Tuesday, markets across the Asia-Pacific region closed sharply lower on renewed worries about the impact of swine flu outbreak on global trade and consumer confidence after the World Health Organization raised its pandemic alert level to the highest level since the warning system was adopted in 2005. Although the flu does seem to be spreading, many doctors agree that the swine flu is no more panic worthy than any other breakout of the human flu during flu season.
While hotel, airline and tourism-related stocks came under selling pressure for a second day, financials took a fresh hit on concerns U.S. banks may have to raise more capital.
In Asian trading, crude oil was last trading weak at below $49 a barrel on fears that the outbreak of swine flu, a disease that has already killed more than 100 people in Mexico, could hurt oil demand. Crude oil price settled lower at $50.14 a barrel, down $1.41 in New York trading on Monday as traders weighed the potential economic impact of the swine flu outbreak. Gains in the dollar and a potential drop in jet fuel demand also weighed on the price.
Overnight, concerns over the economic impact of the swine flu kept Wall Street in negative terrain for the major part of the session on Monday. While Hugh Johnson, chief investment officer for Johnson Illington Advisors told RTTNews that traders used the swine flu scare as an excuse to take some money off the table, he warned that a full blown epidemic could lead to a 10 to 15 percent correction. The Dow Jones Industrial Average closed down 0.64%, the Nasdaq Composite fell 0.88% and the S&P 500 declined 1.01%.
The Japanese market plunged to close near the day's lows, weighed down by disappointing fiscal 2009 corporate earnings, renewed concerns over the U.S. financial system and the yen's advance against the U.S. dollar. Stocks fell almost across the board, but stocks in the land transport and electricity and gas sectors bucked the declining trend.
The benchmark Nikkei 225 index fell 233 points or 2.67% to 8,494, the lowest level since April 1, while the Topix index of all First Section issues on the Tokyo Stock Exchange closed at 812, down 21 points or 2.53%.
Shipping stocks extended their downtrend on dismal earnings and a bleak outlook. Mitsui O.S.K Lines plunged 7.48%, Nippon Yusen plummeted 8.27% and Kawasaki Kisen slumped 6.74%. LCD TV maker Sharp Corp slumped 8.77% after reporting its second straight quarterly loss of Y125.82 billion on Monday afternoon.
Among banking stocks, Mitsubishi UFJ Financial Group slipped 0.59% and Mizuho Financial Group moved down 1.48%, but Sumitomo Mitsui Financial Group rose 0.32% and Resona Holdings closed unchanged.
Daiwa Securities Group fell 1.23% after the brokerage company clarified that it doesn't plan to start talks with Sumitomo Mitsui Financial Group over a comprehensive tie-up.
Nomura Holdings tumbled 4.76%, Shinko Securities slumped 6.84% and T&D Holdings fell 2.59%.
Automakers and exporters came under significant selling pressure as the Japanese yen hit the 95-yen level against the U.S. dollar. Honda Motor fell 2.44%, Suzuki tumbled 4.91%, Toyota moved down 3.43%, Nissan plunged 7.52% and Mazda Motor slumped 5.26%. Digital-camera maker Canon fell 3.97%, Sony Corp declined 3.35% and Kyocera closed down 1.53%.
Steel stock JFE Holdings plummeted 6.77% and Nippon Steel tumbled 5.23% on analyst downgrades. Meanwhile, Chugai Pharmaceutical extended gains on expectations of strong sales of the Tamifu flu drug. East Japan Railway surged up 7.63% on announcing a share buyback.
On the economic front, confidence amongst Japanese small and medium sized companies rose to 30.8 in April from 30.4 in March, a report from the Shoko Chukin Bank showed Tuesday. Economists were expecting the indicator to rise to 31. A reading below 50 suggests that pessimists outnumber optimists.
The Australian market closed lower, weighed down by weakness in the banking sector. The benchmark S&P/ASX200 closed at 3,708, down 23 points or 0.62% and the broader All Ordinaries index fell 18 points or 0.5% to 3,672.
Big miners closed mixed amid falls in prices of all metals overnight. While Rio Tinto rose 2.79%, its rival BHP Billiton fell 1.02% and Iluka Resources declined 0.90%. Gold miner Newcrest Mining fell 1.87% and Lihir Gold moved down nearly 3% due to falling gold price.
National Australia Bank tumbled 3.45% after the bank's first-half net profit fell slightly to $2.66 billion on higher funding costs and rising provisions for bad loans. Commonwealth Bank closed down 0.76%, Westpac Banking moved down 1.50%, Macquarie Group slipped 0.69% and ANZ declined 1.31% ahead of its earnings announcement on Wednesday.
