Asian stocks fall, led by chip makers, gold down

Asian stocks fall, led by chip makers, gold down

Singapore, 4 October Asian stocks were dragged lower today by losses in the chip sector after a negative report on Intel Corp, while the dollar held on to recent gains on signs the US mortgage crisis had not derailed the economy.

Stock markets extended losses as energy and mining companies fell, tracking a drop in crude oil and commodity prices.

The dollar’s revival has hit gold, which retreated further from its recent 28-year high of $747.65 an ounce, dropping to around $728.

On Wednesday a report on the US service sector and another on private-sector payrolls indicated modest growth in the labour market last month, bolstering hopes the housing market troubles had not yet dragged down other parts of the US economy.

Even so, investors were cautious ahead of Friday’s US payrolls data for September.

On Wall Street both the Dow Jones industrial average and the Nasdaq Composite Index fell 0.6% on 3 October.

US Treasuries also fell in New York and Japanese government bonds followed them down on Thursday.

“Investors haven’t really set their near-term trading strategies and are waiting for the payrolls data," said Maki Shimizu, an interest rate strategist at UBS in Tokyo.

Chip-related shares were among the biggest fallers in Asia, taking their cue from a drop in US giant Intel Corp.

Morgan Stanley initiated coverage of the chip maker with an “underweight" rating, saying it expected an inventory correction and a price war.

Japan’s Nikkei was down 0.6% by the midsession break, with chip maker Advantest off 0.8%.

In Seoul the benchmark KOSPI fell 0.3% from a record closing high hit on 2 October before a national holiday.

It was pulled down by a drop in Samsung Electronics as a quarterly loss from US rival Micron Technology and Morgan Stanley’s report on Intel highlighted concerns over earnings.

Payrolls in focus

The dollar was slightly higher at 78.588 on an index that measures its value against a basket of six major currencies, having recovered from a record low of 77.660 on 1 October.

“Investors expect the dollar to extend gains against the euro if Friday’s non-farm payrolls report shows a fair reading," said Hideki Amikura, a currency manager at Nomura Trust and Banking.

“It is quite possible to see a counter-reaction to recent sharp losses in the dollar," Amikura said.

The euro was little changed from late US trade on Wednesday at $1.4100, having retreated from an all-time high of $1.4283 hit on electronic trading platform EBS earlier this week. The US employment data remains the main focus in the market, but investors will also be watching a European Central Bank policy meeting later in the day. The central bank is expected to leave interest rates on hold at 4%.

US crude slid 18 cents to $79.76 a barrel by 0324 GMT, adding to a slump of roughly $4 from a peak hit in September.