U.S. Worries Hurt Asian Markets

123jump.com Staff
22 Feb, 2008
New York City

Asian stocks fell sharply as U.S. recession evidence mounted. Asian markets fearful of slump in exports from the region, decline in foreign direct investment from the U.S., and rising inflation. A sharp and sustained rise in energy and commodities prices such as copper, zinc, aluminum, and steel has put investors on the defensive. India, Japan, and Hong Kong led the decliners in the region.

[R]6:00AM New York, 6:00PM Hong Kong – Asian markets fell sharply after a decline in the U.S. markets.[/R]

The fears of U.S. recession and rising inflation dragged broader U.S. market averages lower. The rising commodities prices and crude oil above $100 a barrel stoked fears of rising inflation and slower growth worldwide. Asian markets fell on the weak sentiment.

In Japan stocks declined as telecom companies sought to attract new customers offering free service between family members. Steel companies edged higher after JFE Steel and Nippon Steel increased prices for the domestic delivery of sheet steels.

In India stocks fell as investors worried that rising inflation may hurt consumer spending and U.S. led recession. Fifth weekly decline for the benchmark index Sensex in the last six weeks has put investors on the edge. The market seems to be caught in a downward spiral. Wholesale price index rose to 4.35% at the end of first week in February.

Australian stocks declined after crude oil prices fell and continued worries related to weak credit markets. Banks fell, led by a weakness in the National Australian Bank, Commonwealth Bank, and Westpac. Banks lost between 1% and 3%. Caltex Australia fell 11% after the oil refiner forecasted weak refining margins in 2008. Billabong added 4% after it reiterated its earnings guidance for the year. Minara Resources surged 8% after it reported lower full year profit but forecasted stronger nickel prices on higher demand from China. Preliminary market turnover showed 551 stocks trading higher, 625 lower, and 346 unchanged and 2.01 billion shares worth $6.4 billion changed hands.

International markets

In Tokyo Nikkei 225 Index closed lower 187.82 or 1.37% to 13,500.46, in Hong Kong Hang Seng index decreased 317.96 or 1.35% closed to 23,305.04. Australia ASX 200 index decreased 23.50 or 0.42% to close 5,559.90.

In South Korea Kospi Index decreased 17.91 or 1.05% to close at 1,686.45, in Thailand SET index closed lower 0.27 or 0.03% to 826.86 and Indonesia JSE Index edged increased 6.97 or 0.25% to 2,741.18. Sensex index in India decreased 385.61 or 2.17% to 17,349.07.


[R]5:00AM New York, 7:00PM Tokyo – Global markets weakness, worries related to U.S. credit market and direction of the economy, local wireless price war, and a sharp rise in steel prices dragged index lower.[/R]

Stocks in Japan slumped to a weekly loss after KDDI announced a plan to lure customers that experts believe will wipe off 25 billion from the company’s revenues.

Market Sentiment

In Tokyo trading Nikkei 225 declined 1.37% or 187.82 to 13,500.46, dropping 0.9% for the week, and the broader Topix Index fell 1% or 13.35 to 1,321.37.

In the first section of the Tokyo Stock Exchange 9.1 billion shares worth 1 trillion yen were traded and in the second section 397 million shares valued at 4 billion yen changed hands.

Of the Nikkei 225 stocks 45 gained, 160 declined and 20 were unchanged. Toho Zinc led advancers in the Nikkei 225 stocks with a rise of 10.87% after metal prices ended the week on a high note.

KDDI to Abolish Fees

The Japan Times reported today that KDDI Corp said yesterday that it will from March 1 abolish fees for domestic mobile phone calls between family members who use ‘au’ service. The report notes that the 24-hour free-call program is aimed at encouraging existing au subscribers to continue using the service and lure more customers in the wake of heightening competition from rivals NTT DoCoMo and Softbank Corp.

Analysts estimate that KDDI’s plan could wipe off 25 billion yen from the company’s revenues.

Metal Prices Mixed

Metal prices were mixed today as gold for December delivery slipped 0.5% to 3,284 yen a gram on the Tokyo Commodity Exchange.

Conversely, platinum for immediate delivery gained 1.7% to a record $2,206 an ounce in New York trading.

BOJ to gradually Increase Rates

Bloomberg news reported that the Bank of Japan Governor Toshihiko Fukui said in Tokyo today monetary authorities will not abandon its policy of gradually increasing interest rates as the economy is projected to continue expanding while prices will remain stable.

Gainers & Losers

Toho Zinc led advancers in the Nikkei 225 index shares with a rise of 10.87% followed by rises in Clarion Co. Ltd of 8.17%, in UBE Industries of 7.24%, in Dowa Holdings of 5.06%, and in Sanyo Electric of 4.71%.

Commodity stocks continued to rally as prices of metals rose. Sumitomo Metal Mining advanced 0.92%.

KDDI Corp. led decliners in the Nikkei 225 index shares with a drop of 10.10% followed losses in Tokyo Dome Corp of 7.95%, in Citizen Holdings of 5.74%, in Taiyo Yuden Co. of 5.42%, and in Chiba Bank Ltd of 4.97%.

KDDI Corp slipped after the company announced yesterday that the company will abolish fees on domestic mobile phone calls to family members. Mobile phone companies declined on KDDI’s plans. NTT DoCoMo slumped 4.82% and Softbank Corp shed 2%.

Exporters declined as yen strengthened from 108.00 yesterday to 107.25 against the dollar. Canon slipped 2.61%, Komatsu fell 1.27% and Toyota Motor Corp. slumped 1.97%.

Company News

Bloomberg News reported today that Nippon Steel Corp. and JFE Holdings Inc raised domestic wholesale sheet price by 31% as prices of iron ore and coal continue to rise.

Nippon Steel Corp gained 2.40% and JFE Holdings advanced 0.86% on the news.