Tuesday, markets across the Asia-Pacific region followed Wall Street lower as concerns about the US banking sector and pessimism about company earnings tempered risk appetite. The focus was back on the state of the economic recovery in the world's biggest economy after Bank of America marked up protection for bad loans.
In Asian trading, crude oil futures extended losses for the second straight day and were last trading at $45.65 a barrel, as a sharp drop in US stock prices on renewed concerns of economic downturn weighed on the commodity. Light sweet crude for May delivery nose-dived more than 8% to $45.88 a barrel, the lowest close in five weeks in New York trading on Monday, weighed down by a rising US dollar and further concerns over energy demand.
Overnight, stocks on Wall Street saw a sharp sell-off led by losses in the financial sector despite better than expected earnings from Bank of America (BAC) and several M&A deals. BAC exceeded expectations on earnings front but marked up provisions for credit loss by a whopping $ 7 billion to $13.4 billion in the first quarter.
On the economic front, the Conference Board's index of U.S. leading economic indicators fell more than expected last month, stoking concern the recession in the U.S. will extend into the second half of 2009. The major averages ended the session near their worst levels of the day. The Dow Jones Industrial Average moved down 3.56%, the Nasdaq Composite fell 3.88% and the S&P 500 index tumbled 4.28%.
The Japanese market fell sharply as financials came under intense selling pressure and reports that Toyota Motor Corp.'s fiscal 2009 domestic output may hit a 31-year-low hurt investor sentiment.
The Nikkei 225 index recouped some of its early losses and closed at 8,711, down 213 points or 2.39%, while the broader Topix index of all First Section issues on the Tokyo Stock Exchange moved down 18 points or 2.07% to 831. Stocks declined mostly across the board, but stocks in the retail, information and communication and land transport sectors bucked the declining trend.
Toyota Motor fell nearly 4% on reports that its domestic output will fall to 2.8 million units in the current business year ending next March. Honda tumbled 4.88%, Suzuki fell 3.49%, Nissan slipped 0.20% and Mazda drifted down 2.69%.
Sony Corp retreated 4.14% on the strengthening of the yen and a cut in its rating to hold by Nikko Citigroup. Trading house Mitsui & Co. slumped 6.46% after oil and copper prices fell. Advantest fell 4.81%, Tokyo Electron closed down 0.94%, Kyocera moved down 2.30% and Fujitsu declined 1.21%
In the banking sector, Mitsubishi UFJ Financial Group declined 1.01%. Sumitomo Mitsui Financial Group fell 1.82%, Mizuho Financial Group declined 1.02% and Resona Holdings moved down 1.04%.
Among brokerages, Nomura Holdings fell 3.67%, Daiwa Securities Group tumbled 4.67% and T&D Holdings moved down 5%. Insurer Mitsui Sumitomo Insurance plummeted 5.27% and Sompo Japan Insurance fell 4.10%.
The Australian market tumbled, led down by banks and miners, as a slump on Wall Street on concerns about bad debts on bank balance sheets and the Reserve Bank of Australia governor Glenn Stevens' statement that Australia was in a recession, weighed on sentiment.
The benchmark S&P/ASX200 index closed at 3,677, down 92 points or 2.43% and the All Ordinaries index fell 89 points or 2.4% to 3,633.
Banking stocks were hit hard. National Australia Bank tumbled 4.49%, ANZ fell nearly 4%, Commonwealth Bank declined 1.84% and Westpac Banking moved down 2.57%.
Asciano Group plunged 9.39% after the ports and rail freight operator said it has received some proposed takeover offers and offers for individual assets, but they are conditional and non-binding.
Aristocrat Leisure was in a trading halt as it looks to raise about A$200 million ($139.6 million) through a share placement. Real estate investment trust GPT Group plunged 15.25% after it appointed former banker Michael Cameron as its new chief executive, effective May 1.
Among oil stocks, Santos tumbled 3.74% and Woodside Petroleum fell 3.47%, but Oil Search rose 0.78%. Oil Search reported fall in first quarter production and revenue on a lower oil price, but said it expects a better second quarter performance.
Among miners, BHP Billiton fell 4.01%, Rio Tinto tumbled 5.82% and Iluka Resources moved down 3.43%. The new chairman of Rio Tinto Jan du Plessis said Rio's board was committed to the group's proposed $19.5 billion tie up with China's state-owned Chinalco
Retailer Wesfarmers gained 2.25% after food and liquor sales at its Coles supermarket chain rose 7.6 percent for the quarter to March. Woolworths also rose 0.53%, but Harvey Norman Holding fell 1.75% and David Jones tumbled 4.55%.
Among gold miners, Newcrest Mining rallied 4.53% and Lihir Gold advanced 2.87% after gold advanced for a second day in Asia on increased demand as a haven investment.
