Hong Kong: Asian stocks tumbled Monday as concerns about US corporate earnings, low American consumer confidence and the poor global economic outlook shook investors, punishing shares in Japan and China.
Tokyo tumbled just more than 3% and China slid more than 5.6% as trading screens across Asia turned red.
Tumbling stocks: Pedestrians are reflected on an electronic board displaying Japan’s Topix index in Tokyo. The benchmark Nikkei-225 index fell 406.22 points to end at 12,917.51 on Monday.
Hong Kong fell nearly 3.5% with Australia, Taiwan, South Korea and Singapore all down too.
India’s stock markets were closed on Monday on account of a public holiday.
Investors took their cue from New York where the Dow Jones industrial average fell more than 250 points on Friday after General Electric Co. (GE) said its profits were hit by the credit market turmoil and downgraded its outlook.
Following bellwether GE’s surprise announcement, earnings are due this week from a raft of big players, including JPMorgan Chase and Co., Merrill Lynch and Co. Inc. and Citigroup Inc.
Investors expect bad results following the world financial crisis, which began with rising defaults among subprime, or riskier, US mortgages but now threatens losses of nearly $1 trillion (Rs39.9 trillion) and a worsening credit crunch. Stocks were also hit by a weaker-than-expected reading showing US consumer confidence at a 26-year low.
A Group of Seven (G-7) meeting of finance leaders at the weekend provided little solace, concluding that global economic prospects had deteriorated and expressing worry at the dollar’s slide.
In Japan, share prices tumbled 3.05%. Dealers said signs of growing gloom among world finance chiefs about the economic outlook had added to pressure on the market.
The benchmark Nikkei-225 index fell 406.22 points to end at 12,917.51. The broader Topix index of all first-section shares declined 32.38 points or 2.53 percent to 1,246.24.
“Concerns about US corporate earnings are increasing as companies may lower their profit forecasts and Japanese corporations may do likewise,” said Maki Shimizu, an analyst at UBS Securities.
“The extremely poor consumer confidence reading may add to worries about stagflation,” said Yoshikiyo Shimamine, chief economist at Dai-Ichi Life Research Institute.
In China and Hong Kong, investors were waiting nervously for key economic numbers due from the mainland this week, including inflation and first-quarter economic growth data.
High numbers could lead the authorities to take more steps to slow the Chinese economy, a development some onlookers fear would hit local stock prices still further.
In Hong Kong, the Hang Seng index closed down 856.59 points, or 3.47%, at 23,811.20.
“Many investors were hesitant to take new positions until numerous uncertainties (related to) US and China data and first-quarter earnings of major US banks” are cleared, said Matt McKeith of First State Investments.
“In China, the biggest concern is that inflation might surprise on the upside, fuelling fears of more tightening measures, including a fresh increase in interest rates,” said Miles Remington at BNP Paribas. China announces inflation and other key data on Wednesday.
Chinese share prices closed down 5.62%, dealers said.
The benchmark Shanghai Composite Index closed down 196.22 points at 3,296.67.
“Investors were still cautious as authorities are scheduled to release economic figures this week, and the outlook for the stock market remains uncertain,” said Zhang Qi, an analyst at Haitong Securities.
In Sydney, Australian shares closed down 1.8%, dealers said. The benchmark S&P/ASX 200 closed down 96.9 points at 5,342.4, while the broader All Ordinaries index ended down 94.3 points at 5,410.9.
“We’ve seen quite heavy falls across most sectors, with even the energy sector struggling to maintain any momentum despite high oil prices,” said Dominic Vaughan, a senior dealer at CMC Markets.
Taiwan share prices closed 0.19% lower, with the weighted index falling 16.90 points to 8,892.68.
“The GE factor reminded investors of concerns over corporate earnings for the first quarter, with large-cap technology stocks taking their tone from their US peers,” said Michael Hsu, an assistant vice president of Taiwan Life Asset Management.
South Korean share prices too closed lower, down 1.9%. The Kospi index ended down 33 points at 1,746.71 after falling to as low as 1,739.03.
“Downbeat news from GE hit most Asian markets, and the South Korean market was no exception,” said Park Seok-hyun, an analyst at Eugene Investment Securities.
In Singapore, share prices closed 2.68% lower. The Straits Times Index slipped 83.91 points to 3,042.96. The index should continue to track key economic news from the United States, including retail sales figures due out later Monday, DMG and Partners Securities said in a note to clients.
In Malaysia, the Kuala Lumpur Composite Index fell 13.36 points to 1,233.43.