Asian stocks dropped sharply Thursday, with a recent rebound in investor willingness to take risks jeopardized by dire U.S. private employment data and fears about corporate earnings.
Global equity markets snapped a 10-day rally on Wednesday after a report showed the U.S. private sector shed 693,000 jobs in December, increasing chances the U.S. payrolls report due on Friday will reflect greater job losses than the expected 500,000.
Hopes that fiscal stimulus measures will support global growth, which fed the recent stock market rallies around the world, have been tempered by the cold, hard economic reality. Government spending plans and interest rate cuts can take a long time to be fully felt, and company earnings are likely to deteriorate further in early 2009. Technology shares in particular were under fire after Intel cut its fourth quarter sales forecast for the second time.
Emerging market currencies weakened as the global equity rally came to a halt, while commodity-related currencies came under pressure after crude oil's biggest single-day percentage decline in more than seven years overnight. The Australian dollar fell against the U.S. dollar after hitting a three-month high this week. The U.S. dollar rose against the Korean won and the Indonesian rupiah. The U.S. dollar recovered against the euro and other major currencies but pinning down a trend has been difficult so early in the year. Expectations of even slower demand for raw materials dragged on metals prices, while U.S. crude was steady above $42 a barrel after a surprising buildup of inventories unleashed a brutal 12 percent selloff on Wednesday.
Japan's Nikkei 225 Average slid 3.9 percent, snapping a seven-day rally, after grim U.S. jobs data and that Intel revenue warning fanned fears the recession was deepening, hitting chip stocks and other exporters. Elpida Memory dropped 7.3 percent while Kyocera ended 6.6 percent lower. Exports such as Canon and Sony both shed 4 percent.
Seoul shares closed 1.8 percent lower, ending five consecutive sessions of gains as technology issues retreated on earnings worries, but shipbuilders including STX Shipbuilding rose on expectations for large overseas orders. Hynix Semiconductor, the world's No.2 memory chip maker behind Samsung Electronics, finished 6 percent higher after spot price for DRAM and NAND Flash chips made solid 5 percent-range gains overnight.
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Australian shares fell 2.3 percent as renewed worries over the outlook for commodities amid a global downturn sparked a sell-off in resource stocks such as global miner BHP Billiton. Iron ore miner Fortescue Metals Group dropped 7.9 percent, and Santos, Australia's third-largest oil and gas firm, slid 3.8 percent. In a further sign the financial crisis is denting company profits, Macquarie Group, Australia's top investment bank, warned it faced extremely tough market conditions in the December quarterand its profits will be hit. Macquarie shares fell 3.7 percent
Hong Kong shares tumbled 3.8 percent with Chinese banks tanking for a second day in a row after equity selldowns in two major banks in the first week of 2009 put nervous investors on the backfoot. Shares of Industrial and Commercial Bank of China, the country's biggest bank, fell more than 6.8 percent amid worries investors Goldman Sachs, Allianz and American Express will trim their holdings when lock-up agreements lapse this year. Lenovo shares, which were suspended on Wednesday, fell after having climbed 12.2 percent on Tuesday in anticipation of the restructuring news.
Singapore's Straits Times Index was down 2.8 percent with DBS Group leading the declines with a 5 percent fall.
Chinese stocks fell, led by banks after two high-profile sales of Chinese bank shares in Hong Kong sparked fears of more such selling. Bank of America raised $2.83 billion on Wednesday by selling some of its H shares in China Construction Bank, while Hong Kong tycoon Li Ka-shing sold $511 million of shares in Bank of China.