Asian markets fell yesterday and the euro hit a near two-year low against the dollar amid Europe’s deepening debt woes, while disappointing US data and Chinese manufacturing numbers also sapped sentiment.
With investors scrambling for safer haven assets such as the yen, Japan’s finance minister pledged “decisive action” if it keeps rising.
Tokyo stocks fell 1.20 percent. The Nikkei 225 Index lost 102.48 points to close at 8,440.25.
“A full-fledged rebound in the equities market is unlikely, since the global economy is likely to remain sluggish, given lingering eurozone debt problems,” said Mizuho Securities senior technical analyst Yutaka Miura.
In Shanghai, stocks ended flat. The composite index ended up 1.2 points, or 0.05 percent, to 2,373.44.
The market got a lift by hopes weak manufactuing figures will spur Beijing into announcing more monetary easing policies to boost the economy.
“At this rate, the government may intervene with monetary stimulus towards the end of June,” Zhou Xu, an analyst with Nanjing Securities, said.
Sydney dropped 0.30 percent, or 12.4 points, to 4,063.9 and Seoul eased 0.49 percent, giving up 8.96 points to close at 1,834.51.
The weak start to June came after a miserable May in which most markets gave up almost all the gains they had made since the turn of the year.
HONG KONG: Shares closed lower yesterday following weak manufacturing data from China, worse-than-expected US jobs figures and amid concerns about the eurozone.
The Hang Seng Index shed 71.18 points, or 0.38 percent, to 18,558.34.
“… everyone’s looking for safe havens,” said Tom Kaan, a director at Louis Capital Markets here. “The problem is where is the safe haven ….”
SINGAPORE: Southeast Asian stock markets fell yesterday, with Thai shares suffering their biggest daily loss in more than seven months, as worries about the deepening eurozone debt crisis and China’s slowing economy prompted selling across the region.
In Singapore, the stock market extended its losing streak to a fifth week. The benchmark Straits Times Index closed down 0.97 percent, or 26.83 points, at 2,745.71.
KUALA LUMPUR: Bursa Malaysia ended lower yesterday, in line with the weaker regional investor sentiment on concern over Europe and the soft data from the US, dealers said.
Losses in the plantation and banking stocks pushed the FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) to close 7.08 points, or 0.45 percent, lower at 1,573.59, after hovering between 1,571.05 and 1,576.67 throughout the day.
The Finance Index fell 95.37 points to 14,028.37, Plantation Index erased 48.79 points to 8,329.78 and the Industrial Index fell 10.23 points to 2,752.48. The FBM Emas Index lost 33.52 points to 10,729.15 and the FBM ACE Index fell 30.32 points to 4,224.84.
The FBM Mid 70 Index added 20.25 points to 11,649.44
In other markets:
* Taipei plunged 2.68 percent, or 195.41 points, to 7,106.09.
* Manila closed 0.56 percent lower, shedding 28.79 points to 5,062.44.
* Jakarta ended 0.86 percent, or 22.06 points, lower at 3,799.77.
* Bangkok tumbled 2.30 percent, or 26.31 points, to 1,115.19.
* Mumbai fell 1.56 percent, or 253.37 points, to 15,965.19.
EUROPE: European shares fell to a fresh five-month low yesterday on growing signs that the debt crises in Spain and Greece were hurting the region’s biggest economies, with many traders opting to stay away from equities in favour of cash or bonds.
The FTSEurofirst 300 index was down 1.5 percent at 958.88 points by 1030 GMT, after earlier touching a low of 957.64.
London’s FTSE 100 index dropped 0.64 percent to 5,287.00 in late morning trade, Frankfurt’s DAX 30 tumbled 2.06 percent to 6,135.56 and Paris’ CAC 40 fell 1.27 percent to 2,978.84. Madrid’s IBEX 35 index lost 0.24 percent to 6,075.00 points.
“Global investors will be hoping that June proves better than May, which was truly horrible,” said Rebecca O’Keeffe, head of investment at online brokerage Interactive Investor.
AMERICA: Alarmed by an ominously weak U.S. jobs report, investors ran for safety Friday from new worries about a global slowdown, sending the Dow Jones industrial average into a 275-point dive, the index’s biggest loss since last November.
The broad selloff wiped out the last of the index’s gains for the year.
Across Wall Street, fearful investors snapped up safer investments such as bonds, dragging the yield on the benchmark 10-year Treasury note to a record low. Gold spiked $50 an ounce, and oil fell to its lowest since October.
