Asian stock markets mostly fell yesterday Thursday August 11, but closed off their earlier lows as traders went bargain hunting despite huge falls in Europe and on Wall Street.
Gold also eased slightly from its record high after breaching the $1,800 barrier for the first time, but the yen edged towards a fresh high against the dollar as dealers poured into safe haven assets.
Tokyo closed 0.63 percent, or 56.80 points, lower at 8,981.94 while Sydney closed flat, edging down 0.5 points to 4,140.8.
But Seoul – which had earlier lost about 4 percent – closed 0.62 percent, or 11.20 points, higher at 1,817.44 while Shanghai was up 1.27 percent, or 32.33 points, at 2,581.51.
Regional markets took a hit on opening after Wall Street slumped – with each of the three main indexes losing more than 4 percent – and Europe was battered by renewed fears over US and eurozone debt.
European woes were reignited on Wednesday when rumours circulated that France was in danger of seeing its top-notch credit downgraded, following last week’s historic cut to the United States’ rating.
Asian markets have suffered a rollercoaster week, tumbling from Friday to Tuesday on eurozone fears and the US debt downgrade before rebounding Wednesday after the US said it would hold rates at record lows for two years.
Japanese Finance minister Yoshihiko Noda reiterated that he remained attentive to financial markets and had an eye on the yen, a week after the government stepped into the forex market to stem the unit’s rise.
“I think one-sided movements (in the forex market) are continuing,” Noda said shortly before the market opened.
HONG KONG: Stocks closed 0.95 percent lower yesterday, making up a lot of the ground they lost on opening.
The benchmark Hang Seng Index shed 188.53 points to 19,595.14.
“The fundamental problem is the real economies (globally) haven’t really recovered in the past two years, it was only the financial markets that had a recovery,” Ben Kwong, associate director of KGI Asia, said.
SINGAPORE: Straits Times Index fell to a 14-month low yesterday. It dropped 0.9 percent to 2,796.22, its lowest close since June 2010.
SingTel eased 1.02 percent to S$2.92 after reporting that its Q1 quarter net profit fell 3 percent.
Tiger Airways slipped 1.9 percent to S$1.02.
Casino operator Genting Singapore dropped 0.30 percent to S$1.68
KUALA LUMPUR: Share prices on the Wall Street resumed their sharp pullbacks on Wednesday had once again impacted the performances on the regional stock markets including Bursa Malaysia yesterday.
The FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) closed at 1,476.46 points yesterday, giving a day-on-day loss of 4.06 points, or 0.27 percent.
The FBM KLCI rebounded from its intra-day day low of 1,454.52 to its intra-day high of 1,479.41.
Declining counters outpaced advancing counters by 434 to 376.
In other markets:
* Taipei fell 0.22 percent, or 17.23 points, to 7,719.09.
* Manila closed 0.49 percent, or 20.08 points, higher at 4,311.02.
* Wellington closed up 0.78 percent, or 24.88 points, at 3,208.62.
* Jakarta rose 0.15 percent, or 5.79 points, to 3,869.37 points.
* Bangkok rose 0.18 percent, or 1.86 points, to 1,062.07.
* Mumbai closed down 0.42 percent, or 71.11 points, at 17,059.4 after cautious trading.
VIETNAM: The VN Index of Hochiminh Stock Exchange (STC) ended with a fall of 1.52 points or 0.39 percent to 384.44 points. The total market trade reached 19.96 million shares for 394.6 billion dong, down 35 percent in volume from previous trading session.
The HNX Index closed losing 0.8 points or 1.2 percent to 65.82 pts.
The total market trade reached 20.9 million shares, down 40 percent from previous trading session, valued at 202 billion dong.
euro OPE: European stocks were on a knife edge yesterday with banks under renewed pressure on growing concern that the eurozone debt crisis is far from over, dealers said.
In choppy trading, the Paris stock market fell back into the red in late morning deals, losing more than 1 percent at one stage, having earlier rallied by more than 2 percent.
London shares gained 0.85 percent in mid-day trading, while Frankfurt gained 0.95 percent in value, but both indices trimmed their earlier gains.
“Panic was laid bare yesterday by the pace at which rumours… spread through the market,” said Rabobank analyst Jane Foley in London.
AMERICA: Wall Street’s wildest week since 2008 careened into another 400-plus point move for the Dow on Thursday. This time, stocks shot up after investors saw small signs that the economy might not be headed into another recession.
Fewer Americans joined the unemployment line last week, and a technology bellwether said revenue could grow faster this quarter than analysts expected. The news pushed prices on long-term Treasurys down, and gold fell from its record high.
The Dow Jones industrial average rose 423.37 points.
