Friday 3 July 2009

UPDATE: Asian Shares Fall On US Data, But Losses Not Severe

UPDATE: Asian Shares Fall On US Data, But Losses Not Severe

(Adds information, quotes, updates/adds market levels)

By Rosalind Mathieson and Matthew Allen


SINGAPORE (Dow Jones)--Asian share markets were falling Friday after a dismal U.S. jobs report cast further doubt on a near-term economic recovery, though low trading volume before a U.S. holiday prevented big declines and markets were off their lows. Shipping, commodity and energy stocks declined, though two stocks gained on debut in Hong Kong.

Risk aversion was also hurting currencies like the euro and Australian dollar, though they were also off their initial troughs as Asian share markets held up better than thought.

Japan's Nikkei 225 was down 1.0% with Australia's S&P/ASX 200 down 1.4% and South Korea's Kospi Composite off just 0.2%. New Zealand's NZX-50 was 0.6% lower, with Taiwan's main index flat and Hong Kong's Hang Seng Index down 0.6%.

IG Markets institutional trader Chris Weston said there was no real inclination by investors to take big positions. "People are now waiting for the U.S. earnings period, which kicks off with Alcoa on Wednesday."

J.J. Park at Taurus Investment & Securities in Seoul said "some seem to be trying to interpret the bleak U.S. jobs data as maybe just a one-off result of the restructuring process of major U.S. car makers."

David Watt, a senior strategist at RBC Capital Markets, said thoughts of a V-shaped recovery seemed less credible. Still, with the U.S. recession into its 19th month, and a hyper-aggressive stimulus policy, "the U.S. job market will be less treacherous in the second half."

The Dow Jones Industrial Average dropped 2.6% after data showed July nonfarm payrolls fell 467,000, more than the 350,000 expected by economists in a Dow Jones Newswires survey. The jobless rate hit 9.5%, its highest level in more than 25 years.

In Tokyo, Mitsui O.S.K. Line was down 3.4%, with oil plays Inpex and Japan Petroleum down 2.8% and 2.3% respectively and Nippon Steel 1.9% lower. In Australia, Fortescue Minerals was down 3.3%, Woodside down 1.3% and Macarthur Coal off 3.0%.

BHP Billiton was down 0.9%. The miner agreed to sell its Yabulu nickel refinery in Queensland to companies owned by Australian mining magnate Clive Palmer. BHP would write down the carrying value of Yabulu by around US$500 million.

Qantas was down 0.1% after earlier falling 3.8%, with the airline saying it carried 2.8% fewer passengers in May compared with a year earlier, while revenue passenger kilometers were down 3.9%.

Markets in Seoul weren't that fussed by indications North Korea late Thursday test-fired four short-range missiles, as Pyongyang's sabre-rattling was nothing new. Financial and cyclical stocks were lower, with KB Financial off 1.7% and Posco down 1.2%, though buyers were coming into technology stocks on hopes for the upcoming earnings season, with Hynix Semiconductor adding 1.7%.

There were several new listings in Hong Kong. Herbal shampoo manufacturer Bawang International was up 19.3% at HK$2.84 in heavy trade, though off an initial high of HK$2.98, with coal trader China Qinfa up 10.3% at HK$2.78.

Trade in Taiwan was a tale of two sectors with export-orientated technology firms hit by the weak U.S data, but financial stocks gaining after the Commercial Times cited the China Banking Regulatory Commission chairman as saying China intended to give a bigger share of its credit card market to Taiwanese banks than it did to other foreign banks. Chipmaker TSMC was down 0.6% but Chinatrust Financial up 4.1%.

Singapore's Straits Timex Index was down 1.1% with economically-sensitive, high-beta commodity plays falling. Noble Group was down 1.1% and Golden Agri off 1.4%.

Malaysian shares were down 0.6% with Indonesian shares off 0.6% and Philippine shares 0.8% lower. The Shanghai Composite Index was flat.

In currency markets the euro was down at $1.3987, from $1.4025 late in New York, but off a low of $1.3943, and at Y134.18, from Y134.45, with the U.S. dollar at Y95.90, from Y95.85.

The Australian dollar was down at US$0.7961.

Asian currencies were following the region's stock markets lower. The U.S. dollar was up at MYR3.5250 against the Malaysian ringgit, from MYR3.5175 Thursday, and at KRW1,276.8 against the Korean won, from KRW1,269.50.

Japanese government bonds were helped by higher U.S. Treasurys and lower stocks in Tokyo, with the lead futures contract up 0.23 at 138.43 points, having briefly touched 138.50, its highest level in three months.

Asia credit default swap spreads were wrenched wider by the turbulence in U.S. and European markets, said BNP Paribas credit analyst Brett Williams, with Japan's benchmark CDS index out 17 basis points and Australia's index 10 basis points wider. "Weak data trends and sentiment convey another opportunity for us to restate our key investment message: Credit is where you need to be."

Spot gold was $4.60 higher at $932.80 a troy ounce, bouncing off its New York lows even as the U.S. dollar remained well-bid. LME three-month copper nudged up $15.0 from London levels, to $5,045 a metric ton.

August Nymex crude oil futures were down 28 cents on Globex at $66.44 a barrel, after falling $2.58 or 3.7% in New York.

-Dow Jones Newswires; +65-6415-4140;

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(MORE TO FOLLOW) Dow Jones Newswires

July 02, 2009 23:15 ET (03:15 GMT)

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