Engineering services group Ausenco rallied 5.05% on reports that its is looking to grow in 2009 by taking advantage of green energy and building investments, despite challenging conditions. ABB Grain surged up 20.43% on saying that it had received a conditional non-binding offer from Canadian agribusiness Viterra.
Health care stocks such as CSL advanced 4.08%, Cochlear rose 1.80% and Ansell moved up 0.26%. Among airline stocks, while Qantas Airways slipped 1.05%, Virgin Blue closed flat. Macmohan Holdings jumped 4.69% after falling 40% on Monday to a five-year low.
In the oil and gas sector, Woodside Petroleum and Oil Search slipped around 0.20% each and Santos moved down 1.86%. Retailer Woolworths and Harvey Norman Holding also ended in the red.
The South Korean market tumbled on heavy institutional selling. The benchmark KOSPI fell 40 points or 2.95% to 1,300, the lowest closing in about three weeks. Volume was significant at 746.19 million shares worth 7.52 trillion won (US$5.54 billion) and decliners outnumbered gainers by 737 to 142.
Shipbuilder Hyundai Heavy Industries tumbled 5.02% after its new orders plunged 83% in the first three months of this year due to decreased demand for new vessels. Samsung Heavy Industries fell 4.48% and Daewoo Shipbuilding slumped 6.93%
Asiana Air Line fell 3.25% and Korean Air Line moved down 2.38% on concerns that the industry would be hit hard by the swine flu outbreak. Tech stock Hynix Semiconductor plunged 8.79%, market heavyweight Samsung Electronics moved down 1.71%, LG Display LCD tumbled 4.32% and LG Electronics ended down 1.96%
In the banking sector, Woori Finance plummeted 5.89%, Korea Exchange Bank slumped 4.57% and KB Financial, the holding firm of Kookmin Bank fell 4.32%. Automaker Hyundai Motor fell 2.59% and Ssangyong Motor plunged 7.23%.
Among other notable stocks, steel maker POSCO fell 4.04%, oil stock SK tumbled 4.64%, S-Oil closed down 0.86%, but telecom stock KT closed up 0.28% and energy stock KEPCO rose 0.97%.
In economic news, South Korean consumer confidence jumped in April as concerns over the economic downturn eased among households on positive current balance and increased assets value such as stock prices.
Consumer confidence that measures sentiment in six categories stood at 98 in April, up from 84 last month, the Bank of Korea reported Tuesday. The April reading was the highest since the central bank started to compile monthly series in July 2008. However, a reading below 100 indicates that pessimists outnumber optimists.
After closing modestly up on Monday, the New Zealand market bounced back and closed sharply higher, as a weaker kiwi dollar helped companies with offshore earnings. The benchmark NZX-50 closed at 2,686, up 22 points or 0.83%. Turnover totaled $81.1 million.
Telecom rose 3.04% to 271c, its highest level since early February after it has proposed two alternative options for achieving the government's plan to build an open-access fiber broadband network to 75% of the nation's homes
Fisher & Paykel Appliances gained 2.27% after the company's banking syndicate agreed to extend the date for repayment of the company's $NZ80 million ($A63.9 million) interim bank funding facility to May 29. F&P Healthcare gained 2.03% aided by a drop in the New Zealand dollar
Lion Nathan rose 0.75%. The stock climbed 38% on Monday after Japan's Kirin Holdings agreed terms for a takeover of the company. Stock exchange operator NZX advanced 1.04% on saying that it is acquiring rural publishing company Country-Wide Publications Ltd (CPL) for an undisclosed sum.
Among other notable gainers, Tourism Holdings rallied 4.44%, Fletcher Building added 2.24%, retailer Hallenstein Glasson advanced 2.83%, Sky City closed up 0.73%, Steel and Tube rallied 3.92% and Air New Zealand rose 0.93% after falling nearly 3% on Monday.
NZ Farming Systems Uruguay tumbled 4.23% after cutting its annual earnings forecast to $US20m due to drought in Uruguay. Auckland Airport fell 0.60%, Contact Energy moved down 0.89%, Warehouse Group declined 0.29%, Nuplex fell 2.94% and Vector edged down 0.47%.
On the other hand, jeweler Michael Hill, energy stock TrustPower and children's clothing retailer Pumpkin Patch closed unchanged.
The Indian market tumbled as funds and retail investors squared their long positions ahead of the expiry of April series derivative contracts on Wednesday. The benchmark for the Indian market, the Sensex was last trading at its day's low of 10,972, down nearly 400 points or 3.51% over the previous close.
Among the other markets in the region, China's Shanghai Composite index slipped 0.16%, Hong Kong's Hang Seng index fell 1.92%, Singapore's STI Straits Times index shed 0.56% and Taiwan's TWII Weighed index closed down nearly 2%.
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