Hong Kong: Asian stocks fell more than 1% on Wednesday and the yen rose, with risk-averse investors fretting about the deepening damage to corporate profits and consumer spending despite a late rally on Wall Street.
Market players were also spooked after US automakers gave a dire warning to lawmakers about their outlook while pleading for $25 billion of bailout funds from Congress
Oil was steady at $54.34, near a 22-month low, on mounting worries about a deep global economic recession, highlighted by data overnight showing confidence at US home builders plunging to a record low.
Japan’s Nikkei average shed 1.8%, driven in part by falling bank shares after No. 1 Mitsubishi UFJ Financial Group suffered a 61% drop in quarterly profit and a report said Sumitomo Mitsui Financial Group aimed to raise $4.2 billion in capital.
The MSCI index of Asia-Pacific stocks outside of Japan dropped 1.7% and was back near a four-and-a-half-year low hit last month. Overnight the US S&P 500 gained 1%.
Troubles plaguing the banking system have yet to abate despite the efforts of central banks to get credit flowing again and problems have now spread to the real economy, leading to recessions in Japan, Europe and elsewhere.
Citigroup’s plans to slash 52,000 jobs underscored the financial sector woes, with shares of the second-largest US bank still falling to a 13-year low on worries its efforts to return to health may not be enough.
The US housing market collapse at the heart of the crisis showed signs of deteriorating further, with the National Association of Home Builders index plunging to a record low of 9 in November. At its peak in 2005, the index reached 72.
The South Korean won hit a three-week low and the KOSPI index shed 3.6% as market players have kept shedding riskier assets in stocks and emerging markets to minimise losses as year-end approaches.
The weakness in emerging market currencies knocked the Philippine peso down and led to suspected purchases by the country’s central bank to prop it up, while the Indonesian rupiah slid to a seven-year low.
Australia’s benchmark S&P/ASX 200 shed 1.4% on a drop in non-financial shares after authorities lifted a ban on short selling, hitting companies such as supermarket chain Woolworths whose shares had outperformed during the sell-off.
The yen climbed as falling stocks spurred selling of higher-yielding currencies as investors shifted funds into the relative safety of the Japanese currency as well as the dollar.
Th dollar dipped 0.4% from US trade to 96.55 yen, while the euro was steady at $1.2616.
The dollar index, a gauge of its performance against a basket of six major currencies, was a touch higher at 87.158 and held near a 2-1/2-year peak struck last week.