Asian shares retreated Tuesday as investors grew cautious ahead of key event risks from the U.S. and Europe later in the week, with exporters in Japan hit by a weak euro.
Japan’s Nikkei Stock Average 100000018 and China’s Shanghai Composite Index 000001 fell 0.7% each, while South Korea’s Kospi SEU and Australia’s S&P/ASX 200 index XJO both lost 0.2%.
Taiwan’s Taiex Y9999 ended little changed, while Hong Kong’s Hang Seng Index HSI slipped 0.6%.
The losses in Asia followed a decline for U.S. stocks Monday, ahead of the Federal Reserve’s policy decision due Thursday. A weak jobs report for August stoked expectations that the central bank may unveil plans to support the economy. Read more on the U.S. session.
Risks from news headlines are also high in Europe this week, as Germany’s constitutional court is due to rule on the legality of the euro zone’s permanent rescue fund Wednesday, and Eurogroup finance ministers are due to gather Friday. Read analysis on the German court ruling.
Ric Spooner, CMC Markets chief market analyst in Sydney, said traders would be squaring positions ahead of the Fed and German court decision.
“Investors face risks in both directions with these decisions,” Spooner said in emailed comments.
“Although a favorable ruling on Germany’s ability to fund the euro bailout funds and a large Fed monetary initiative would be positive for markets, there is now plenty of scope for markets to fall if either of these decisions disappoints in a material way,” he said.
Majors movers
Japanese exporters with strong exposure to Europe were hit as the euro fell back below the psychologically significant 100-yen level EURJPY Monday.
NEC Corp. 6701 NIPNF dropped 0.9%, Sony Corp. SNE 6758 slipped 0.3% and Mazda Motor Corp. 7261 MZDAF retreated 2.1%.
Panasonic Corp. 6752 PC lost 1.7% after Moody’s downgraded its credit rating by two notches to just one level above “junk” grade, citing poor earnings and high debt. Read more on Panasonic’s rating cut.
Shares of Toshiba Corp. 6502TOSYY shed 0.8% after announcing a settlement in a U.S. antitrust case over flat-panel price fixing, with Toshiba agreeing to pay $30 million while admitting no wrongdoing.
Tokyo-listed financials also suffered amid concerns about Europe. Shares of Nomura Holdings Inc.8604NRSCFNMR lost 0.7% and Mitsubishi UFJ Financial Group Inc. MTU 8306 shed 1.1%.
In Hong Kong, shares of Li & Fung Ltd. 494LFUGY dropped 1.1% after Deutsche Bank downgraded the export and logistics firm to hold from buy.
Resource shares were also weak across the region following falls on some commodity markets overnight.
Shares of China Coal Energy Co. CCOZY1898 slipped 0.3% and Angang Steel Co. 347ANGGF dropped 2.2% in Hong Kong; on mainland Chinese bourses, they gave up 1.1% each.
In Australia, Woodside Petroleum Ltd. WPLWOPEY lost 1% and Santos Ltd. STOSSLTY eased 0.4% after crude-oil futures settled with a mild loss in New York on Monday. Read more on oil futures.
Shares of gold major Newcrest Mining Ltd. NCMNCMGY dropped 0.9%. Read more on gold futures.
Marketwatch
