Asian Markets Follow US Stocks Lower
HONG KONG — Asia’s stock markets headed lower on Friday in the wake of a steep drop on Wall Street as a fusillade of data reports indicated that the U.S. economy’s initial bounce from the bottom could be leveling off.
Feeble economic news from Asia itself over the past few sessions added to the pessimism. Jobless data published in Japan on Friday showed a surprise improvement in August, but a closely-watched business confidence survey released Thursday has raised concerns that companies are still planning to cut back on spending plans — boding ill for the economy’s recovery prospects.
The yen’s strength against the U.S. dollar also has been a drag on Japan’s markets lately. On Friday, the Japanese currency strengthened to ¥89.40 per dollar from ¥89.50 the previous day.
The head of Toyota Motor called the current dollar-yen rate “very tough,” saying the weak U.S. currency made it difficult to return to profit on an unconsolidated level.
“When you get to this level, it makes it difficult to return to profit on sales growth alone,” Akio Toyoda told a news conference Friday at the Japan National Press Club.
The result: A 2.5 percent slump by the Nikkei 225 index in Japan on Friday, and an almost equally large drop in Hong Kong, where the Hang Seng index was 2.3 percent lower by mid-afternoon.
Glorious Property Holdings, a Chinese property developer, fell as much as 20 percent on its first day of trading in Hong Kong, the fifth company to start its market debut in the city with a drop.
The Straits Times index in Singapore shed 1.5 percent, and Australia’s benchmark index sagged 2.1 percent.
Stock markets in mainland China, India and South Korea were shut because of public holidays on Friday.
“After the big rally since March, global stock markets are correcting their gains. This pull-back was expected given the fact that we are now approaching the one-year anniversary of last year's autumn crash,” commented Puru Saxena, chief executive of Puru Saxena Wealth Management in Hong Kong in a note to clients on Friday.
Mr. Saxena, though, remained confident that another crash is not on the cards, and that emerging Asian markets, in particular, remained attractive.
“It is our contention that after a wobbly October, the markets will gather their poise and a powerful year-end rally may occur,” he said. “We continue to favor the emerging nations of Asia and recommend exposure to China, India and Vietnam.”
Still, the economic picture in the United States had once again made investors there nervous.
The Dow Jones industrial average fell 203 points, or 2.1 percent on Thursday. The broader Standard & Poor’s 500 stock index was off 2.6 percent. The Nasdaq sank the most, tumbling 3.1 percent, to 2057.48 on losses in software production and for network companies.
Falling U.S. automobile sales in September, a jump in first-time jobless claims and an unexpected decline in manufacturing activity suggested that Wall Street might have become too optimistic. And an hour before markets closed, economists at Goldman Sachs downgraded their estimates for Friday’s monthly U.S. unemployment report, feeding into the pessimism.
It was Wall Street’s worst daily performance since July. Stocks had bounded higher for seven months with little pause for breath. But now, some investors are concerned that share prices are heading into a red October.
“It’s been great up to this point, but it can’t go up forever,” said Ryan Larson, senior equity trader at Voyageur Asset Management. “The market wants solid fundamental growth. While we may tick incrementally positive, they were looking for more.”
On Thursday, investors got less.
Manufacturing activity slipped in September, according to the Institute for Supply Management, even though it continued to expand, though not as rapidly as in August. Businesses said their new orders dipped from a month ago, and that production and prices fell.
And in a troubling sign for the U.S. job market, the Labor Department said in a separate report that first-time claims for unemployment insurance rose 17,000 to a seasonally adjusted 551,000 last week.
“We don’t think we’re going to come out of this unscathed and be back to business as usual,” said Scott Anderson, senior economist at Wells Fargo. “Consumers will continue to be suffering from the headwinds of the financial crisis. Debt levels remain too high.”
A separate report on personal spending showed that consumers would still open their wallets if offered a good enough deal.
Consumer spending, which makes up 70 percent of the U.S. economy, rose sharply in August as car buyers took advantage of taxpayer-financed rebates under the government’s cash-for-clunkers program, the Commerce Department reported.
While the 1.3 percent spike in spending was the largest in nearly eight years, economists said it was not the foundation for any long-term rebound in the consumer sector. The government’s $3 billion clunkers program has ended, and automakers reported sharp declines in September sales from a month earlier.
With consumers worried about losing jobs and value in their homes and investments, economists said the surge in spending was probably a one-time event. Still, it was the fourth consecutive month of growth in spending.
“I wouldn’t expect it to continue,” said Alan Levenson, chief economist at T. Rowe Price.
Jack Healy reported from New York.
