Thursday May 8, 12:05 PM
Asian stocks mostly lower as record oil price revives inflation fears UPDATE
SINGAPORE (Thomson Financial) - (Updates with closing figures throughout)
Asian stocks ended mostly lower Thursday, tracking losses on Wall Street overnight after oil prices climbed to a fresh record above $123 a barrel, fuelling fears about inflation.
'While the market may have seen the worst of the U.S. credit crisis, it hasn't seen the worst of record oil prices,' said Astro del Castillo, managing director at First Grade Holdings in Manila.
The Nikkei closed 1.1 percent lower at 13,943.26 and the broader Topix shed 1.5 percent to 1,372.95.
'Investors feel that unless the U.S. stock market makes clear headway, it will be difficult to send the Nikkei 225 (news) index sharply above the 14,000 point level,' said Shinko Securities strategist Tsuyoshi Segawa.
Mizuho Financial Group slid 5.2 percent to 525,000 yen, Mitsubishi UFJ Financial (Berlin: MFZ.BE - news) fell 3.7 percent to 1,117 yen and Sumitomo Mitsui Financial Group dropped 3.2 percent to 873,000 yen.
General leasing firm Orix (Frankfurt: 851769 - news) tumbled 6 percent to 18,340 yen.
Top brokerage Nomura Holdings (N33.SI - news) retreated 3 percent to 1,825 yen.
The South Korean Kospi closed down by 0.3 percent at 1,848.00, after the Bank of Korea left interest rates unchanged at the conclusion of a policy meeting, disappointing expectations for a 25 basis-point cut to boost a slowing economy.
'Latest developments at home and overseas are moving in a direction where downside risks to the economy are growing while upward pressure on prices are increasing,' the central bank said in a statement.
The Singapore Straits Times index closed down 1.8 percent at 3,171.88 and Malaysia's Kuala Lumpur Composite Index closed down 0.5 percent at 1,280.35.
But the Shanghai and Australian benchmarks bucked the trend as investors sought bargain in sectors that have been battered in recent sessions.
The benchmark Shanghai Composite Index closed up 2.2 percent at 3,656.84. The Hang Seng ended down 0.6 percent at 25,449.79.
The S&P/ASX 200 closed up 1.0 percent at 5,723.2, and the all Ordinaries index gained 0.8 percent at 5,800.9.
National Australia Bank (Berlin: NAL.BE - news) rose 1.6 percent to A$31.00, Westpac gained 3.6 percent to A$25.69 and St George added 0.8 percent to A$26.25. ANZ closed down 0.6 percent at A$22.17, reflecting an adjustment as the stock traded ex-dividend.
India's Sensex provisionally closed 1.6 percent lower at 17070.72. The Jakarta composite index closed down 0.2 percent at 2,376.93.
Taiwan's weighted index closed down 0.7 percent at 8,866.62, and the Manila composite index finished up 0.8 percent at 2,760.62.
Price pressure
The Dow Jones Industrial Average shed 200 points overnight as oil prices continued to climb, raising worries about U.S. consumption, the main driver of economic growth. Investors are worried that consumers are being squeezed on all sides as they struggle with higher prices for gasoline and food.
Federal Reserve Bank of Kansas City President Thomas Hoenig said inflationary pressures 'now stand at unacceptably high levels.'
Meanwhile, Treasury Secretary Henry Paulson said in an interview with The Associated Press that while the worst of the credit crisis might have passed, rising gas prices will dampen the benefits from the 130 million economic stimulus checks that the government is distributing.
The current rise in global inflation is a threat to U.S. and global growth, Morgan Stanley (SPU - news) said Thursday. Economist Richard Berner said U.S. headline inflation will remain at or above 4 percent through September before it is capped by a slowing economy.
'The resulting loss in discretionary income from the start of the year nearly offsets coming tax rebates,' he said in a note to clients. 'We estimate that the rise in energy quotes between December 2007 and September 2008 will absorb an annualized $70 billion in consumer discretionary income, while price hikes in food a much bigger share of consumer budgets will drain about $50 billion from wherewithal.'
The recent rally in stock markets and slightly firmer tone to data have raised expectations that the worst of the crisis of the past year is over, but it may be too early to make that call, he said.
Morgan (MGHL.PK - news) is sticking with its cautious market outlook for now.
'The biggest risk to our call is that the economy and markets continue to trade in ranges that frustrate bulls and bears alike,' he said. 'But the biggest risk for bullish investors now is that downside surprises in the economy and earnings prove that the recent upswing was a bear-market rally after all.'
Inflation worries weighed on financials around the region, while airlines tumbled on fears for jet fuel costs.
China financials were lower, with China Construction Bank losing 0.3 percent at HK$6.96, ICBC down 1.5 percent at HK$6.01, Bank of China (3988.HK - news) down 0.3 percent at HK$3.94 and Bank of Communications down 1.5 percent to HK$10.68.
Ping An lost 3.5 percent at HK$69.5 weighed down by talk that it will pursue its aggressive 160 billion yuan share and bond sale plan when market sentiment improves. The stock tumbled 4.5 percent on Wednesday.
Surging oil prices continued to hit airlines, with China Eastern Airlines down 2.6 percent at HK$3.39, Air China (0753.HK - news) falling 2.2 percent to HK$5.72 and China Southern Airlines losing 1.9 percent at HK$4.97.
Santos gained 4.2 percent to A$18.56 and Oil Search added 3.6 percent to A$5.70.
|
|
|
Send Article by Email
Send Article by IM
Blog This with Y! 360
Printable View
