Asian stocks lower on Moody’s credit downgrades
HONG KONG—Asian key markets were mostly lower on Tuesday after Moody’s downgraded its credit ratings on six European nations, blaming the ongoing fallout from the continent’s debt crisis.
The move came after Greek lawmakers pushed through a package of austerity cuts late Sunday, with Premier Lucas Papademos saying the measures were “the country’s only hope” to avoid economic meltdown and secure another bail-out.
Sydney closed 0.99 percent lower, or 42.3 points, at 4,242.8, Seoul ended down 0.15 percent, or 3.10 points, at 2,002.64.
Hong Kong shares closed up 0.15 percent, or 30.43 points, 20,917.83, while Shanghai stocks ended down 0.30 percent, or 7.09 points, at 2,344.77.
Tokyo clawed back early losses to close up 0.59 percent, or 52.89 points, at 9,052.07, after the central bank said it was easing monetary policy by pumping an extra 10 trillion yen ($130 billion) into an asset purchase programme, aimed at battling the deflation that has wracked Japan’s economy for years.
Moody’s, meanwhile, chopped ratings for Italy, Spain and Portugal and said its top ratings on Austria, France and Britain were at risk.
Ratings were also cut for Slovenia, Slovakia and Malta, with the agency warning that all nine countries were increasingly susceptible to financial and macroeconomic risks from the eurozone debt crisis.
The news came as Chinese and European Union leaders meet in Beijing Tuesday for a summit likely to be dominated by the debt crisis.
There has been speculation that China may try to help resolve the eurozone’s fiscal woes, armed with its massive foreign exchange holdings, as Beijing looks to prop up a key export market.
That speculation gained traction after Premier Wen Jiabao said later Tuesday that Beijing stood ready to increase “its participation in resolving the EU debt problems” and hoped to see Europe “maintain stability and prosperity.”
European finance ministers will meet Wednesday in Brussels to sign off on the Greek deal necessary for a Europe-sponsored rescue package, followed by an offer to private sector holders of Greek government bonds.
The debt holders will be asked to exchange their existing bonds for new bonds with half the face value, chopping about 100 billion euros off Greece’s 350 billion euro ($463 billion) debt mountain.
Athens must make the offer by Friday at the latest to complete its debt writedown – and receive the fresh bail-out package – before a looming March 20 bond redemption, when the government must repay 14.5 billion euros.
“Markets will likely trade cautiously ahead of tomorrow’s meeting of (European Union) finance ministers, especially as it appears that at least Germany and the Netherlands remain skeptical of Greece’s austerity plans, which could frustrate the approval of a second 130 billion euro bailout package,” Credit Agricole said in a note to clients.
The budget cuts sparked anger among many Greeks and Athens has been rocked by violence, with dozens injured and buildings set ablaze as an estimated 80,000 protesters voiced their opposition to the unpopular austerity plan.
The drop in Asian markets followed a solid day on Wall Street as the Dow Jones Industrial Average gained 0.57 percent, the broad-based S&P 500 added 0.68 percent with the tech-heavy Nasdaq Composite up 0.95 percent.
Apple shares finished at $502.60, surpassing the $500 mark for the first time amid reports the tech giant would unveil a new iPad next month and after it released blockbuster quarterly earnings in January.
The firm more than doubled its net profit to a record $13.06 billion as revenue also hit an all-time high.
Meanwhile, the owners of New York’s Empire State Building applied to take it public in a real estate trust with the aim of raising $1.0 billion from an initial public offering.
Europe’s main markets slipped in early trade on Tuesday with London’s FTSE 100 falling 0.28 percent, Frankfurt’s DAX 30 shedding 0.06 percent, and the Paris CAC 40 dipping 0.24 percent.
On currency markets, the Bank of Japan move saw the yen soften to 102.98 against the euro, compared with 102.34 late Monday in New York, while it also weakened to 77.96 against the dollar, from 77.58.
New York’s main oil contract, light sweet crude for delivery in March, rose 68 cents to $101.59 a barrel in the afternoon and Brent North Sea crude for March delivery shed 43 cents to $117.52 on its last trading day.
Gold was at $1,718.80 an ounce at 1100 GMT, against $1,721.90 in New York.
In other markets:
— Taiwan shares fell 0.36 percent, or 28.83 points, at 7,884.08.
MediaTek gained 1.44 percent to Tw$316.0 while Hon Hai Precision was 1.46 percent lower at Tw$101.0.
— Singapore shares closed up 0.37 percent, or 11.07 points, to 2,987.41.
Sembcorp Marine gained 1.36 percent to 5.23 while City Developments fell 0.65 percent to 10.77.
— Mumbai rose 0.43 percent, or 75.73 points, to close at 17,848.57.
India’s top vehicle maker Tata Motors, which reported a 41 percent rise in its third quarter net profit, closed up 3.74 percent at 267.9.
— Kuala Lumpur closed up 0.21 percent, or 3.23 points, at 1,566.05.
Financial firm CIMB Group Holdings gained 2.1 percent to 7.31 ringgit, while Hong Leong Bank rose 1.2 percent to 11.70. Budget carrier AirAsia fell 2.1 percent to 3.68 ringgit.
— Indonesian shares lost 0.23 percent, or 9.09 points, at 3,952.82.
Bank Mandiri lost 1.6 percent to 6,250 rupiah and car maker Astra rose 0.5 percent to 73,700 rupiah.
— Bangkok dropped 0.98 percent, or 10.99 points, at 1,106.41.
Banpu fell 1.57 percent or 10 baht to 626 baht, and PTT Plc also dropped 2.31 percent or 8 baht to 338 baht.
— Philippine shares closed 0.54 percent lower, or 26.10 points, to 4,775.93.
BDO Unibank rose 1.9 percent to 64.35 pesos while Philippine Long Distance Telephone Co. fell 0.51 percent to 2,744 pesos.
— Wellington fell 0.29 percent, or 9.69 points, to 3,330.33.
Mainfreight slumped 9.2 percent to NZ$9.40 after an unexpected fall in net profit, while Fletcher Building was down 0.15 percent at NZ$6.71.
