Asian stocks dropped for a third day after Japan’s largest carmakers cut global production and President George W Bush said the US would face a “long and painful’’ recession unless a financial bailout is agreed.
Honda Motor Corp and Toyota Motor Corp fell more than 2 per cent after reducing output because of slumping US demand for trucks and sports-utility vehicles. BHP Billiton, the world’s biggest mining company, declined 3.9 per cent after oil and copper dropped. Mitsubishi UFJ Financial Group led banks lower as lending rates jumped on concern that US lawmakers may delay or dilute the $700 billion rescue plan.
“The US bailout plan is moving slowly and markets will be in limbo until there’s better clarity,’’ said Daphne Roth, Singapore-based head of equity research in Asia at ABN Amro Private Bank, with about $30 billion of Asian assets. “Money markets are again frozen and everyone is rushing for safety.’’
The MSCI Asia Pacific Index declined 1 per cent to 115.12 at 7:38 pm in Tokyo, extending a two-day, 0.8 per cent retreat. All of the index’s 10 industry groups fell.
The gauge has dropped 27 per cent this year as a US housing recession sparked a credit crisis, left global financial companies with more than $520 billion in writedowns and losses, and threatened to send the global economy into a recession.
Japan’s Nikkei 225 Stock Average retreated 0.9 per cent as investors in two-thirds of the index’s members lost the right to a dividend. China’s CSI 300 Index jumped 4 per cent after the nation’s two stock exchanges eased restrictions on equity purchases by controlling shareholders.
The Standard & Poor’s 500 Index slipped 0.2 per cent yesterday as Federal Reserve Chairman Ben S Bernanke said the US is facing “grave threats’’ to financial stability and fended off congressional criticism of the rescue proposal. S&P futures lost 0.2 per cent on Thursday.
“Without immediate action by Congress, America could slip into a financial panic, and a distressing scenario would unfold,’’ Bush said in a 13-minute prime-time address to the nation.
Toyota, the largest Japanese automaker, slid 2.5 per cent to 4,690 yen after reducing global production by 17 per cent. Honda, the second biggest, dropped 3.2 per cent to 3,300 yen.
RIL, Infosys drop most
Indian stocks fell, with the benchmark index declining to its lowest in a week, on concern US growth may slow and hurt developing economies.
Reliance Industries (RIL) and Infosys Technologies led falls among the biggest stocks in the benchmark Bombay Stock Exchange Sensitive Index, or Sensex. Reliance fell 1 per cent while Infosys dropped 1.1 per cent to its lowest since April.
“The confusion in the US will prevail over the short run and that could impact flows because of the problems there,’’ said Tridib Pathak, chief investment officer of equities at Lotus India Asset Management Co, which manages $1.7 billion in assets.
The Sensex slid 145.34 points, or 1.1 per cent, to 13,547.18. The S&P CNX Nifty Index on the National Stock Exchange fell 50.7, or 1.2 per cent, to 4,110.55. The BSE 200 Index declined 1 per cent to 1,643.13. Nifty futures for September delivery fell 1.7 per cent to 4,110.30. The contract expired on Thursday.
