Asia stocks traded mostly lower Thursday, with a downgrade to Spain’s credit rating underscoring Europe’s debt troubles to investors already concerned about corporate earnings trends in a weaker global economy.
Japan’s Nikkei Stock Average slipped 0.4%, extending the previous session’s 2% drop, while Australia’s S&P/ASX 200 index lost 0.1%.
In China, the Shanghai Composite Index lost 0.3%, but Hong Kong’s Hang Seng Index shook off early losses to trade up 0.2%.
South Korea’s Kospi saw volatile trading after the Bank of Korea cut its policy interest rate by a quarter-point to 2.75%, as widely expected, in response to softness in the domestic economy amid a weakened global outlook. After moving in both directions, the Kospi traded down 1.1%. “Markets were getting a boost from the European Central Bank and the Federal Reserve [support moves], but that’s started to wear off with delays in Spain and profit-reporting season in the U.S. creating a bit of nervousness,” said Shane Oliver, head of investment at AMP Capital.
The stage was set for losses in Asia after Wall Street closed lower Wednesday following downbeat guidance from aluminum major Alcoa Inc. and energy giant Chevron Corp. . Existing worries about Europe’s debt situation were given fresh impetus late Wednesday after Standard & Poor’s cut Spain’s credit rating by two notches — to just one level above speculative or “junk” grade — with a negative outlook, citing mounting risks to the country’s public finances.
“Pressure on Spain has intensified in the wake of a two-notch downgrade to the country’s debt,” Credit Agricole strategists said. “Slow progress towards a sovereign bailout for Spain will have likely played a role in the decision, a factor that is also weighing on general market sentiment,” they said.
Japanese industrial firms fell Thursday after the release of the weaker-than-expected 3.3% drop in August’s core machinery orders, which exclude volatile power-station and shipbuilding orders.
Robotics firm Fanuc Corp. traded down 2.6% and Mitsubishi Materials Corp. lost 2.6%.
Autos also gave up ground in Tokyo, with Toyota Motor Corp. down 1.3% after announcing after announcing a major recall shortly before the close of Wednesday’s trading. In the same sector, which has seen selling pressure recently on concerns about the impact of Sino-Japanese tension on Chinese sales, Honda Motor Co. slipped 0.6% and Nissan Motor Co. retreated 1.4%.
The losses also came as the Japanese currency furthered its strong run against the dollar this week, with the greenback trading at ¥78.03 on Thursday, down from ¥78.19 in late trading Wednesday.
In Australia, rare-earths firm Lynas Corp. tumbled 14.5% after a Malaysian court postponed a decision on a temporary operating license for the firm’s refinery in that country.
Other miners trading lower in Sydney included Fortescue Metals Group Ltd. down 2.5% and Rio Tinto Ltd. down 0.7%.
In Taipei, smartphone maker HTC Corp. tumbled 6.9% after the tech major reported its lowest quarterly profit in seven years this week. Read: HTC’s need for ‘something else’ to take on Apple, Samsung.
Lenovo Group Ltd. rose 1% in Hong Kong after Gartner ranked the firm as the world’s leading personal-computer maker by unit sales. Still, the personal-computer market saw its biggest drop in third-quarter sales for more than a decade, according to research firms.
Nomura analysts said that “the long-term structural shift in IT industry demand from PCs to tablets/smartphones continues, and faster than we expected.”
“This has the market looking forward to a recovery for DRAM, where prices are at unit cash cost, and NAND prices already appear to be on the road to recovery,” they said.
Advantest Corp. , which makes test equipment for the semiconductor industry, climbed 5% in Japanese trading. Tokyo Electron Ltd. extended gains from Wednesday when it reported a stronger-than-expected rise in second-quarter orders with a 2.1% climb.
Major mainland Chinese banks were putting in a strong performance in Hong Kong, supporting the broader market, with Industrial & Commercial Bank of China Ltd. up 2.6%, Agricultural Bank of China Ltd. rising 1.9%, Bank of China Ltd. adding 1.7% and China Construction Bank Corp. ahead by 1.5%.
An investment arm of China’s sovereign-wealth fund bought shares in four major Chinese banks on the secondary market Wednesday and said it will continue such share purchases over the next 12 months.
Marketwatch
