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Asian Stocks Slide on High Oil, US Concerns

CNBC.com
Monday, 9 Jun 2008 | 5:11 AM ET

Asian stocks came under selling pressure Monday, after Wall Street slumped on Friday, as oil spiked $11 and renewed fears of stagflation in the world's largest economy gripped the markets.

The Dow Jones industrial average had its worst one-day fall in 15 months, down 3.1 percent, as investors ran to the safety of government bonds from stocks, following oil's record one-day gain to $139 a barrel, and a jobs report showing unemployment at a 3-year high. However oil retreat about $1 in Asian trade.

The U.S. dollar fell on Friday's jobs data, as prospects faded of the Federal Reserve raising interest rates by the end of the year.

Japan's Nikkei 225 Average closed 2.1 percent lower, spooked by a surge in oil prices and worries about the U.S. economy after Friday's unfavorable unemployment data. Exporters such as Canon and Toyota slipped on a weaker dollar. Financials fell across the board. But energy firms such as Inpex Holdings gained ground, and oil explorer AOC surged 7 percent, boosted by oil's spike to record levels. The country's domestic carrier Skymark retreated 3.5 percent on prospects the airline may halve its full year earnings forecast due to its flight cancellations this month.

The South Korean KOSPI slid more than 1.3 percent, led by exporters such as LG Electronics on deepening concerns that the U.S. -- South Korea's second-largest export market -- is headed for a recession after latest jobs data showed that the U.S. unemployment rate has marked a record high. But Hynix Semiconductor rose 1.4 percent, fed by optimism that the world's No. 2 memory chip maker could turnaround earlier than expected on the back of firming chip prices. Korean Air Lines sank 4.8 percent, weighed down by record high oil prices. To help South Korea's citizens cope with escalating oil prices, the government said on Sunday it would hand out $10.2 billion to its lowest-income earners over the next year to ease some of the pain.

Taiwan's key TAIEX ended 1.8 percent lower, but was off the index's 2.6 percent fall at midday, led by major technology exporters such as TSMC and rival UMC on signs of weakness in the key U.S. market.

Singapore's Straits Times Index shed 2 percent. The island's flag carrier SIA, which fell 2.3 percent, was among the leading decliners. Bank stocks such as OCBC and other market heavyweights like Sembcorp Marine also lost ground.

Malaysian stocks lost 1.4 percent, as transportation and aviations stocks retreated on persistent worries about the health of the U.S. economy and record oil prices. But oil palm stocks such as Sime Darby bucked the general downward trend.

Markets in Australia, Hong Kong and China were closed Monday. Trading will resume on Tuesday.