Japanese and Australian stocks fell Tuesday after worries over China and a slump in commodities prompted a sell-off on Wall Street, although many regional markets came off their lows as buyers circled back in after recent losses.
“With no news or data, Asia saw limited follow-through of the risk-off move, prompting a solid bout of short-covering,” said Sue Trinh, a strategist at RBC Capital Markets.
The Nikkei Stock Average ended fell 0.4% and the broader Topix lost 1.3% in Japan, and Australia’s S&P/ASX gave up 0.3%, with the benchmarks all paring their early losses.
Rebounding from early declines, Hong Kong’s Hang Seng Index was fractionally higher and China’s Shanghai Composite Index inched up 0.5% after a three-day losing streak.
South Korea’s Kospi added 0.1%, after the government unveiled a supplementary budget that analysts said will provide a small fiscal stimulus to the economy.
“We may see some initial selling as Europe comes in, as they closed pre Boston bombing, but I think the selling will be muted,” said Andrew Sullivan, director of sales trading at Kim Eng Securities.
Regional markets opened the day on a downbeat note after hefty overnight losses of between 1.8% and 2.4% for major U.S. stock benchmarks. But they steadily recovered as the day progressed, after all major regional markets slumped Monday in the wake of downbeat Chinese economic data.
Many regional financial, property and construction stocks advanced to pull markets higher Tuesday. In Hong Kong, Industrial & Commercial Bank of China Ltd. and China Construction Bank Corp. rose 0.8% each.
In Shanghai, China Pacific Insurance Group Co. rose 3.5% and China Railway Construction Corp. added 1%, while in Seoul, Hyundai Engineering & Construction Corp. added 1% and Industrial Bank of Korea gained 0.8%.
The rise in Seoul came after the government introduced a 17.3 trillion won ($15.53 billion) supplementary budget, of which about a third will used for additional spending.
But most regional commodity stocks ended lower, despite the recovery from the day’s lows, following a $140 loss for gold futures and a plunge for silver futures traded in New York.
In Sydney, gold miners Newcrest Mining Ltd. and Perseus Mining Ltd. dove 5.1% and 5.8%, respectively.
In Hong Kong, Zhaojin Mining Industry Co. slumped 2.8%, and retailer Chow Tai Fook Jewellery Group Ltd. skidded 1.4%. Shares of Zhongjin Gold Corp. lost 2.9% in Shanghai, while Korea Zinc Co. , which has an exposure to precious metals, plummeted 4.9% in Seoul.
The broader resource sector also weakened after brokerages including HSBC, Royal Bank of Scotland and J.P. Morgan downgraded their economic forecasts in the wake of Monday’s disappointing first-quarter economic data from China, one of the biggest consumers of global commodities.
Mining heavyweight BHP Billiton Ltd. lost 0.5%, and Woodside Petroleum Ltd. gave up 1.7% Sydney.
Jiangxi Copper Co. fell 0.9%, and PetroChina Co. gave up 1.8% in Hong Kong, while in Shanghai, Jiangxi shed 0.8% and PetroChina was flat.
“While a small miss in China’s gross domestic product and industrial production data was the primary catalyst for the share-market selloff, the underlying reasons for the decline are a supply-driven decline in some commodity markets, a leverage-inspired crash in gold prices and, in the case of the Australian market, full valuations for many stocks,” said CMC Markets chief market analyst Ric Spooner.
In Japan, exporters and financials — which had powered gains of more than 25% for the two major stock benchmarks in the year to date — suffered another day of weakness. Exporters in particular came under pressure as the U.S. dollar hovered around ¥97, after testing the ¥100 level unsuccessfully last week.
Sony Corp. slid 4.1%, and Toyota Motor Corp. lost 1.6%, while among banks, Mitsubishi UFJ Financial Group Inc. gave up 3.6%.
Shares of wireless telecom Softbank Corp. plunged 6.8% in Tokyo, after Dish Network Corp. topped its bid for U.S. peer Sprint Nextel Corp..
Marketwatch
