Asian Markets Wobble Over US Stimulus Uncertainty
Asian markets wobbled Tuesday as doubts grew about U.S. plans to create a bank to soak up toxic debts, while the euro fell over 1 percent against the yen and the dollar on a report that Russia is set to request a delay in repaying debt.
Russia will request negotiations with European and other foreign banks to postpone repayment on up to $400 billion of its private-sector debt, Japan's Nikkei business daily reported. The report, which could not be immediately confirmed, sent the euro tumbling against the yen and the dollar before it clawed slightly higher again. Oil prices rose to near $40 a barrel, after getting a boost from OPEC talk of more production cuts and hopes that a U.S. economic package would be passed by Congress this week.
U.S. stock futures were down an average of 1 percent as doubts that the U.S. would create a bad bank" to buy distressed assets from commercial banks as part of a financial rescue package grew. later said the plan would include a new form of "bad bank", using public and private funds.
The Treasury's latest financial-rescue planis expected to use a variety of methods to take bad assets off of banks' books, including encouraging private firms to buy up the toxic debt, sources told CNBC. Although the concept of creating a "bad bank" to house these assets was considered earlier, the new plan envisions creating a similar type of entity or entities to facilitate the asset sales, sources said.
Japan's Nikkei 225 Average slipped 0.3 percent, erasing earlier gains as the yen climbed against the euro and amid growing uncertainty about the U.S. bank
rescue plan. Nissan Motor surged over 6 percent after it announced drastic steps to cope with the recession, saying it would cut 20,000 jobs and joining a growing list of automakers warning of red ink this year.
South Korea's KOSPI edged 0.3 percent lower, with a bearish economic outlook by the new South Korean finance minister and caution before the U.S. government announcement on a bank rescue plan pressuring sentiment.
Australian stocks closed 0.6 percent lower, dragged down by the major banks on uncertainty surrounding the U.S. financial rescue plan, but rare profit surprises gave the market some support. JB Hi-Fi powered 17 percent higher after reporting a 40 percent rise in first-half profit, well ahead of market forecasts, and said it was cautiously optimistic it would meet its target of 28 percent sales growth this year. Cochlear rose 4.4 percent after beating market
forecasts with a 22 percent rise in first-half profit and revising up slightly the bottom end of its full-year growth forecast.
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Hong Kong shares flitted in and out of negative territory, but closed 0.8 percent higher as investors waited for details on a U.S. bank rescue plan to emerge. Power stocks underperformed after data showed a more than 13 percent decline in output in January, a fourth straight monthly drop, likely exaggerated by the week-long Lunar New Year holiday which fell in February last year. Huaneng Power and Datang Power both slid.
Singapore's Straits Times Index moved 1.2 percent higher, though blue chips were turning in a mixed performance. CapitaMall Trust fell 6.2 percent, one day after it announced a rights issue to raise S$1.2 billion which analysts described as huge and dilutive in terms of distribution per unit.
Chinese stocks closed 1.8 percent higher with non-ferrous metals and real estate shares outperforming. Trade remained very heavy as new money continued to enter the market on hopes of an economic recovery. Jiangxi Copper rose, after jumping its 10 percent daily limit on the previous two days, as Shanghai copper prices continued to rise on optimism about the economy. Consumer price inflation fell to a 30-month lowof 1 percent in January while its producer prices were 3.3 percent lower in January than a year earlier.