Asian shares fell for a second day on Wednesday and oil prices slipped back near a 20-month low as poor corporate earnings highlighted the damage from the global economic slowdown on companies and consumers.
The yen surrendered gains as the drop in Asian markets was less than that seen on Wall Street overnight, with Japan’s Nikkei average dipping 0.3% after losing more than 2% in early trade. But investors confessed they had few reasons to be optimistic. “Whether it’s economic indicators or company news, all of it’s just too awful,” said Takashi Ushio, head of the investment strategy division at Marusan Securities. The MSCI benchmark index of Asian stocks outside of Japan fell 0.5% in early trade.
On Wall Street, the S&P 500 shed 2.2% on news of faltering demand at aluminum maker Alcoa and a dismal outlook from Tyco International. Trading activity remained sluggish as many investors stuck to the sidelines, choosing to sit out the final months of what’s been a brutal year as they try to assess how deep a recession the global economy may be facing.
Shares in Shanghai and Hong Kong briefly rose on hopes for more official measures to help the economy after a batch of data showed Chinese consumer inflation slowing to a 17-month low and import growth falling even as latest numbers on Wednesday showed consumer spending holding up. China at the weekend launched a nearly $600 billion economic stimulus package aimed at infrastructure spending, a move that gave a fleeting boost to equities and investor confidence earlier in the week.
Analysts said a slowdown in Chinese import growth suggested domestic investment was slowing more quickly than demand for its goods, raising worries about a deeper economic slowdown despite the record trade surplus posted last month. The troubles in the United States cast a shadow on the rest of the world. Shares of General Motors slid to a 65-year low of just $2.92 on mounting worries about whether it can avoid bankruptcy.
US automaker woes have prompted Congress to consider emergency aid that could be passed as soon as next week. Traders said the prospect of near-term assistance to US automakers helped left S&P 500 futures 11 points, or 1.3%, in Asia trade.
The yen gave up initial gains as stocks trimmed losses, but traders said any further slide in major indexes would help the yen push back toward last month’s 13-year peak hit against the dollar. The dollar was up slightly at ¥97.72 compared with ¥97.66 in late US trade, while the euro climbed to ¥122.72 from near 122.30. The dollar index, a gauge of its performance against six major currencies, dipped 0.1% to 86.970. The yen tends to trade closely with stocks due to its role in the carry trade -- borrowing the low-yielding Japanese currency to buy higher-yielding currencies or other assets.
But the stock market losses in Asia and on Wall Street the previous day gave a lift to safe-haven Treasuries, which traded again after US bond markets took a break for the Veterans Day holiday on Tuesday. The benchmark 10-year Treasury note gained 8/32 in price to yield 3.728%, down about 3 basis points from Monday’s close. A deteriorating global economic outlook has also cast doubt about demand for commodities, driving oil and metal prices down.
US crude oil dipped 8 cents a barrel to $59.25 after falling as far as $58.32 the previous day, the lowest since March 2007 and down more than $80 from record peaks hit in July. (Reuters)