Asia Tumbles, Yen Surges

Ivaylo
05 Mar, 2007
New York City

Asian makets plunged sharply across the region, with Japanese stocks falling for the fifth session in a row, while Hong Kong dipped 4%. In Japan, exporters were hit hardest on the recent rally of the yen. HK stocks dived to close below 19,000 for the first time since mid-December, on currency worries and expectations of poor earnings figures from HSBC. South Korea tracked sharp declines in global markets, with steelmaker Posco and builders leading losses. Australia and Shanghai also plunged.

[R]9:00AM Asian markets ended sharply lower Monday with Japan leading decliners.[/R]
Asian markets finished lower on Monday. Japanese Nikkei 225 Index fell 3.34% to 16,642.25. Exporters fell amid a surge in the yen, which erodes overseas earnings when repatriated to Japan. The dollar fell to 115.70 yen from 116.75 yen late Friday in New York. Canon shed 2.08%, Toyota Motor fell 3.24% and Sony was down 2.92%.

Hong Kong declined 4% to 18,664.88. Investors are worried about the possibility of further falls to come. Shares of HSBC fell 2.5% ahead of its earnings results, which the company issued after the market closed. Among other large-caps, China Mobile dropped 6%, Hutchison Whampoa fell 3% and China Construction Bank sank 4.9%. The Shanghai Composite Index fell 1.6% at 2,783.31.

In South Korea shares also shed 2.71% to 1,376.15. Australian index S&P/ASX 200 index fell 2.3% on heavy volume to close at a seven-week low of 5,642.40. The index is down 6.6% from the last month record high of 6,052.1. BHP Billiton led the decliners, with commodity-price weakness giving an added reason to sell resources. BHP shed 2.9%, Rio Tinto lost 2.5% and Woodside Petroleum closed down 4.2%.

Other major markets also declined. Singapore Straits Times Index finished 3.1% lower, at 2,982.29, the Weighted Price Index of the Taiwan Stock Exchange closed 3.7% lower to 7,344.56 and the Kuala Lumpur Composite Index, ended down 4.6%, at 1,110.69.

[R]7:00AM European markets declined Monday on global market weakness.[/R]
European markets were sharply lower on Monday. The German DAX Xetra 30 dropped 2% to 6,472.81, the French CAC 40 fell 1.8% to 5,328.70 and the U.K. FTSE 100 lost 1.4% to 6,031.40.

Advancers

One of the few advancers was HSBC Holdings edging 0.2% higher after reporting a 5% profit rise in 2006 and lifting its dividend by 11%. It took $10.57 billion in charges, mostly on a poor performance out of the U.S.

Countrywide gained 3.5% after Apollo Management late Friday agreed to buy the real estate chain shares for 1 billion pounds. Getaz Romang shares rose 21% after Ireland CRH agreed to buy it for $442 million.

Decliners

Fears that sharp strengthening for the Swiss franc could hurt exports drove Swatch 3.9% lower. Richemont, which owns the Cartier brand, announced a joint venture to design, manufacture and distribute watches under the Ralph Lauren brand. The venture, which aims to launch products in Autumn 2008, will operate at a loss for a few years. Richemont shares fell 2.6%.

Mining and metals stocks were lower as commodity prices fell. Xstrata, the London-listed miner, was down 4%, while steelmaker Arcelor-Mittal shed 4.1%.

Oil and gold

Gold fell to a five-week low on selling by investors holding the precious metal in exchange-traded funds after a slump in Asian and European stocks. Gold for immediate delivery dropped $5.70, or 0.9%, to $636.75 an ounce in early trade in London.

Crude oil fell for a second day on concern global economic growth will slow, reducing fuel consumption. Crude oil for April delivery fell as much as $1.18, or 1.9%, to $60.46 a barrel on the New York Mercantile Exchange. Brent crude dropped as much as $1.29, or 2.1%, to $60.79 a barrel on the ICE Futures exchange in early trade in London.

Currencies

The euro dropped against the dollar on Monday, while the U.S. currency hit a three-month low against the Japanese yen as global stock markets remained nervous following last week sell-off. In morning European trading the euro bought $1.3129, down from $1.3191 late Friday in New York. The British pound fell to $1.9225 from $1.9433 in New York, while the dollar slipped to purchase 115.36 Japanese yen, down from 116.75 on Friday.

[R]5:30AM Gold and silver fell Friday on a massive sell-off.[/R]
April gold declined $21 to $644.10 a troy ounce on the New York Mercantile Exchange. May silver lost 69 cents to $12.96 an ounce. April platinum settled down $33.40 at $1,211.80 an ounce, while June palladium settled down $3.45 at $350.60 an ounce.
The May copper contract shed 4.75 cents to settle at $2.7070 per pound.

The April crude oil contract shed 36 cents to end at $61.64 a barrel. April gasoline settled down 0.83 cent at $1.9018 a gallon. April heating oil lost 0.81 cent to close at $1.7682 a gallon. April natural gas settled down 4.5 cents at $7.243 per million British thermal units.

On the New York Board of Trade, Arabica coffee futures ended weaker, pressured by losses in London trading of robusta beans. The March contract closed down 1.65 cents at $1.1435 a pound, with May off 1.45 cents at $1.1515. Futures on raw sugar in foreign ports for May gained 0.25 cent to end at 11.22 cents a pound, with July up 0.21 cent at 11.02 cents.