Asian markets retreated as lingering uncertainty over the U.S. fiscal outlook and the next tranche of financial aid to Greece sidelined buyers, hurting resource stocks in particular.
Australia’s S&P/ASX 200 dropped 1.5%, China’s Shanghai Composite Index skidded 1.2%, Hong Kong’s Hang Seng Index fell 0.8%, and Taiwan’s Taiex lost 1.8%.
Japan’s Nikkei Stock Average gave up early gains to end 0.3% lower, extending its streak of losses to seven sessions as the country’s weak economic outlook pressured sentiment, while South Korea’s Kospi also surrendered early gains to slide 0.7%.
The drop in Shanghai and Hong Kong came even as markets awaited the once-in-a-decade leadership changes at the Communist Party Congress, currently in session.
“China is likely to remain the center of focus for the region, and any comments from there could be a big sentiment driver,” said Stan Shamu, a market strategist at IG Markets.
Investor focus also remained on the so-called fiscal cliff in the U.S. — heavy tax hikes and spending cuts that would occur in the absence of an agreement between Republicans and Democrats by year’s end.
“While our base case remains that a compromise will be reached eventually, the risk of temporarily going over the fiscal cliff in the interim will be negative for risky assets,” Barclays strategists wrote in a note to clients.
Greece was another cause for concern, with The Wall Street Journal reporting about differences between euro-zone leaders and the International Monetary Fund on how to reduce the country’s debt to more manageable levels.
The report said that while the region’s ministers were confident about finding a way to agree on releasing a long-delayed $40 billion aid tranche, IMF Managing Director Christine Lagarde made clear there were differences on how to do that.
Major movers
Stock losses in Asia spread across various sectors, with resources, financials and internationally exposed firms coming under particular selling pressure.
In Sydney, miners suffered despite overnight gains for some commodities. Fortescue Metals Group Ltd. lost 2%, and Newcrest Mining Ltd. fell 2.3%.
BHP Billiton Ltd. lost 1.6% in spite of saying that it expects significant valuation improvements on its shale assets in the U.S.
In Hong Kong, PetroChina Co. lost 1.2%, and China Coal Energy Co. dropped 1.6%. In Shanghai, they declined 1.5% and 1.3%, respectively, while Zhongjin Gold Corp. sank 2%.
In Taipei, Taiwan Semiconductor Manufacturing Co. slid 1.1%, and Inotera Memories Inc. sank 4.4%.
In Seoul, the key shipbuilding sector extended recent sharp losses, as Daewoo Shipbuilding & Marine Engineering Co. surrendered 4.8% and Hyundai Mipo Dockyard Co. retreated 2.2%.
Among major Asian financial names, Westpac Banking Corp. gave up 2.2% in Sydney, Nomura Holdings Inc. lost 0.4% in Tokyo, KB Financial Group Inc. shed 0.8% in Seoul, and China Construction Bank Corp. lost 1.2% in Hong Kong and 0.7% in Shanghai.
QBE Insurance Group Ltd. plunged 7.5% in Sydney on a string of broker downgrades after it issued a profit warning.
On the upside in Sydney, shares of Incitec Pivot Ltd. rallied 3.8%. The firm posted a 24% drop in annual profit, but its key explosives business nonetheless managed a pre-tax gain.
In Tokyo, Olympus Corp. jumped 5.9% after the company swung to a larger-than-expected profit in the fiscal second quarter.
Marketwatch
