Singapore: Asian stock markets were jittery on Wednesday, 24 September, as fears that US lawmakers will stall a proposed $700 billion bailout of the battered financial sector haunted investors and a firmer yen hurt Japanese exporters.
Shares in Honda Motor and Canon Inc. fell nearly 4%, but financial shares gained in Sydney and Hong Kong and US Treasury yields rose after Warren Buffett surprised the market with a $5 billion investment in Goldman Sachs.
“Everybody is just following god, Warren Buffett has shown the way,” said Francis Lun, general manager with Fulbright Securities in Hong Kong, as the move by the world’s most famous investor was taken as a sign their may now be value in the beaten-down sector.
Japan’s third-biggest bank, Sumitomo Mitsui Financial Group (SMFG) also planned to invest several billion dollars in Goldman, according to the Kyodo news agency, though SMFG said it had no plans to do so for now. SMFG shares added 2.2%.
Crude oil futures rose nearly 0.5% above $107 a barrel, paring Tuesday’s losses of nearly $3, ahead of US inventory data expected to show declines in crude and gasoline stocks.
Japan’s Nikkei fell 1.2% in the morning session, with car maker Honda down 3.7% and cameras and copiers firm Canon losing 3.9%. Japanese markets had been closed for a holiday on Tuesday, when Asian markets mostly fell.
“We now have a delicate situation about whether the US Congress will approve the bailout plan and this is weighing on the market,” said Takahiko Murai, general manager of equities at Nozomi Securities.
The MSCI index of Asia-Pacific stocks outside Japan, which slumped to a 2-year low last week, was up 0.6% at 0300 GMT.
US stocks fell on Tuesday, with the Dow Jones industrial average and S&P 500 both losing around 1.5%, amid congressional wrangling over Treasury Secretary Henry Paulson’s plan to buy up toxic mortgage debt on financial institutions’ balance sheets in an effort to resolve the root cause of the current financial crisis.
Buffett bank boost
But news that Buffett’s Berkshire Hathaway was investing in Wall Street’s most powerful firm sent US index futures surging in extended trading.
Buffett’s move also boosted Australia’s financial sector, with National Australia Bank up 4.6% and ANZ Banking Group gaining 2.3%, as the benchmark S&P/ASX 200 index rose 0.9%.
In Hong Kong the financial sector led gains, with HSBC up 1.1% and ICBC up 2.6%, as the Hang Seng put on 1.9%.
South Korean stocks rose 1.2%, reversing early losses as an anticipated announcement of government measures against short-selling sent foreign investors who had been betting on price falls scrambling to cover their positions.
The yen eased a little against a number of currencies as the Buffett news stemmed some inflows into the Japanese currency when Wall Street fell the previous day.
“We expected the yen to gain against its peers, drawing support from the slip in Wall Street the previous day,” said a trader at a European bank. “However, various cross yen pairs are being bought back in light of the Goldman news.”
The dollar traded around 105.70 yen after hitting a high of 105.90 yen. The euro advanced to 155.25 yen The Australian dollar rose to around 88.20 yen
Gold fell after the dollar bounced on Tuesday, continuing a strong negative correlation between the greenback and dollar-denominated commodities that has been in place for several months.
Base metals also fell, with Shanghai aluminium futures slipping 1.8% to a four-year low on concerns over swelling stockpiles and worries China’s smelters will continue to churn out metal despite weak demand.
November US crude was up 47 cents at $107.08 a barrel. Losses on Tuesday had followed a record surge of 16% in the now expired October contract on Monday.
A Reuters poll of analysts predicted US inventory data due later would show a fall of 2 million barrels in crude stocks.
Ten-year US Treasury notes fell in price in Asian trade, pushing yields up to 3.824% from 3.803% late in New York on Tuesday.