Singapore: Asian stocks fell on Thursday as several major US firms issued disappointing outlooks, casting doubts on the strength of a global recovery.
The yen benefited as investors pared exposure to riskier assets, and on media reports the Bank of Japan may upgrade its inflation and growth forecasts in a semi-annual report next week.
The yen’s gains were briefly dented after ratings firm Fitch Ratings said that in the absence of sustained economic recovery and fiscal consolidation, Japan’s government debt would rise further, putting downward pressure on sovereign credit and ratings over the medium term.
Japan’s Nikkei average fell 1.3%, with Toyota Motor Corp falling after Moody’s Investors Service cut the recall-hit firm’s credit ratings, saying that it expected the automaker’s current low profitability to continue and that litigation costs could be significant.
Market players, however, said they thought the impact of the downgrade would be limited.
“Market worries and unfavourable factors about Toyota have pretty much been factored in during the course of its share price decline that started in January,” said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.
“The downgrade is reflecting the concerns market players felt back in January.”
Tech shares fell broadly as investors moved to take profits after a sharp climb on Wednesday in the wake of better-than-expected results from Apple, though a few shares bucked the trend.
Hitachi Corp gained more than 2% after its hard drive unit projected a strong 2010, with its sales up 42% from a year earlier.
The MSCI index of Asia-Pacific stocks outside Japan lost about half a percent.
Investors are scouring earnings reports for signs that consumer demand is improving, which would boost sales and give a much-needed leg up to a flagging equities rally, which began early last year.
However, many market watchers have already priced in strong growth expectations, leaving markets vulnerable to profit taking if earnings and forecasts do not surprise strongly on the upside.
“The market has risen quite steeply lately and it is taking a break. Investors have also turned a bit more cautious before earnings results of major firms,” said Won Jong-hyuck, a market analyst at SK Securities in Seoul.
Equity markets were also chewing over mixed earnings from Wall Street. Disappointing outlooks from healthcare companies offset strong earnings from Morgan Stanley and Apple.
Chipmaker Qualcomm Inc and Internet auctioneer and retailer eBay Inc issued weak forecasts, casting doubts over what has been an otherwise upbeat corporate reporting season so far.
Shanghai stocks shed more than a percent, with all banks listed on the Shanghai and Shenzhen stock exchanges falling.
Hong Kong shares ended down 0.3%, after reports that the local government was considering fresh steps to curb property speculation, threatening to dent developers’ near-term cash flow and profits.
“Policy tightening in the property sector has a definite impact on the banking sector. People may be wondering how much it is going to affect loans,” said Xu Yinhui, analyst at Guotai Junan Securities.
Australian shares fell nearly 1% to a three-week low as weaker commodity prices and disappointing results and outlooks from companies stoked selling.
Mining and energy stocks were the biggest drag, after top gold miner Newcrest Mining and oil and gas producer Santos cut their production forecasts for this year and refiner Caltex warned its margins could shrink.
Investors were also spooked by Wesfarmers, which reported weaker-than-expected sales, shrinking margins at its discount department store chains and a cautious outlook for the fourth quarter. Its shares fell 2.5%.
“The market is just nervous, basically,” said Martin Angel, a dealer at Patersons Securities. “Some of the earnings figures have been coming a little lower than the market has anticipated, therefore things are getting written down on that.”
South Korean shares lost half a percent after strong gains in the previous session, but rises in Hynix and Hyundai Motor after posting robust quarterly results lent the market support. Shares in Taiwan lost 0.2%.
Shares in India and Singapore, however, bucked the trend and rose about half a percent.
Gold rose towards $1,150 an ounce, lifted by a softer dollar and persistent concerns about the outlook for debt-laden Greece.
Oil steadied below $84 after higher US inventories signalled demand in the world’s top oil consumer was lagging the recovery in the global economy.