During a calm market, such a large move would rank as the Dow’s biggest in months. For this volatile week, it’s more than 100 points off the average. The Dow plunged 634 points Monday, soared 429 points Tuesday, and dove 519 points Wednesday. It’s the first time the Dow has ever had four straight 400-point days.
Carlton Neel, who manages about $2 billion as a senior portfolio manager at Virtus Investment Partners, said investors are so scared of being the last one out of the market in a downturn or the last one in during a rally that they are stampeding in herds, creating more volatility.
“Fear tends to be a much more powerful emotion, and the sell-offs tend to be more violent than the rallies,” he said. “But people are worried about missing the bottom, so you will have a few melt-ups along the way.” That’s because memories of the last meltdown in 2008 are still fresh in the mind of many investors.
In October 2008, the Dow had four days of 400-point plus gains and four days of similar losses. That includes a 936-point surge on October 13 after European central banks pledged more aid to banks and the US Treasury offered details about its plan for US banks. Two days later, a report showed retail sales had fallen more than anticipated and the Dow dropped 733 points.
On Friday, the government will say how much people spent at retailers during July. Economists expect a 0.4 percent rise in retail sales, according to FactSet.
This week’s ricocheting is reminiscent of 2008, when the financial crisis battered stocks. The last time the Standard & Poor’s 500 index rose or fell by 4 percent in four straight trading days, as it has just done, was November 19, 2008 through November 24, 2008, according to Kevin Pleines, an analyst at Birinyi Associates. It’s only the third time since 1934. October 1987, including the day known as Black Monday when the S&P plunged more than 20 percent, was the first instance.
The Dow climbed 3.9 percent Thursday, to 11,143.31 The S&P 500 rose 51.88, or 4.6 percent, to 1,172.64. The Nasdaq rose 111.63, or 4.7 percent, to 2,492.68.
The surge came after the government said the number of people filing for unemployment benefits for the first time fell to 395,000 last week, down 7,000 from a week earlier. It’s the first time the number has dropped below 400,000 in four months.
Financial stocks also rebounded from their steep drop Wednesday, up 6.3 percent after a 7.1 percent drop a day earlier.
In recent weeks, investors largely ignored the strong profits that companies have reported since July. Of the 452 companies in the S&P 500 that have reported second-quarter results so far, total earnings are up 12 percent.
Investors have been more focused on worries about the weak US economy and Europe’s debt problems.
The leaders of France and Germany, the biggest Eurozone economies, said they will meet next week to talk about how to solve the region’s financial difficulties. Worries that the continent’s debt problems could hurt the banks that own European government bonds have weighed heavily on financial stocks and the broader market. Pain for European banks could lead to more trouble for the US banking industry and the economy because global financial firms are so closely linked.
Reports also circulated Thursday that European officials were considering a temporary ban on selling stocks short, which is a way that traders bet a stock will fall.
Rumours have been a force driving the market in the last week. On Friday, speculation that Standard & Poor’s may downgrade the US from its top AAA credit rating helped knock down stocks. It turned out to be correct.
This week, the scuttlebutt has centered on European banks, French ones in particular. The head of France’s central bank said Thursday that the country’s banks are solid, and he blamed “unfounded rumours” for big drops in their stocks.
Prices for longer-term Treasurys fell, as investors felt less need to put their money in investments considered safe. The yield on the 10-year Treasury note rose to 2.33 percent from 2.11 percent late Wednesday. A bond’s yield rises when its price falls.
Investors had been pouring money into Treasurys earlier in the week, briefly knocking the 10-year note’s yield to a record low of 2.03 percent Tuesday. Treasurys have held onto their reputation as a safe place to put money even after S&P cut the US credit rating to AA+ last Friday.
Gold fell $32.80 per ounce to $1,751.50 Thursday. It had rocketed above $1,801 per ounce for the first time on Wednesday as stock markets tumbled around the world.
Benchmark Currency Rates USD EUR JPY GBP CHF CAD AUD HKD HKD 7.7941 11.0647 0.1014 12.6435 10.2191 7.8997 8.0466 - AUD 0.9686 1.3751 0.0126 1.5713 1.2700 0.9817 - 0.1243 CAD 0.9866 1.4006 0.0128 1.6005 1.2936 - 1.0186 0.1266 CHF 0.7627 1.0827 0.0099 1.2372 - 0.7730 0.7874 0.0979 GBP 0.6165 0.8751 0.0080 - 0.8082 0.6248 0.6364 0.0791 JPY 76.8750 109.133 - 124.706 100.793 77.9167 79.3658 9.8632 EUR 0.7044 - 0.0092 1.1427 0.9236 0.7140 0.7272 0.0904 USD - 1.4196 0.0130 1.6222 1.3111 1.0136 1.0324 0.1283 Bloomberg