Asian stock markets ended lower Friday as investors showed their disappointment that a fiscal-union pact for the 17 euro-zone members didn't manage to achieve unanimous backing on treaty changes.
European Central Bank President Mario Draghi said the agreement on tighter fiscal rules between the 17 euro-zone countries and six other European Union states that emerged from the EU leaders summit offered a "good basis" for a fiscal compact in the region. But he added, "We came to conclusions that will have to be fleshed out in coming days," highlighting that EU leaders remain deeply divided over key elements of their crisis strategy.
"It is still unclear how these new fiscal rules will be enforced," said Simon Furlong at Spreadex. "So it seems we find ourselves in a very familiar situation regarding the EU—one of uncertainty."
Stock markets were already under the hammer before the latest news on the fiscal-union pact, after Mr. Draghi dashed hopes Thursday for expanded ECB buying of government bonds by repeating earlier messages that the bank's purchase program is "neither infinite nor eternal."
"Draghi's dismissive view prompted profit-taking in stocks that had gained previously on higher expectations," said Hideyuki Ishiguro, supervisor of investment strategy at Okasan Securities in Japan.
Japan's Nikkei Stock Average ended down 1.5% at 8536.46, Australia's S&P/ASX fell 1.8% to 4203.0 and South Korea's Kospi lost 2% to 1874.75. Hong Kong's Hang Seng Index lost 2.7% to 18586.23, while China's Shanghai Composite fell 0.6% to 2315.27 and India's Sensex dropped 1.7% to 16213.46.
Lower-than-expected inflation data from China failed to provide much of a sentiment boost around the region, despite hopes for further policy loosening, as it also spurred concerns over growth in the world's second-largest economy. China's consumer price index for November was up 4.2% from a year earlier, less than both the 4.4% expected and October's 5.5%.
"The low CPI may be slightly beneficial to the market, but the key factor is monetary policy; we may have to wait for December data early next year for a clearer sign of Beijing's intentions," said Hongyuan Securities analyst Tang Yonggang in China.
Around the region, growth-sensitive exporters and resources stocks were lower, with energy plays sold off after crude-oil futures posted their largest decline in three weeks Thursday.
Sony dropped 3.3% in Tokyo, while LG Electronics fell 4.1% in Seoul and Acer lost 1.6% in Taipei. Energy plays Woodside Petroleum and Santos shed 3.1% and 1.5% respectively in Sydney, while S-Oil fell 3.5% in Seoul and Cnooc lost 3.5% in Hong Kong.
Semiconductor-related stocks also lost ground in Tokyo after Texas Instruments lowered its fourth-quarter guidance, citing demanded weakened by concerns about the broader economy. Tokyo Electron fell 1.9% and Advantest lost 3%. Among other chip plays, Hynix Semiconductor lost 3% in Seoul and TSMC fell 2.9% in Taipei.
Financial stocks around the region were also hard-hit, tracking declines Thursday in their U.S. counterparts. China Minsheng Banking fell 2.2% in Hong Kong and 1.3% in Shanghai. Daiwa Securities lost 3.4% in Tokyo, Hana Financial shed 2% in Seoul, National Australia Bank fell 2.4% in Sydney and DBS Group fell 1.5% in Singapore.
AMP outperformed the Sydney market, falling just two cents to A$4.30, after its funds-management unit AMP Capital Investors formed an alliance with Mitsubishi UFJ Trust and Banking. Mitsubishi will pay 425 million Australian dollars (US$430 million) for a 15% stake in vehicle AMP Capital Holdings.
