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Asia stocks tumble on knock to recovery hopes

Asia stocks tumble on knock to recovery hopes
AP
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First Published: Tue, Jun 16 2009. 02 10 PM IST
Updated: Tue, Jun 16 2009. 02 10 PM IST
Bangkok: Asian stock markets tumbled on Tuesday, with Japan and Hong Kong benchmarks down about 3%, after weak US manufacturing figures knocked confidence in a quick recovery from global recession.
Oil retreating from eight-month highs dragged commodity stocks lower in Asia while top manufacturers like Japanese automaker Toyota fell on the weak data. The dollar weakened after Russian President Dmitry Medvedev told a regional summit that the world needs new reserve currencies.
Indexes in big Asian markets such as Japan and Hong Kong have gained 40% or more since early March, powered by ample liquidity and signs the economic slump has leveled out.
But as the rally gathered pace, it became increasingly vulnerable to any evidence that a recovery wasn’t unfolding as quickly as investors hoped.
Wall Street faltered overnight on one such sign, with the Dow Jones industrials posting its biggest drop in nearly a month.
A monthly index of manufacturing conditions around the New York region fell to minus 9.4 in June from minus 4.6 the previous month, underscoring that any recovery in the world’s largest economy a critical market for Asian exporters will be tepid and slow.
“All the global stock markets have been overbought so the manufacturing data was a trigger, an excuse to sell and take some profit,” said Peter Lai, investment manager at DBS Vickers in Hong Kong.
Japan’s Nikkei 225 stock average shed 286.79 points, or 2.9%, to 9,752.88 even as the central bank said the country’s economic conditions “have begun to stop worsening” an improvement from its previous assessment that the economy had been “deteriorating.” The Bank of Japan also left its key lending rate unchanged at 0.1% as expected.
Hong Kong’s Hang Seng, meanwhile, slid 545.62, or 3%, to 17,953.34 and South Korea’s Kospi dropped 0.9% to 1,399.15.
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First Published: Tue, Jun 16 2009. 02 10 PM IST
More Topics: Asia | Markets | Wall Street | Nikkei | Hang Seng |