Asian Shares Sharply Lower; Japanese Automakers Fall

Oct 2, 2009

By Colin Ng


DOW JONES NEWSWIRES

SINGAPORE (Dow Jones)--Asian stocks markets were sharply lower Friday, dragged by heavy losses on Wall Street. Japanese automakers were hit by weak U.S. sales data and the strong yen.

"It's not looking pretty," said IG Markets institutional dealer, Chris Weston. "I think this is the breather people were looking for."

Japan's Nikkei 225 was down 2.2%, Australia's S&P/ASX 200 was down 1.9% and New Zealand's NZX-50 lost 1.0%. DJIA futures were 31 points lower in screen trade. South Korean markets were closed.

Investors' risk appetite shriveled after the Dow Jones Industrial Average lost 2.1% and suffered its worst decline in about three months, in the wake of a weaker-than-expected manufacturing report.

"Nothing has changed to make me feel that this (recent) rally is anything but a bear market rally and bear rallies are to be rented not owned. Since I went positive in early March, the biggest threat would be increased complacency," said Keith Springer, president of Capital Financial Advisory Services.

"We can't expect global stock markets to pick up again any time soon," said Tachibana Securities analyst Kenichi Hirano in Tokyo. "This correction may continue at least through the end of this month," with players paying close attention to U.S. corporate earnings, he added.

Japanese automakers were hit after data Thursday showed September U.S. auto sales returned to depressed levels, as the jolt from the government-run "Cash for Clunkers" subsidy program proved to be short lived, while the yen's continued strength against the dollar also added pressure.

Industry consultant Autodata's closely watched measure of annualized selling rate fell to 9.22 million in September from the previous month's 14.1 million rate. Toyota Motor was down 2.6% and Honda Motor down 2.4%.

Insurance stocks were 4.3% lower as a group, with Tokio Marine Holdings down 4.9% and Mitsui Sumitomo Insurance Group down 4.2%. The iron and steel sector was down 3.8% with Nippon Steel losing 4.7% and JFE Holdings 2.9% weaker.

In Australia, resources stocks were suffering the biggest falls, with BHP Billiton down 2.4%. Banks were lower, with ANZ down 2.5%.

In New Zealand, selling was concentrated in stocks held by large institutional investors with heavyweight Telecom off 1.5%, Fletcher Building down 1.4% and Sky Television down 2.7%.

In foreign exchange markets, the majors were trading in relatively tight ranges, though risk aversion was pressuring the euro lower and the yen higher. The euro was at $1.4519 from $1.4526 in late New York trade Thursday, and at Y129.90 from Y130.09. The dollar was at Y89.46 from Y89.77.

Japanese government bonds were higher, helped by falling equities and stronger U.S. Treasurys Thursday. Bonds were also pressured by worries of weak U.S. jobs data due later in the global day. The 10-year JGB cash bond yield fell to its lowest level since March, down 3 basis points at 1.260% while the lead futures contract was up 0.24 at 139.55 points.

The London Metals Exchange three-month copper futures contract was at $5,942 per ton, down $38 from the London afternoon kerb. Three-month aluminum was also lower, at $1,845, down $8.

A mixed bag of U.S. economic data was weighing on sentiment in the base metals market, said ANZ senior commodity strategist Mark Pervan. "The catalyst downward will likely be China trade data for September. Copper imports will be slower due to seasonal factors, as well as coming off the exceptionally high levels from earlier in the year," he said.

Spot gold was at $998.95 per troy ounce, down 95 cents from the New York close. The November Nymex crude oil futures contract was down 68 cents at $70.14 per barrel after picking up 21 cents on Thursday.

-Colin Ng, Dow Jones Newswires; +65-6415-4140; colin.ng@dowjones.com

Keith Springer is President of Capital Financial Advisory Services, a registered investment advisor, providing Wealth Management and Mortgage Consulting Services.  For more information on how to build and maintain a solid retirement plan, please contact Keith Springer at 916-925-8900 or Keith@KeithSpringer.com