Singapore: Asian stocks fell on Tuesday, with Japan’s Nikkei index dipping below a key support level as investors fretted about an anaemic global recovery, while the euro hit a six-week low against the dollar.
Recent data, particularly those from the United States and Europe, have showed signs of fatigue of the global economy despite the extension of accommodative policy measures in most countries, prompting investors to shun riskier assets.
The MSCI index of Asia Pacific stocks outside Japan fell more than 0.5%, tracking a weak Wall Street.
Japan’s Nikkei average fell below the closely watched 9,000 mark for the first time in 15 months, pressured by selling by hedge funds and foreigners as concern mounted over the fragile economic recovery.
The Nikkei index has shed nearly 15% so far this year, compared to a 2.6% fall in the MSCI Asia ex-Japan index.
The 9,000-9,100 range had been strong support for the benchmark Nikkei since last year.
“Selling by hedge funds and European investors appears to be hurting stocks and if the Nikkei goes further below 9,000, unloading by individual investors will also likely accelerate,” said Masayuki Otani, chief market analyst at Securities Japan Inc.
“Worries about the economy will not go away overnight, and investors will closely watch what measures emerge, including steps aimed at fending off a so-called double-dip recession in the US economy.”
Investors have dumped Japanese stocks in recent weeks amid worries about Japan’s economic recovery, heightened by the yen’s climb this month to a 15-year high against the dollar.
Overnight, both the Dow Jones industrial average and the Standard & Poor’s 500 Index finished lower despite flurry of corporate takeover activity, usually a sign of investors optimism.
The euro hit a six-week low of $1.2618 as the loss of key technical support led speculators to short the single currency in the hope of forcing stop-loss sales against both the yen and the dollar.
Bears were targeting $1.2605, the 50% retracement of the euro’s rise from a four-year low of $1.1876 in June to its August peak of $1.3334. A break here would open the way to at least $1.2520 and then $1.2479, daily lows from July.
The euro extended its losses against the yen to hit its lowest level in about nine years, as speculators sold the euro in the hope of forcing stop-loss selling.
The euro fell as low as ¥107.21 on trading platform EBS, its lowest since November 2001. It later edged back to 107.35 yen, down 0.4% on the day.
Spot gold fell $3.30 an ounce to $1,220.10 after hitting a one-week low of $1,219.30, as falling equities prompted investors to sell bullion to cover losses, while a firmer dollar also put pressure.
Crude oil fell 56 cents to $72.54 a barrel, a seven-week low, as the dollar rose and the lacklustre US driving season approached its end without triggering a seasonal stockpile drop.