HONG KONG – World stock markets stalled yesterday, with Japan’s index off more than two per cent, as investors began to doubt a global rally could be sustained amid more grim news about the region’s powerhouse economies.
Most Asian markets ended in the red, led by shares in automakers and financial firms, in lackluster trade that defied slim gains on Wall Street overnight. Major European bourses opened lower.
Stocks worldwide rallied on Wednesday as indications struggling US bank Citigroup may be turning a profit lifted optimism about the hard-hit financial system, whose recovery is seen as essential to ending the global slump.
But there was little to entice investors yesterday after figures this week showed a continued sharp drop-off in Chinese exports and Japanese industrial spending – the latest evidence that Asia’s economies were getting clobbered by an economic crisis that has levelled overseas consumer demand for exports.
Yesterday, revised figures showed that Japan’s economy, the world’s second largest, suffered its biggest contraction in 35 years in the fourth quarter. Gross domestic product shrank at 12,1 per cent annual rate in the October-December period, less than the Cabinet Office’s preliminary reading of a 12,7 per cent contraction, but still confirming a serious recession.
The gloom extended to corporations, with Toyota saying it was worried its suppliers may face a cash crunch.
‘The markets are still lacking momentum, we had a one day spike in volumes and it’s back to quiet markets today. There’s still a lot of indecision and scepticism,’ said John Mar, co-head of sales trading at Daiwa Securities SMBC Co. in Hong Kong.
‘There was a slew of economic data that point to a slowdown in China,’ he said. ‘Two large US banks talked up profits, but nothing has changed fundamentally and there’s little to get you pumped back into the markets.’
South Korea’s Kospi inched marginally higher but markets in Singapore, Australia, mainland China, Taiwan and elsewhere traded lower.
In Tokyo, stocks came under pressure from a combination of a rampaging yen and Wall Street’s failure to convincingly build on Tuesday’s rally. A strong yen hurts Japanese exporters like Toyota Motor Corp. and Sony Corp. by cutting their dollar income from abroad.
‘Sentiment in Tokyo turned downbeat as investors were disappointed by marginal gains in the US market yesterday (Wednesday). With feeble gains overnight, investors were worried U.S. shares could fall again Thursday,’ said Yutaka Miura, senior strategist at Shinko Securities Co. Ltd.
Toyota, the world’s largest automaker, fell 3,1 per cent and Honda Motor Co. dropped 6,6 per cent. Major lender Mitsubishi UFJ Finance was off 3,7 per cent.
Overnight in New York, Wall Street eked out wafer-thin gains after a huge rally the day before.
The Dow rose 3,91, or 0,1 per cent, to 6 930,40. The rise gives the blue chips their third advance in four sessions. The Standard & Poor’s 500 index rose 1,76, or 0,2 per cent, to 721,36.
Oil prices recovered somewhat from a steep fall overnight, with benchmark crude for April delivery up 58 cents at US$42,91 a barrel in Asian trade. On Wednesday, the contract tumbled US$3,38, or more than seven per cent, to settle at US$42,33.
In currencies, the dollar swooned to 95,87 yen from 97,31 yen. The euro traded lower at US$1,2774.
– Nampa-AP
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