“The big worry now is that this economic slowdown is widening and accelerating,” said Sam Stovall, chief equity strategist at S&P Capital IQ, a market research firm.
The Standard & Poor’s 500 index and Nasdaq composite index both fell more than 2 percent. The Nasdaq has dropped more than 10 percent since its peak — what traders call a market correction. The S&P 500 is just a point above correction territory.
American employers added just 69,000 jobs in May, the fewest in a year, and the unemployment rate increased to 8.2 percent from 8.1 percent. Economists had forecast a gain of 158,000 jobs.
The report, considered the most important economic indicator each month, also said that hiring in March and April was considerably weaker than originally thought.
Earlier data showed weak economic conditions in Europe and Asia, too. Unemployment in the 17 countries that use the euro currency stayed at a record-high 11 percent in April, and unemployment spiked to almost 25 percent in Spain.
There were signs that growth in China, which helped sustain the global economy through the recession, is slowing significantly. China’s manufacturing sector weakened in May, according to surveys released Friday.
The Dow closed down 274.88 points, or 2.2 percent, at 12,118.57. The Dow is off 0.8 percent for the year; two months ago, it was up more than 8 percent for the year.
The Standard & Poor’s 500 index fell 32.29 points, or 2.5 percent, to 1,278.04. The Nasdaq dropped 79.86, or 2.8 percent, to 2,747.48. Both indexes are still up for the year — 1.6 percent for the S&P 500 and 5.5 percent for the Nasdaq.
The yield on the benchmark 10-year U.S. Treasury note briefly fell to 1.44 percent, the lowest on record. It ended the day at 1.46 percent. Gold for August delivery climbed $57.90, nearly 4 percent, to $1,622.10 per ounce.
“Everybody’s looking for a safe haven,” said Adam Patti, CEO of IndexIQ, an asset management firm. He’s skeptical of that strategy, believing the swing was driven by short-term traders “looking to flip in and out of things,” rather than long-term investors willing to ride out a few bumps in the market.
May was the worst month for the stock market in two years by some measures. Investors’ worries about Europe’s debt crisis intensified as the month wore on. Greece’s political future is uncertain, and it appears increasingly likely to stop using the euro currency. That could rattle financial markets and make Greece’s economy — already hobbled — even weaker.
Friday’s jobs report drew traders’ attention back to the weakening U.S. economy, said Todd Salamone, director of research for Schaeffer’s Investment Research in Cincinnati.
“The weaker jobs report translates into anticipation of slower growth ahead and weaker corporate earnings, and that ratchets stock prices lower,” Salamone said.
The record-low yield on the 10-year Treasury note reflected rapid buying by traders with the biggest portfolios, including central banks, endowments and pension funds, said Ira Jersey, U.S. interest rate strategist at Credit Suisse. He said money managers were selling investments priced in euros and stashing their money in U.S. securities.
Several analysts raised the possibility that the weakening economy will prompt more action by governments and central banks seeking to juice global economic activity. Anticipation of some policy response prevented even deeper losses, Stovall said.
The Federal Reserve undertook programs in 2009 and 2010 to buy U.S. government bonds. Its goal was to lower interest rates and encourage people to buy riskier investments like stocks. At least in public, the central bank so far has resisted a third round of purchases, known as quantitative easing.
Anticipation of bond-buying by the Fed “might put in a little bit of a floor to the market, but the overall economic picture is still bad,” said Bob Gelfond, CEO of MQS Asset Management, a New York hedge fund.
The dollar fell and gold rose partly because traders expect more intervention by the Federal Reserve, Gelfond said.
The euro rose half a penny against the dollar to above $1.24. A day earlier, fears about Europe’s finances had pushed the euro to a nearly two-year low against the dollar.
Only 17 of the 500 companies in the S&P index were higher for the day.
Homebuilder stocks fell the most, despite a report that construction spending rose for a second month in April. PulteGroup fell 11.8 percent, D.R. Horton 8.4 percent and Lennar 8.3 percent.
Boeing, the biggest U.S. exporter, fell 3.4 percent, one of the biggest declines among the 30 companies that make up the Dow. Traders fear that the economic slowdown will hurt global demand for its airplanes and defense technologies.
A slower global economy would reduce demand for energy. The price of a barrel of oil fell $3.49 to $83.04, extending a monthlong slide. The price of oil is at a 16-month low.
Stocks closed way down in Europe. Greece’s benchmark stock index fell 4.4 percent, Germany’s 3.4 percent and France’s 2.2 percent.
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