By Virginia Harrison, MarketWatch
SYDNEY(MarketWatch) — Major Asian markets sank Monday, as a dismal U.S. jobs report and a spike in Chinese inflation stoked investor caution, while the Australian market digested the details of the carbon-pricing plan released over the weekend.
Financial stocks were also weaker throughout the region ahead of an emergency meeting of euro-zone officials planned for later Monday over concerns the sovereign-debt crisis could spread to Italy from Greece.
Hong Kong’s Hang Seng Index HK:HSI -0.88% lost 0.9% in early trading, Japan’s Nikkei Stock Average JP:NIK -0.70% declined 0.7%, and Australia’s S&P/ASX 200 index AU:XJO -1.50% traded down 1.4%.
China’s Shanghai Composite CN:000001 -0.04% however, turned positive, gaining 0.1%.
“The [U.S.] nonfarm payrolls out Friday gave the market a bad start, and other macro-economic factors like the Chinese inflation data” also hit sentiment, said Naomi Fink, strategist with Jefferies Japan.
Both those factors weighed on financial stocks in Hong Kong, with Bank of Communications Co. CN:601328 +0.18% HK:3328 -1.15% BKFCF -5.10% losing 1.2%, and China Merchants Bank Co. CN:600036 -1.49% HK:3968 -2.62% CIHHF -8.66% lower by 1.5%, while HSBC Holdings PLC HK:5 -1.15% HBC -0.56% dropped 1.2%, with the stock also reacting to the fresh concerns about Italian debt. Read more about the meeting of euro-zone officials on Italy.
Also impacting market moves, China’s consumer prices accelerated to a three-year high in June as food prices soared, according to data released Saturday, reaffirming expectations that Beijing won’t be in a hurry to relax its tightening monetary-policy bias. Read more about China’s consumer-inflation data.
“There are some expectations now that China will have to continue tightening. Monetary policy doesn’t work in China like it does elsewhere. If they raise rates, they just get hot money flowing in from elsewhere, into the economy. It’s reapportioning liquidity, but the sentiment is that the data will have effects on some stocks,” Fink said.
Stronger yen slaps Japan
Fears about health of the U.S. economy were sparked by a steep slowing in monthly jobs, according to data Friday, with nonfarm payrolls up by 18,000 in June, well below the 125,000 gain expected by economists surveyed by MarketWatch.
The jobs data pushed the dollar USDJPY +0.29% lower against the yen, hurting shares of auto makers and other exporters in Japanese trading Monday.
Electronic manufacturer Tokyo Electron Ltd. JP:8035 -2.63% TOELY -0.04% dropped 1.9%, Advantest Corp. JP:6857 -1.85% ATE -1.04% shed 1.5%, and Nikon Corp. JP:7731 -1.71% NINOY -2.32% traded down 1.5%.
Mitsubishi Motors Corp. JP:7211 -1.89% lost 2.0%, Mazda Motor Corp. JP:7261 -1.80% MZDAF -0.74% lost 1.9%, Toyota Motors Corp. JP:7203 -0.73% TM -0.28% shed 1.0% and Honda Motor Co. JP:7267 -0.46% HMC -0.03% declined 0.6%.
In Japan, losses for financial stocks accelerated, with Shinsei Bank Ltd. JP:8303 -1.15% SKLKY 0.00% down 2.5%, Mizuho Trust & Banking Co. JP:8404 -2.70% MZATF 0.00% losing 2.9%, Mitsubushi UFJ Financial Group Inc. JP:8306 -1.69% MTU -1.56% off by 1.8%, and Tokio Marine Holdings Inc. JP:8766 -1.55% TKOMY -0.17% shedding 1.3%.
Banking-sector weakness was matched in Sydney trading, with shares in Westpac Banking Corp. AU:WBC -2.65% WBK -0.13% trading down 2.5% and the Commonwealth Bank Ltd. AU:CBA -2.26% CBAUY 0.00% lost 2.1%.
Investors were also watching for a deal to extend the U.S. debt limit. Talks on the debt ceiling Sunday broke up early and were slated to resume Monday, with no indication that a deal was close. Read report on latest U.S. debt-ceiling talks.
One bright spot on the Japanese market was Fukushima Daiichi nuclear-plant operator Tokyo Electric Power Co. JP:9501 +7.06% TKECF +3.64% adding 6.6% after some fresh details on the government’s planned stress tests of nuclear-power facilities.
Japan’s government said the stress tests will be conducted in two stages, with the first stage covering currently idled facilities, according to reports Monday. Read more about the Japanese stress tests.
Australia carbon tax weighs
The Australian government unveiled the details of its much-anticipated carbon-pricing reforms on Sunday. As expected, the legislation will set a price of 23 Australian dollars ($24.60) per carbon ton emitted by the country’s 500 biggest polluters from July 1, 2012.
Much of the proposal had been anticipated by the market, including a high threshold of assistance to buffet the impact on the most exposed industries, which saw steel-makers rally last week.
But in Sydney trading Monday afternoon, Bluescope Steel Ltd. AU:BSL -5.19% BLSFY +16.85% fell 4.4%, and Onesteel Ltd. AU:OST -4.19% OSTLY 0.00% lost 3.9%.
In the mining sector, Macarthur Coal Ltd. AU:MCC -3.25% MACDF +1.48% declined 3.3%, BHP Billiton Ltd. AU:BHP -1.74% BHP -0.99% dropped 1.5% and Rio Tinto Ltd. AU:RIO -1.36% RIO -1.24% shed 1.0%.
Airlines were also weaker, with shares in Virgin Blue Ltd. AU:VBA -4.29% VBHLY 0.00% and Qantas Airways Ltd. AU:QAN -3.15% QUBSY 0.00% both losing 2.8%.
MarketWatch parent News Corp. AU:NWS -5.19% NWS -3.35% tumbled 4.7%, as the British government came under pressure to delay approval of the company’s bid for television broadcaster British Sky Broadcasting Group PLC UK:BSY -7.64% in the wake of the “News of the World” phone-hacking scandal.