On the economic front, the Reserve Bank of Australia's board members said that the outlook is weaker for near-term demand, but they still believe recovery is likely by the end of 2009, minutes from the board's April 7 monetary policy meeting revealed on Tuesday. At the meeting, the board voted to cut interest rates by 25 basis points to a 49-year low of 3 percent, saying the economy is contracting, but at a slower pace than other major economies. The rate cut was the eighth since last September.
The South Korean market closed flat as gains in shipbuilders and technology shares offset losses in the financial sector. The benchmark KOSPI recouped all its early losses to finish at 1,337, up a mere 0.03 percent or 0.42 points. Volume was at 629.61 million shares worth 6.4 trillion won (US$4.7 billion) and advancers outnumbered decliners by 412 to 398.
Sipbuilders outperformed on optimism that South Korean companies would win orders from Brazil's Petrobras by as early as May. Daewoo Shipbuilding rose 1.47%, Samsung Heavy Industries advanced 3.41% and Hyundai Heavy added 0.47%.
Steel maker POSCO fell 2.30% on profit taking, market heavyweight Samsung Electronics moved down 0.17%, automaker Hyundai Motor declined 2.12%, Kia Motors fell 2.14% and Oil stock SK drifted down 2.42%.
In the banking sector, Korea Exchange Bank retreated 0.81%, Woori Finance ended down 1.96% and KB Financial, the holding firm of Kookmin Bank fell 3.12%
LG Electronics, Asia's second-largest maker of mobile phones, rose 0.95%. The company swung to a loss in the three months to March on account of slowing demand for handsets and televisions, troubles at its flat-panel unit and foreign-exchange losses related to its overseas debt.
Among other notable stocks, Hynix Semiconductor moved down 0.34% and Asiana Air Line fell 1.19%, but Korean Air Line closed up 0.50%, energy stock KEPCO moved up 0.96%, Telecom stock SK Telecom rose 0.27%, KT gained 0.27% and LG Display LCD added 0.94%
The New Zealand market fell sharply after markets in the United States and Europe lost more than 3 percent overnight. The benchmark NZX-50 closed at 2,665, down 1.26% over the previous close. Decliners outnumbered gainers by 54 to 27.
Auckland International Airport moved down 0.59% on reports about weakening demand for inbound tourism and that the company would concentrate more on its substantial property holdings.
International arrivals in March tumbled 10% to 226,500 visitors compared to the same month in 2008, according to Statistics New Zealand. The number of New Zealanders departing on short-term trips slid 6% to 126,700.
Pike River Coal fell 2.50%. The company said on Tuesday that its $41 million rights issue has closed fully subscribed. Fisher & Paykel Appliances fell 2.22% as investors awaited its capital-raising plans.
Sky City Entertainment Group fell 2.73% before being placed on a trading halt while it conducts a book build and share placement. The company plans to issue 71 million new shares underwritten by Goldman Sachs JBWere at a price of $2.52 per share, resulting in gross proceeds of at least $178.9 million.
Infratil declined 1.91% after selling three bus depots for $23 million in a bid to pay down debt. New Zealand Oil & Gas fell 2.17% after crude oil price fell nearly 9% in New York trading on Monday on pessimism over the state of the U.S. economy.
Nuplex plunged 7.32% after the company said that its rights offer was undersubscribed by 4.09 per cent, or $5.4 million. Air New Zealand rose 0.94% after it has launched a major campaign in Australia designed to get more Australians visiting all parts of New Zealand.
Among other notable stocks, Telecom rose 2% Contact Energy fell 2.42%, Fletcher Building tumbled 4.12%, Hallenstein Glasson fell 3.64% and Warehouse Group moved down 0.57%, while Jeweler Michael Hill advanced 1.79% and Tourism Holdings gained 2.17%. On the other hand, Pumpkin Patch and energy stocks TrustPower and Vector closed flat.
In economic news, New Zealand's service sector activity showed an improvement in March for the second consecutive month, the latest report from the Business New Zealand revealed. The Performance of Service Index moved up to 47.1 in March from 46.3 in February, reflecting a rise in activity levels and new orders.
Among the other markets in the region, China's Shanghai Composite index slipped 0.85%, Hong Kong's Hang Seng index fell 2.95%, Singapore's STI Straits Times index moved down 1.37%, but Taiwan's TWII Weighed index closed up 1.73%.
After a weak start, India's benchmark Sensex recouped most of its losses on emergence of fresh buying by funds as the central bank cut short-term lending (repo) and borrowing (reverse repo) rates by 25 basis points each. The BSE Sensex was last trading at 10,930, down 0.45% over the previous close.
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