Asia stock slide deepens; tech shares weak

Asia stock slide deepens; tech shares weak

Singapore: Asian stocks fell on Monday after Wall Street suffered its worst three-day slide in 10 months, but losses were muted, and high-yielding currencies edged up as some investor appetite for riskier assets surfaced.

Disappointing results announced by Google Inc on Friday dragged down tech-related shares in Tokyo, pushing the Nikkei index down 1.2%, but analysts shrugged off the fall.

They said that while Tokyo had been hit by an inevitable negative reaction given the sharp US losses, there were some signs that its declines might be relatively small.

“Stocks that you might have expected to have really lost a lot, such as the megabanks, aren’t down so much, and that’s true of a lot of the big-cap shares as well," said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Securities.

“There’s the chance that foreigners may be buying, that there could be a bit of a pull-back from the United States and Europe that’s coming into Japan."

Wall Street stocks fell as much as 2.7% on Friday on worries over President Barack Obama’s plan to curb bank risk-taking, which could hit their profits, and on Google’s result.

With the sudden loss of leadership from the financial and tech sectors, which have led a global rally in recent months, analysts are unsure if equities will continue to sink. Some investors fear the global economic recovery may be slowing, and a number of technical indicators point to further weakness.

The main US stock indices have lost all the gains made this year and fell below key support levels and their 50-day moving averages, a move seen as a bearish signal.

The MSCI index for Asia ex-Japan shares was down 0.72% on Monday.

On foreign exchange markets, high-yielding currencies like the Aussie and the kiwi rose on Monday, inching up to $0.9070 and $0.7160 respectively, from $0.9003 and $0.7110 late on Friday.

Analysts said risk appetite had been lifted by reports that Federal Reserve Chairman Ben Bernanke was moving closer towards confirmation for a second term.

Investors were spooked last week after several key senators announced their opposition to Bernanke’s reappointment but the top Senate Republican predicted confirmation.

The US dollar edged up against the yen to ¥90.20 from ¥89.87 late on Friday in New York but fell about 0.1% against a basket of six currencies

The greenback had struck a five-week high against the dollar and a nine-month high on the euro on Friday as investors rushed towards safe-haven assets.

Still, demand for riskier assets and higher-yielding currencies is likely to remain subdued amid rising concerns over Greece’s fiscal problems; worries that China’s efforts to curb its surging economy may impair global growth and fears that the populist turn at the White House might impact US bank earnings.

Traders are awaiting the response to Greece’s proposed issue of a 5-year benchmark bond issue later on Monday as a test of investor appetite, analysts said.

On other markets, crude oil steadied near its four-week low of below $75 a barrel, while spot gold trekked upward to $1,098.65 per ounce from the New York close of $1,091.65 as the dollar edged down.