Singapore: Asian shares fell on Wednesday 25 July with exporters such as Canon Inc. hit by the rallying yen and mounting concerns about the health of the US economy, while falling oil prices weighed on energy stocks.
The yen hit a two-month high against the dollar as investors bailed out of stocks and risky trades financed by borrowing in the Japanese currency. The rush to safety bolstered government bonds and kept gold near 11-week highs.
Japan’s Nikkei fell 1.1% to a six-week low, tracking heavy losses on Wall Street, where poor results of blue chip DuPont and a top mortgage lender reignited fears about the broader fall-out from the weak housing sector.
“The word is ‘fall´ as two factors -- a rise in US stocks and a softer yen that helped the market rally -- have turned around,” said Yutaka Miura, deputy manager of the equity information department at Shinko Securities.
Canon fell 2.2%, industrial robot maker Fanuc shed 2% and Toyota Motor fell 1.9 %.
Oil stocks hit
Japanese oil shares fell 4% led by a 5.9% drop in Nippon Oil Corp., the country’s biggest oil refiner, on the back of falling crude prices.
US crude fell 36 cents to $73.20 a barrel by 0230 GMT after it tumbled more than 2% on Tuesday 24 July in anticipation of a rise in US fuel stocks and after assurances from producer group OPEC it was ready to meet any shortfalls.
London Brent crude eased 38 cents to $74.70 after a $1.78 loss on Tuesday 24 July.
Seoul market also fell, with heavyweight Samsung Electronics down 2.1%. But optimism about the South Korean economy after it grew faster than expected in the second quarter helped temper the losses.
MSCI’s index of Asia Pacific stocks excluding Japan dipped 0.7% after three consecutive record highs, with Wall Street’s worst one-day drop since mid-March casting a pall over the region’s markets.
Hong Kong stocks fell 0.7%, Australian benchmark lost 1.2%, Taiwan stocks shed 0.5% and Singapore fell 0.9%.
The dollar regained some ground against the euro and hovered around $1.3812 after hitting another all-time low of $1.3853.
But the US currency, dogged by persistent worries about US credit market problems, sank below 120.00 yen in early trade, its lowest level against the Japanese currency since mid-May.
“The yen was the weakest currency among the euro, dollar, yen trio until recently,” said Tsutomu Soma, a senior manager at Okasan Securities. “But now the dollar is clearly the weakest, with market players expecting it to fall further.”
Volatile share and currency markets and heightened uncertainty about the performance of the world’s biggest economy have bolstered safe-haven investments.
Japanese government bond futures hit a seven-week high early today, while gold hit an 11-week high in late New York trade before coming off a bit in Asia.
Analysts said investors’ focus on the likely fall-out of a US housing market crisis in US meant US existing home sales data and new homes sales due will be key for further market direction.