Techs Sink Asian Markets, South Korea Sheds 4%
Asian markets finished sharply lower Monday, stung by the technology sector, which is anticipating slower global demand. South Korea was the worst hit, sinking 4 percent.
Technology stocks across the region took a beating after Dellconfirmed the industry's long-standing fears of a demand slowdown. LG Electronics, the world's No.4 handset maker, plunged 9 percent while Taiwanese electronics gear maker Hon Hai, dropped 6.9 percent.
Oil prices rose above $116 a barrel Monday, as a quarter of U.S. crude production was shuttered because of Hurricane Gustav. Gustav was expected to strike land west of New Orleans, on the Louisiana coast, only days after the somber anniversary of Hurricane Katrina's devastation in 2005, though the storm was not expected to strengthen significantly once it made landfall.
The U.S. dollar rose against major currencies, extending last month's biggest rally in more than a decade, on the view the U.S. economy is likely to recover quicker than other major economies that are probably still shrinking. The dollar's rally was striking since it took place with oil prices also rising, which showed the crude market's singular focus on Gustav. Wall Street is closed Monday for the Labor Day holiday.
South Korea's KOSPI plunged 4 percent led by techs on an increasingly grim outlook, while a falling won currency stoked worries about costs of foreign denominated debts and raw materials, sending airlines tumbling. LG Electronics and Hynix Semiconductor both nosedived. Korean Air Line tanked nearly 15 percent and Asiana Airlines lost almost 11 percent.
Japan's Nikkei 225 Average shed 1.8 percent, its biggest one-day percentage loss in nearly two weeks, as Honda Motor and other exporters fell on worries about the economy and a slightly stronger yen. Kyocera and other high-tech shares fell on
concerns that an economic chill will prompt manufacturers around the world to cut back on technology spending, while losses in other Asian stock markets helped drag the overall market lower.
Australian shares finished 0.3 percent lower, tracking losses on Wall Street last week, with
top miners lower on weaker base metals prices.
Hong Kong shares started the new month on a weak note, down 1.7 percent, as lingering worries over slowing corporate profitability sparked further selling of blue-chip stocks. Shares in Chinese PC maker Lenovo Group tumbled over 7 percent after Dell warned that companies worldwide were cutting technology spending.
Singapore's Straits Times Index fell more than 1 percent. Shipping stocks fell on investor concerns over a possible rise in the cost of ship fuel as oil prices climbed because a hurricane shut down oil production in the U.S. Gulf Coast, traders said. Shares in Neptune Orient Lines and Cosco both declined.
China's Shanghai Composite Index sank 3 percent after corporate earnings for the first half of this year confirmed a trend of slowing earnings growth. Shares in SAIC Motor, China's biggest car maker, dropped 3 percent after the company reported on Saturday a 28 percent drop in first-half net profit.