating, citing sky-high private debt, weak economic growth and towering unemployment.
The threat to France’s credit rating sent European stocks tumbling, and the euro slipped against the dollar, while investors were also nervous before the release of earnings news from Goldman Sachs and Bank of America.
London’s FTSE 100 index of leading shares dropped 1.31 percent to 5,365.47 points in morning trade, as investors also reacted to a spike in British inflation.
Frankfurt’s DAX 30 shed 1 percent to 5,800.58 points and in Paris the CAC 40 decreased 1.78 percent to 3,109.67 points.
The euro dipped to $1.3696 from $1.3734 late in New York on Monday, while the single currency dipped slightly against the yen at 105.05 yen, from 105.51 yen in New York late Monday.
The dollar stood at 76.64 yen, down from 76.81 yen earlier Tuesday.
New York’s main oil contract, light sweet crude for delivery in November, was down 21 cents to $86.09 per barrel, while Brent North Sea crude for December delivery was trading 80 cents lower at $109.41
By 1100 GMT, gold was trading down at $1,657.82 an ounce, from $1,666.55.
In other markets:
— Singapore’s Straits Times Index closed down 54.28 points, or 1.95 percent, to 2,724.69.
Jardine Cycle and Carriage fell 0.97 percent to Sg$42.00 and Olam International shed 4.76 percent to Sg$2.40.
— Taipei shares fell 101.64 points, or 1.36 percent, to 7,359.48.
Hon Hai slipped 1.07 percent to Tw$74.2 while TSMC was 0.56 percent lower at Tw$70.70.
— Kuala Lumpur shares slid 1.73 percent, or 25.41 points, to end at 1,439.94.
Gaming giant Genting Malaysia slipped 5.1 percent at 3.50 ringgit as national power firm Tenaga dropped 4 percent at 5.35. Mobile operator Maxis climbed 0.9 percent at 5.37 ringgit.
— Indian shares slid 1.63 percent, or 276.8 points, to 16,748.29.
India’s fourth-biggest software services firm HCL plunged 8.58 percent to 401.15 while the largest outsourcer TCS fell 7.71 percent to 1,033.5.
— Indonesian shares fell 2.87 percent, or 106.99 points, to 3,622.03.
— Manila was down 1.36 percent, or 57.19 points, at 4,157.26.
Top-traded Alliance Global fell 1.40 percent to 9.88 pesos, Lepanto Consolidated Mining dropped 4.38 percent to 1.31 pesos, while SM Investments Corp. lost 1.55 percent to 540.50 pesos.
— Bangkok fell 1.94 percent, or 18.88 points, to close at 952.75.
Banpu and Siam Cement both lost 6 baht to close at 600 and 300 respectively.
