Asian share markets were taking their cue Thursday from a sharp fall on Wall Street, as concerns were reignited about the outlook for corporate earnings and the health of the broader U.S. economy.
"The negative cues from the U.S. will likely shift investors' focus to worsening fundamentals from expectations of economic stimulus policies," said Park Suk-hyun, an analyst at Eugene Investment & Securities in Korea.
Japan's Nikkei 225 was down 2.3% with Australia's S&P/ASX 200 down 2.6% and Korea's Kospi Composite falling 1.9%; Hong Kong's Hang Seng Index was down 3.2% - adding to Wednesday's 3.4% fall - with Taiwan's main index lower by 3.8%.
Resource stocks were pulling back as commodity prices faltered after a recent run-up in prices, while technology stocks were hit as Intel shares fell 6.1% in the U.S. after the chip giant cut its revenue outlook and said it expected a 23% fall in fourth-quarter sales.
There was also the overhang from a corporate scandal with the chairman of Satyam Computer Services , one of India's biggest information technology firms, revealing the company had played with earnings figures.
It was looking increasingly as if markets had pushed ahead of themselves in embracing risk at the start of the year; "most markets have been in extended winning streaks, which are not sustainable with the current fundamental backdrop," said analysts at AB Capital Securities in Manila.
Phillip Securities analyst Phua Ming Weii in Singapore still believed equities were showing early signs of a rally, but added "we urge investors to be cautious, as this is also the phase where the rally is the weakest and most prone to being derailed."
Concerns about the U.S. economy were highlighted after a report by Automatic Data Processing Inc. indicated U.S. private-sector job losses of 693,000 in December, far more than expected by analysts; that suggested downside risk to December nonfarm payrolls, due Friday, with a poll of economists by Dow Jones Newswires currently indicating jobs fell 525,000 for the month.
Among Asian markets, commodity stocks were in retreat in Australia with BHP Billiton down 5.2% and Woodside ) falling 4.6%.
Financial stocks were under pressure in Sydney with Macquarie Group down 4.5% after saying the December quarter was "exceptionally challenging" for almost all its operations; that shouldn't come as a surprise but still worried investors as the bank failed to provide any specifics of the extent of the impact on profits.
Tech stocks were on the decline in Asia with Advantest down 7.2% in Japan and Tokyo Electron off 9.4%; Korea's Samsung Electronics was down 2.1% and Taiwan's Hon Hai Precision 3.8% lower.
Most auto stocks fell in Japan though Mitsubishi Motors was up 5.0% in heavy volume with the Nikkei reporting it would supply France's PSA Peugeot Citroen Group with electric cars as early as next year.
In Taiwan, stocks generally were damped by terrible December exports data and despite a surprise 50 basis point interest rate cut from the central bank late Wednesday; "the move indicates the economy may be worse in the first half of 2009," said Hua Nan Securities trader Stan Chang.
Lenovo shares slumped 17% in Hong Kong after it warned it expected to post a material loss for the October-December period, its fiscal third quarter, due to lower demand for personal computers globally, while Cathay Pacific fell 5.5% after saying its fuel hedging losses widened to HK$7.6 billion at the end of 2008 from HK$2.8 billion at the end of October.
The Shanghai Composite was down 2.2% with banking sectors fading in both China and Hong Kong after the Li Ka Shing Foundation sold 2 billion shares in Bank of China in a placement that raised US$511 million for the charitable foundation owned by Hong Kong's richest man; Bank of China fell 2.0% in Shanghai and 7.5% in Hong Kong.
Malaysian shares were down 1.1% with Singapore's market falling 2.5%, Philippine shares down 2.1%, Indonesian shares off 1.5% and New Zealand stocks 0.7% lower.
In currency markets, the euro was off its highs against the U.S. dollar and the Japanese yen, a sign of some risk aversion and with the European Central Bank tipped to cut interest rates next week; the euro was near $1.3598 from $1.3671, and at Y126.06 from Y126.52 initially in Asia.
The U.S. dollar was little changed against the yen, near Y92.71, though it was rising against Asian currencies like the Korean won and Malaysian ringgit.
Japanese government bonds were lower despite the fall in the Nikkei, with the market awaiting a 10-year bond auction later Thursday; lead futures were down 0.17 at 139.02 with the yield on the 10-year note up two basis points at 1.27%.
The cost of protection on Asian bonds pushed wider again with the Markit iTraxx Asia ex-Japan investment-grade credit default swap index out 15 basis points at 295 basis points.
Base metals were expected to add to the falls made in London, where LME three-month copper shed 2.5% and nickel 7.2%; "the recent gains seen on the back of the upcoming rebalancing of commodity indexes slowed overnight and investors returned their focus to the slowing economy and its bearish impact on demand," said one market player in Australia.
Goldman Sachs JBWere said the demand outlook for all major commodities in 2009 looked weak; except for gold, it tipped 2009 annual average commodity prices to be considerably lower than 2008.
Spot gold was holding near $842.00 a troy ounce after falling to $836.45 late in New York, still crimped by the dim economic outlook.
Front-month Nymex crude was only 11 cents higher at $42.74 a barrel on Globex after skidding 12.3% in New York; "our oil analysts believe oil is prone to a reversal of its New Year rebound as it will take time for production cuts to reduce the current crude overhang, as indicated in the large rise in U.S. oil inventories data," said Barclays Capital.
