Asian stocks and US futures retreated after China’s industrial production slowed, Australia’s jobless rate rose and Japanese government data confirmed the nation’s economy shrank the most since 1974.
China Railway Construction Corp slid 3.3 per cent as the nation’s output growth slipped to 3.8 per cent in January and February. Woolworths, Australia’s biggest retailer, lost 1.6 per cent after unemployment reached a four-year high. Mitsubishi UFJ Financial Group, Japan’s No. 1 listed bank, sank 3.7 per cent after the government confirmed gross domestic product fell last quarter by the most since the 1970s oil shock.
"The global economy is weakening in such a highly synchronised way that everybody is affected," said Stephen Halmarick, Sydney-based Head of Investment Markets Research Colonial First State Global Management, which manages about $84 billion. "I’d still be cautious on the Asian economies."
The MSCI Asia Pacific Index fell 1.1 per cent to 72.68 as of 8:23 pm in Tokyo, snapping a two-day, 4.1 per cent advance. Japan’s Nikkei 225 Stock Average lost 2.4 per cent to close at 7,198.25. Most markets in Asia declined except for those in South Korea, India, and Pakistan.
MSCI’s Asian index has slumped 19 per cent this year, extending last year’s record 43 per cent drop as the global recession decimated company profits. Reported earnings for companies in the index have fallen by about half from a year ago. Toyota Motor Corp, the world’s No. 1 carmaker, lost 3.1 per cent in Tokyo after saying it was concerned suppliers may run short of cash. Nippon Telegraph & Telephone Corp, Japan’s largest fixed-line phone company, slumped 5.8 per cent to a record low after an analyst downgrade.
Futures on the Standard & Poor’s 500 Index fell 1 per cent. The gauge added 0.2 per cent in New York yesterday as JPMorgan Chase & Co joined Citigroup in saying it was profitable in January and February.
"Positive comments from the US banks are reassuring, but we’re not out of the woods yet," said Nicole Sze, a Singapore- based investment analyst for Bank Julius Baer & Co, which manages $350 billion. "Investors are still waiting for concrete signs that the economy has bottomed."
Inpex Corp, Japan’s largest oil explorer, dropped 5.1 per cent to 651,000 yen. Woodside Petroleum, Australia’s second-largest oil producer, slipped 2.7 per cent to A$35.98.
China production
Crude oil for April delivery plunged 7.4 per cent yesterday to $42.33 in New York as US inventories climbed and fuel consumption retreated to a two-month low. Oil gained 1.9 per cent in after-hours trading today.
China Railway fell 3.3 per cent to HK$9.28 in Hong Kong. GD Midea Electric Appliances Co, China’s second-biggest publicly traded appliance maker, slumped 3.4 per cent to 9.50 yuan in Shenzhen, southern China. China’s industrial-production growth slowed in the first two months of the year as exports slid at a record pace, while bank lending jumped as the nation’s 4 trillion yuan ($585 billion) stimulus began to take effect. Chinese Premier Wen Jiabao reiterated last week the government’s pledge to "significantly increase" investment in 2009.
Governments have stepped up efforts to avert what the World Bank predicts will be the first global economic contraction since World War II. US Treasury Secretary Timothy Geithner yesterday urged the Group of 20 nations to take "forceful" actions to end the financial crisis.
Mitsubishi UFJ slumped 3.7 per cent to 396 yen. JFE Holdings, Japan’s No. 2 steelmaker, plunged 6.5 per cent to 1,907 yen, the lowest since July 2003.
Gross domestic product in Japan shrank an annualized 12.1 per cent in the three months ended December 31, government figures today showed, as exports, output and business spending collapsed. The figure was less than the 12.7 per cent reported last month.
The Japan Bank for International Cooperation said it has received requests for emergency loans totalling as much as $40 billion since the end of 2008, almost four times its original budget for the financial year that ends March 31.
"Not just automakers, but electrical and chip companies, and also other manufacturers, are coming to us in large numbers," Hiroshi Watanabe, chief executive officer of the Tokyo-based JBIC, said in a March 10 interview.
Government support
Woolworths dropped 1.6 per cent to A$25.10 in Sydney. Westpac Banking Corp, Australia’s largest bank by market value, lost 1.6 per cent to A$16.60.
Australia’s jobless rate rose in February to the highest in four years as companies fired the most full-time workers in almost two decades, adding to signs the economy is in a recession.
New Zealand’s central bank today reduced its benchmark interest rate to a record low to help steer the economy out of its worst recession in 30 years. The Bank of Korea, meanwhile, unexpectedly left its interest rate unchanged as policy makers struggled between the need to stimulate the economy and prevent a further slide in the won, the worst performing Asian currency against the dollar this year.
Honda Motor Co slumped 6.6 per cent to 2,065 yen after the yen strengthened to as high as 95.67 to the dollar, the highest since February 23. Sony Corp, which gets a quarter of its sales from the US, declined 3.7 per cent to 1,735 yen. A stronger yen lowers the value of Japanese exporters’ overseas sales when converted back into the local currency.
Toyota sank 3.1 per cent to 2,820 yen after Jim Lentz, president of its U.S. sales unit, told the U.S. government’s auto task force yesterday suppliers may run short of cash and any failures could disrupt production. NTT slid 5.8 percent to 3,430 yen, the lowest since its listing in February 1987. Mizuho Securities downgraded the stock to "buy" from "strong buy."
