Asian stocks fell broadly on Monday, with sentiment hit by concerns about China's faltering economic recovery, speculation over an early tapering of the Federal Reserve's QE program and caution ahead of the U.S. corporate earnings season, with Alcoa set to report its second-quarter earnings results after the close of U.S. trading later tonight.
Fears of a Chinese credit crunch weighed on the markets after IMF Director Christine Lagarde warned the international lender may cut its global growth forecast because of weaker-than-expected growth in emerging market economies.
Most emerging market currencies weakened against the U.S. dollar as a strong U.S. jobs report increased the chances of the Federal Reserve scaling back its massive bond-buying program in coming months. The dollar hit a fresh three-year high against a basket of major currencies as investors waited for the minutes from the Fed's June 18-19 meeting due out Wednesday for more clues about the Fed's future course of action.
Tokyo stocks ended sharply lower, reversing early gains, tracking weakness in Shanghai and other Asian markets. The benchmark Nikkei fell over 200 points or 1.4 percent to 14,109, while the broader Topix index shed 1.35 percent. Real estate, construction and communication stocks led the decliners.
Softbank fell 3.4 percent after Standard & Poor's lowered its debt rating by two notches to "junk" grade, citing the large amount of debt the wireless carrier has taken due to the acquisition of U.S. mobile carrier Sprint Nextel Corp. Major exporters Honda Motor and Sharp fell about 2 percent each.
In economic news, Japan's current account surplus narrowed to 540.7 billion yen in May, the Finance Ministry said, with the result missing forecasts for a surplus of 600.0 billion yen following the 750.0 billion yen surplus in April. The surplus jumped 58.1 percent on an annual basis, also missing forecasts for a jump of 91.6 percent. Exports added an annual 9.1 percent to 5.526 trillion, while imports climbed 9.6 percent.
Separately, Japanese bank lending rose at the fastest pace in four years in June, although growth of deposits outpaced that of lending, data released by the Bank of Japan showed. Overall bank lending rose 2.2 percent from a year earlier in June, standing at 403.640 trillion yen.
China's Shanghai Composite index tumbled 2.4 percent on worries of a potential glut of share supply amid talk the CERC will soon restart initial public offerings. Hong Kong's Hang Seng index lost 1.3 percent.
Australian shares weakened, led by miners and resource stocks. The benchmark S&P/ASX 200 fell 0.7 percent to close at 4,809, while the broader All Ordinaries index slipped 0.6 percent. Global miners BHP Billiton and Rio Tinto lost about 2 percent each as metal prices retreated sharply on Friday on concerns about Fed tapering. Gold miner Newcrest slumped 7.7 percent. Among the major banks, ANZ and NAB lost about a percent each, while Commonwealth and Westpac ended little changed.
On the economic front, Australia's job advertisements declined for the fourth month in a row in June after showing signs of stabilization at the start of the year, data from Australia & New Zealand Banking Group showed. Job ads dropped 1.8 percent from a month ago, but slower than the 2.5 percent fall seen in May.
South Korea's Kospi average fell 0.9 percent to 1,817, with heavyweight Samsung Electronics falling 3.2 percent to a fresh 10-month low after its second-quarter earnings estimates released on Friday failed to meet forecasts. Asiana Airlines slumped 5.8 percent after one of its planes crashed at San Francisco International Airport on Saturday.
New Zealand shares posted marginal gains despite weakness elsewhere across Asia. The benchmark NZX-50 rose 0.1 percent to 4,493, its highest level since late May. Retirement village operator Ryman Healthcare rose 1.5 percent to a record high, rival Summerset Group gained 2.1 percent and Metlifecare advanced 1.6 percent. Xero, Contact Energy and Warehouse Group all rose about 2 percent each, while shares of Fletcher Building, the nation's largest construction company, shed 2.2 percent.
Elsewhere, India's Sensex was moving down 0.9 percent, Indonesia's Jakarta Composite index was losing 3.7 percent, Malaysia's KLSE Composite was down half a percent, Singapore's Straits Times was declining 0.4 percent and the Taiwan Weighted average lost 1.4 percent.
The major U.S. averages rose about a percent each on Friday, benefiting from a positive reaction to the Labor Department's closely-watched monthly employment report, which showed that non-farm payroll employment increased by 195,000 jobs in June, matching the revised job growth seen in May. The unemployment rate held steady at 7.6 percent as more people entered the workforce.
by RTT Staff Writer
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