Asia’s stock markets fell sharply Wednesday, with commodity firms among those hardest hit after news that Greece’s political impasse would force new elections in the country.
The Greek news overcame relatively positive US economic data to send the Dow Jones Industrial Average DJIA -0.50 percent to near a four-month low overnight, offering a negative lead for the Asia markets. Read more on Tuesday’s US stock trade.
“Investors are thinking: We don’t know what’s going to happen with Greece, we don’t know what’s going to happen with Europe, we’re just going to sit it out,” said Andrew Sullivan at Piper Jaffray.
Amid concerns that elections in Greece may ultimately end with the country leaving the euro zone, Sullivan said: “It’s just inponderable as to how you play Greece coming out of the euro zone…. It’s very difficult to know how to play that in Asia. Investors can’t get an inside line on this – there’s no precedent.”
Hong Kong’s Hang Seng Index HK:HSI -2.69 percent was among the region’s worst performers Wednesday, tumbling 2.4%, with Sullivan citing the Hong Kong market’s relatively high liquidity.
Australia’s S&P/ASX 200 AU:XJO -2.18 percent wasn’t far behind with a 1.8 percent drop, as weak commodity prices sent major mining names lower.
South Korea’s Kospi KR:SEU -2.24 percent lost 1.1%, Japan’s Nikkei Stock Average JP:100000018 -1.27 percent dropped 0.9%, and the Shanghai Composite Index CN:000001 -0.44 percent slipped a milder 0.5%.
Barclays Capital analysts said in a note Wednesday morning aimed at Australian clients that “to arrest market fears, proactive measures are needed. Unfortunately, they seem nowhere in sight. This suggests that risky assets are likely to trade erratically at best, with a bias to underperform.”
Among the riskier assets are cyclical stocks closely tied to global growth, such as miners, and the Greek news hit Australian-listed miners especially hard Wednesday.
BHP Billiton Ltd AU:BHP -3.51 percent BHP -2.51 percent and Rio Tinto Ltd AU:RIO -3.50 percent RIO -4.22 percent – the Australian sector’s two largest players – both fell 3.1%. Uranium-focused miner Paladin Energy Ltd AU:PDN -9.34 percent PALAF -8.69 percent dropped 9%.
Commodity players were also trading with sharp losses in Hong Kong, with Aluminum Corp. of China Ltd HK:2600 -3.90 percent ACH -1.81 percent down 3.9%, PetroChina Ltd HK:857 -3.42 percent PTR +1.65 percent lower by 3.2%, and China Coal Energy Co. HK:1898 -4.43 percent CCOZF +3.60 percent dropping 4.2%.
Banks likewise suffered in Hong Kong, with Bank of Communications Co. HK:3328 -3.49 percent BKFCF -14.38 percent down 2.8%, and China Citic Bank Corp. HK:998 -5.82 percent CHBJF -10.16 percent retreading 4.5%.
However, the largest Japanese banks offered a bit of support in Tokyo after the top three lenders all posted solid profits, managing to sidestep the euro-zone crisis. Read report on earnings for Japan’s top three banks.
Mizuho Financial Group Inc. JP:8411 +0.88 percent MFG +0.70 percent advanced 2.6%, and Sumitomo Mitsui Financial Group Inc. JP:8316 -0.13 percent SMFG -0.68 percent rose 0.5%, though No. 1 lender Mitsubishi UFJ Financial Group Inc. JP:8306 -1.43 percent MTU -0.46 percent lost its early gains to trade down 0.6%.
Major Japanese exporters traded lower, however, as the European uncertainty outweighed a weaker yen, with the US currency USDJPY +0.2752 percent climbing back above the JPY 80 level.
Among the decliners in Tokyo, Renesas Electronics Corp. JP:6723 -3.80 percent RNECY -12.45 percent retreated 2.9%, Toyota Motor Corp. JP:7203 -2.69 percent TM -1.76 percent gave up 2.2%, Fujitsu Ltd JP:6702 -2.12 percent FJTSY +1.71 percent fell 1.9%, and Bridgestone Corp. JP:5108 -1.88 percent BRDCF -0.86 percent lost 1.2%.
Back in Australia, logistics firm Toll Holdings Ltd AU:TOL -15.05 percent THKUF -1.06 percent plunged 15.1 percent after warning on its underlying earnings for the current fiscal year. -By Sarah Turner and Michael Kitchen