Asian markets mostly down as Europe woes drag
HONG KONG—Asian markets fell Wednesday and the euro sat near one-year lows with traders unconvinced by Europe’s deal to save its currency and downbeat over the US Fed’s lack of fresh economy-boosting plans.
Adding to the poor sentiment was Germany’s opposition to raising the limit for Europe’s bailout fund, highlighting cracks in the region’s leadership.
Tokyo fell 0.39 percent, or 33.68 points, to 8,519.13. Olympus, which by the end of trade had not met a deadline to submit its much-delayed earnings, closed 4.1 percent lower. The firm posted its report soon after the end of trade.
Sydney was flat, closing 2.9 points lower at 4,190.5 and Seoul gave up 0.34 percent, or 6.31 points, to 1,857.75.
Hong Kong slipped 0.50 percent, or 92.74 points, to 18,354.43 and Shanghai shed 0.89 percent, or 20.06 points, to close at 2,228.53.
The US Federal Reserve said Tuesday it would hold interest rates for some time to come and that the world’s top economy was growing at a moderate level but warned of severe global headwinds.
Despite its concerns over the world outlook it did not unveil any fresh stimulus measures to kickstart growth, disappointing investors who had hoped for even an indication of future plans.
The Fed meeting “was a letdown for the many investors looking for any change in policies,” said Avis Wang, strategist at IG Markets in Singapore.
“Traders are likely to be cautious as there was no significant improvement to the situation in Europe,” he told Dow Jones Newswires.
Street turned lower, with the Dow Jones Industrial Average off 0.55 percent, the S&P 500 0.87 percent lower and the Nasdaq diving 1.26 percent.
Asian investors were already nervous that last week’s deal in Europe, which aims to tighten budgetary rules and more closely integrate members, will not be enough to solve the region’s sovereign debt crisis.
Twenty-six of the European Union’s 27 members backed the “fiscal compact” but Berlin’s hopes for a treaty revision were dashed when Britain opted out, citing a lack of protection for the City of London financial center.
The euro slipped below $1.31 in New York on Tuesday for the first time since January and remained under pressure in Asia on Wednesday.
It traded at $1.3046 and 101.70 yen in Europe, compared with $1.3033 and 101.66 in New York late Tuesday.
The euro may fall further as the market turns risk-averse, said a senior dealer at a major Japanese bank, after a report said Germany was opposed to raising the 500-billion-euro lending limit for the planned European Stability Mechanism (ESM).
The ESM is to succeed the eurozone’s temporary bailout fund, the European Financial Stability Facility, next year.
At a meeting of her ruling party on Tuesday, German Chancellor Angela Merkel signalled to lawmakers that Berlin remained opposed to any increase.
Germany’s stance underscores a rift among some European leaders over boosting the fund’s firepower and how best to tackle the eurozone’s fiscal woes.
The dollar was trading at 77.95 yen against 78.00 yen in New York.
Dealers are keeping an eye on Standard & Poor’s, which is expected to pass judgement on last Friday’s agreement this week after putting 15 of 17 euro-member states – including France and Germany – on downgrade warning.
The agency last week announced the AAA status of the EU itself was under threat. Fitch Ratings predicted a “significant” economic downturn in Europe with the debt crisis likely to continue through 2012, while Moody’s said the crisis remains in a “critical and volatile stage.”
In Tokyo Olympus ended in the red as traders awaited its crucial filing of earnings figures, which were put back due to the controversy surrounding the firm’s admission that it covered up huge investment losses dating back to the 1990s.
If it had not submitted them Wednesday the firm would have been delisted from the stock exchange.
The camera maker, which is embroiled in a cover-up scandal, earlier Wednesday handed in its revised earnings for the five years to March 2011.
In another clear signal of the worldwide impact of the eurozone crisis, the oil cartel OPEC and the International Energy Agency both revised their previous forecasts for global oil demand downwards, citing a slowdown in growth.
That weighed on crude prices. New York’s main contract, light sweet crude for January delivery, fell seven cents to $100.07 a barrel and Brent North Sea crude for January delivery was off 39 cents at $109.11.
Gold was trading at $1,637.90 an ounce at 0950 GMT, against $1,664.80 an ounce late Tuesday.
In other markets:
— Singapore closed down 0.50 percent, or 13.35 points, at 2,672.39.
Singapore Airlines fell 1.46 percent to Sg$10.11 and Olam International shed 2.20 percent to Sg$2.22.
— Taipei rose 0.38 percent, or 26.26 points, at 6,922.57.
HTC rose 4.69 percent to Tw$446.0 while Hon Hai gained 0.49 percent to Tw$81.9.
— Manila closed flat, edging up 3.31 points to 4,285.93.
Energy Development Corp. led gainers, rising 1.60 percent to 6.35 pesos, while Metropolitan Bank and Trust was up 0.94 percent at 69.55 pesos.
SM Investments fell 0.67 percent to 515.50 pesos.
— Wellington fell 0.26 percent, or 8.65 points, to 3,284.14.
Telecom was down 2.35 percent at NZ$2.08 and Contact Energy was 1.11 percent off at NZ$5.36.
— Kuala Lumpur fell 0.15 percent, or 2.27 points, to end at 1,463.12.
UEM Land Holdings shed 0.45 percent to 2.19 ringgit, while budget carrier AirAsia lost 1.62 percent to 3.65 ringgit and financial firm CIMB Group Holdings gained 0.15 percent to 6.85 ringgit.
— Jakarta lost 0.32 percent, or 11.98 points, to finish at 3,751.60.
Car maker Astra dropped 3.9 percent to 72,000 rupiah, while Bank Mandiri lost 0.8 percent to 6,450 rupiah.
— Bangkok fell 0.69 percent, or 7.13 points, to 1,023.48.
— Mumbai closed down 121.37 points, or 0.76 percent, to end at 15,881.14.
