Japanese stocks fell sharply to lead losses across most of Asia on Wednesday, with technology and steel firms taking a hit as concerns about growth and earnings weighed.
Japan’s Nikkei Stock Average retreated 1.8% to extend losses made so far this week to 2.8%, putting the index back at early-August lows.
South Korea’s Kospi dropped 1.1%, while Australia’s S&P/ASX 200 index lost 0.3% to back away from a 14-month high.
Hong Kong’s Hang Seng Index slipped 0.2% but the Shanghai Composite Index reversed early losses to rise 0.1%.
U.S. shares ended with sharp losses Tuesday, as investors took a cautious stance ahead of the start of the third-quarter earnings season. Read: U.S. stocks drop on earnings caution.
“Risk aversion increased in the wake of lower revised growth estimates from the International Monetary Fund and worries that earnings will be far less flattering than in previous quarter,” said Mitul Kotecha, strategist at Credit Agricole.
Alcoa Inc. unofficially kicked off the start of U.S. third-quarter earnings after the U.S. close, with the metal giant reporting that it swung to a third-quarter net loss. On an adjusted basis, earnings slightly exceeded analyst forecasts. Read: Alcoa swings to 3rd-quarter loss on charges
Alcoa also moderated its 2012 global aluminum demand forecast to 6%, from 7%, saying that a growth slowdown in China has slightly impacted its second-half outlook.
“Industrials are weighing on the region today, with the Alcoa result being pinned as one of the main reasons for this. Alcoa cut its forecast for global aluminium demand, and this revived some of the growth concerns markets have been facing,” said Stan Shamu, strategist at IG Markets.
Chinese aluminium firm Aluminium Corp. of China Ltd. lost 0.6% in Hong Kong on Wednesday.
Japanese steel stocks were hit hard, with JFE Holdings Inc. falling 2% and Kobe Steel Ltd. down 4.8%.
In the technology sector, a weak performance for U.S. rivals set the stage for losses in Asia. In Tokyo, Ricoh Co. lost 4.8%, Fujitsu Ltd. fell 3.5% while Panasonic Corp. declined 2.7%.
Toshiba Corp. slid 4.7%. The firm announced it would buy a further 20% stake in Westinghouse Electric Co. for 125 billion yen ($1.6 billion), in which it already hold majority ownership. Read: Toshiba to buy Shaw’s stake in Westinghouse
A decline in the dollar against the yen didn’t help matters for Japanese exporters, with the dollar buying ¥78.25 on Wednesday, down from ¥78.29 in late trading on Tuesday and ¥78.32 on Monday.
South Korean technology majors saw selling as well, with Samsung Electronics Co. down 2.3% and SK Hynix Inc. down 1.3%.
Investors remained concerned about developments, or a lack of them, in Europe, Credit Agricole’s Kotecha said.
“Spain remains the major focal point, and in this regard there is no progress in the country moving forward with a bailout request, much to the chagrin of peripheral debt markets,” Kotecha said.
In Hong Kong, Europe-exposed banking giant HSBC Holdings PLC lost 0.9%, weighing on the market.
Still, Bank of China Ltd. advanced 0.3% and Industrial & Commercial Bank of China Ltd. rose 0.9% after the domestic-investment arm of China’s sovereign-wealth fund increased its stakes in both firms over the third quarter of 2012. Read: China wealth fund raises stakes in two major banks
Car makers gained in mainland China, with Dongfeng Automobile Co. up 3.2% in Shanghai, and BYD Co. rising 3.6% in Shenzhen trading.
Chinese share markets recorded big gains Tuesday following another large liquidity injection into the financial system by the People’s Bank of China.
“It’s a signal to say that the PBOC is still in the way of easing,” said Linus Yip, chief strategist at First Shanghai Securities. “We are expecting them to do more.”
“There are [global economic] worries but I think that ECB and QE3 moves are countering them,” for Hong Kong at least, said Yip, describing the Hong Kong market as “quite firm.”
He was referring to the recent comments from the European Central Bank’s president pledging to hold the shared-currency region together, and an announcement from the U.S. Federal Reserve that it would conduct a third round of quantitative easing, buying bonds for an unspecified time period.
Retailers were among notable decliners in Australia, with department-store operator Myer Holdings Ltd. down 0.5% and electronics retailer JB Hi-Fi Ltd. retreating 1.5%.
Westpac Banking Corp. led losses among the major Australian banks with a drop of 0.7% after analysts at Nomura cut its rating on the shares to neutral from buy, while J.P. Morgan lowered Westpac to underweight from neutral.
Marketwatch
