WSJ:Asian Shares Lower; Euro Treads Water As China Data Awaited
By LESLIE SHAFFER And SHRI NAVARATNAM
SINGAPORE—Asian stock markets dropped sharply Wednesday as fresh jitters over a potential downgrade of France's sovereign credit rating and a contraction in manufacturing activity in China sent the euro skidding, while the Australian share market fell to a six-week low.
Data from China showing manufacturing activity contracted in November added to the gloom over Europe.
"If there was one thing we could hope to count on in these dark and unsettled times, it was that China's economy would continue to tick along. Reports like this obviously put a fair amount of dent into those hopes and sentiment," said Chris Hunter, corporate dealer at Western Union Business in Auckland.
Asian currencies such as the Singapore dollar and the Korean won fell to multiweek lows against the U.S. dollar, while the euro dropped below $1.35 amid speculation France's triple-A credit rating could come under threat.
Australia's S&P/ASX 200 dropped 1.7% to 4063.5 after hitting an intraday fresh six-week low of 4056.3, while Hong Kong's Hang Seng Index dropped 1.9% and China's Shanghai Composite Index eased 0.3%. South Korea's Kospi Composite fell 2%, and India's Sensex lost 1.3%. Markets in Japan were shut for a holiday.
Dow Jones Industrial Average futures were down 114 points in screen trade.
China's preliminary HSBC manufacturing Purchasing Managers Index, a gauge of nationwide manufacturing activity, fell sharply to 48 in November compared with a final reading of 51 in October.
The fall in the index, which reversed a rebound in the final figure for October, raises fresh concerns about a possible sharp slowdown for the world's second-biggest economy amid the darkening global growth outlook.
"The European crisis seems to be now taking a toll on the world's fastest growing economy," said Stan Shamu, a strategist at IG Markets in Melbourne.
Resources, exporters, and financials were sold off as investors worried the West's debt woes will undermine Asia's export-dependent economies.
Shares in Australia dropped sharply as the resource-rich economy's fortunes are closely tied to China's growth cycle. BHP Billiton dropped 3.5% and Rio Tinto fell 2.5%. In Hong Kong, Lenovo dropped 1.7%, and other exporters such as Samsung Electronics and Hynix Semiconductor dropped 2.4% and 4.5%, respectively in Seoul.
The sharp drop in oil prices during Asian trading drove South Korea's S-Oil 6.0% lower and Cnooc down 2.8% in Hong Kong.
January Nymex crude oil futures were $1.43 lower at $96.58 per barrel on Globex.
The euro slipped below $1.35 against the dollar on the Dexia-led speculation on France's credit rating, while the accelerating losses in Asian equities further crimped appetite for the riskier common currency.
Against the greenback, the euro was at $1.3469 from $1.3505 late Tuesday in New York and it was fetching ¥103.74 against the yen, from ¥103.96. The U.S. dollar was at ¥77.00 from ¥76.98.
Asian currencies also took a hit, with the Singapore dollar falling to a near seven-week low and the Korean won skidding to a five-week low. The greenback was recently at S$1.3047 against its Singapore counterpart, and at 1,149.90 won against the won.
Spot gold was at $1,707.40 per troy ounce, up $8.00 from its New York settlement on Tuesday.
Write to Leslie Shaffer at leslie.shaffer@dowjones.com