HONG KONG — Asia’s stock markets headed lower on Friday in the wake of a steep drop on Wall Street as a fusillade of data reports indicated that the U.S. economy’s initial bounce from the bottom could be leveling off.
Feeble economic news from Asia itself over the past few sessions added to the pessimism. Jobless data published in Japan on Friday showed a surprise improvement in August, but a closely-watched business confidence survey released Thursday has raised concerns that companies are still planning to cut back on spending plans — boding ill for the economy’s recovery prospects.
The yen’s strength against the U.S. dollar also has been a drag on Japan’s markets lately. On Friday, the Japanese currency strengthened to ¥89.40 per dollar from ¥89.50 the previous day.
The head of Toyota Motor called the current dollar-yen rate “very tough,” saying the weak U.S. currency made it difficult to return to profit on an unconsolidated level.
“When you get to this level, it makes it difficult to return to profit on sales growth alone,” Akio Toyoda told a news conference Friday at the Japan National Press Club.
The result: A 2.5 percent slump by the Nikkei 225 index in Japan on Friday, and an almost equally large drop in Hong Kong, where the Hang Seng index was 2.3 percent lower by mid-afternoon.
Glorious Property Holdings, a Chinese property developer, fell as much as 20 percent on its first day of trading in Hong Kong, the fifth company to start its market debut in the city with a drop.
The Straits Times index in Singapore shed 1.5 percent, and Australia’s benchmark index sagged 2.1 percent.
Stock markets in mainland China, India and South Korea were shut because of public holidays on Friday.
“After the big rally since March, global stock markets are correcting their gains. This pull-back was expected given the fact that we are now approaching the one-year anniversary of last year's autumn crash,” commented Puru Saxena, chief executive of Puru Saxena Wealth Management in Hong Kong in a note to clients on Friday.
Mr. Saxena, though, remained confident that another crash is not on the cards, and that emerging Asian markets, in particular, remained attractive.
“It is our contention that after a wobbly October, the markets will gather their poise and a powerful year-end rally may occur,” he said. “We continue to favor the emerging nations of Asia and recommend exposure to China, India and Vietnam.”
Still, the economic picture in the United States had once again made investors there nervous.
The Dow Jones industrial average fell 203 points, or 2.1 percent on Thursday. The broader Standard & Poor’s 500 stock index was off 2.6 percent. The Nasdaq sank the most, tumbling 3.1 percent, to 2057.48 on losses in software production and for network companies.
Falling U.S. automobile sales in September, a jump in first-time jobless claims and an unexpected decline in manufacturing activity suggested that Wall Street might have become too optimistic. And an hour before markets closed, economists at Goldman Sachs downgraded their estimates for Friday’s monthly U.S. unemployment report, feeding into the pessimism.
It was Wall Street’s worst daily performance since July. Stocks had bounded higher for seven months with little pause for breath. But now, some investors are concerned that share prices are heading into a red October.
“It’s been great up to this point, but it can’t go up forever,” said Ryan Larson, senior equity trader at Voyageur Asset Management. “The market wants solid fundamental growth. While we may tick incrementally positive, they were looking for more.”
On Thursday, investors got less.
Manufacturing activity slipped in September, according to the Institute for Supply Management, even though it continued to expand, though not as rapidly as in August. Businesses said their new orders dipped from a month ago, and that production and prices fell.
And in a troubling sign for the U.S. job market, the Labor Department said in a separate report that first-time claims for unemployment insurance rose 17,000 to a seasonally adjusted 551,000 last week.
“We don’t think we’re going to come out of this unscathed and be back to business as usual,” said Scott Anderson, senior economist at Wells Fargo. “Consumers will continue to be suffering from the headwinds of the financial crisis. Debt levels remain too high.”
A separate report on personal spending showed that consumers would still open their wallets if offered a good enough deal.
Consumer spending, which makes up 70 percent of the U.S. economy, rose sharply in August as car buyers took advantage of taxpayer-financed rebates under the government’s cash-for-clunkers program, the Commerce Department reported.
While the 1.3 percent spike in spending was the largest in nearly eight years, economists said it was not the foundation for any long-term rebound in the consumer sector. The government’s $3 billion clunkers program has ended, and automakers reported sharp declines in September sales from a month earlier.
With consumers worried about losing jobs and value in their homes and investments, economists said the surge in spending was probably a one-time event. Still, it was the fourth consecutive month of growth in spending.
“I wouldn’t expect it to continue,” said Alan Levenson, chief economist at T. Rowe Price.
Jack Healy reported from New York.
Source: New York Times
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