Hong Kong: Asian stocks dipped on Monday on worries about the fate of US automakers and banks, while the dollar retreated as market players booked profits on the rise to a three-year peak last week.
Markets sent mixed signals at the start of the week, with the safe-haven dollar and government bonds losing ground even as financial shares dragged down most stock indexes. Oil prices jumped for a second day on hopes for more Opec supply cuts.
Japan’s broad TOPIX index slid to a 25-year intraday low as the country’s shares remain the worst hit among Asian markets, while the Shanghai Composite index surrendered some of this year’s solid gains on hopes for economic recovery.
Asian stock markets have held up better than others in the United States and Europe on expectations that households and governments in the region have more scope to keep spending because they are less indebted.
But analysts said Asia’s dependency on exports meant that regional equities were likely to play catch up with the tumble elsewhere.
Figures on Monday showed Japan suffered its biggest current account deficit on record in January on plunging shipments abroad.
“We don’t believe Asia can outperform the G3 this year,” said Clive McDonnell, Asia strategist at BNP Paribas in Hong Kong. “In the past few weeks, Asia has rolled over quite clearly.”
The MSCI index of Asia-Pacific stocks outside Japan dipped 0.5% following a slight rise in the US S&P 500 on Friday following dismal data showing US unemployment surging to a 25-year high in February.
Stocks slumped globally last week on renewed concerns about the impact of the crisis in the United States as the government stepped in with another lifeline for insurer AIG and General Motors’ auditors raised doubts about the ability of the company to survive outside of bankruptcy.
Regional currencies were mixed on Monday, with the South Korean won slipping back towards an 11-year low even as the Philippine peso edged up.
Foreign investors have been persistent sellers of Asian stocks, one of the factors knocking regional currencies lower.
Fund tracker EPFR Global said that Asia ex-Japan equity funds saw the biggest outflows among emerging market regions in the week ending last Wednesday, seeing $1.09 billion yanked out - the most in 20 weeks.
Dollar backs down
The dollar backed down from a three-year peak reached mainly on the back of safe-haven buying and as US investors have kept selling their holdings of foreign assets to repatriate funds.
The dollar index, a gauge of its performance against six major currencies, dipped 0.2% to 88.369 after climbing as high as 89.624 last week.
The US currency also took a hit after the index fell just short of the 90 line, which coincides with a 38.2% Fibonacci retracement of its long slide between 2001 and 2008 that serves as a major point of chart resistance.
The euro gained 0.2% to $1.2681 while the dollar was little changed at ¥98.30.
Oil prices jumped 93 cents to $46.45 a barrel gaining nearly 7% in the past two trading sessions on expectations Opec will cut supplies further. But gold dipped $3.50 an ounce to $936.10