Asian stocks down after S&P downgrades Japan

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BANGKOK (AP) — Asian stock markets were lower Friday after a credit-rating downgrade was slapped on Japan and U.S. companies that are bellwethers for consumer spending reported disappointing earnings.

Oil hovered above $85 a barrel after a batch of disappointing economic news. In currencies, the dollar fell against the yen and but gained ground against the euro.

Japan’s benchmark Nikkei 225 stock average lost 1 percent to 10,367.34. Investors dumped shares in banks — which own large amounts of government bonds — a day after Standard & Poor’s lowered Japan’s long-term sovereign debt rating one notch to AA- due to its ballooning public debt.

Mitsubishi UFJ Financial Group, Japan’s biggest bank, fell 2.2 percent. Mizuho Financial Group, Japan’s No. 2 banking group, declined 1.8 percent, and Sumitomo Mitsui Financial Group was down 1.9 percent.

Australia’s S&P/ASX 200 was down 0.9 percent at 4,763.90 as the first estimates of the economic cost of east coast flooding — possibly the most expensive natural disaster in Australia’s history — were released.

South Korea’s Kospi declined 0.3 percent to 2,108.15. China’s Shanghai Composite index lost 0.2 percent to 2,743.83. Hong Kong’s Hang Seng fell 0.4 percent to 23,683.97. Shares in Indonesia and Thailand were all lower. Benchmarks in Singapore, Taiwan, New Zealand and Malaysia were higher.

Analysts said signs of weakness in some of the world’s leading economies were causing investors to think hard about stocks and whether now was a time to jump in, stay put, or head for the exits.

“There is an undercurrent of fear of what is going on in the U.S. There are signs of things turning around, but it’s not sure whether current earnings reporting is playing out in line with the recovery story,” said Song Seng Wun, an economist at CIMB-GK Research in Singapore.

In addition to uncertainty over the U.S. recovery, Japan also received “a reminder from the credit agency that maybe it’s not going the right way either,” he said.

The rating given Japan on Thursday — its first downgrade in almost nine years — is the same rating given to China, Saudi Arabia and Kuwait. The news sent the dollar as high as 83.18 yen late Thursday from 82.20 yen.

The downgrade is a stern reminder to Japan that it faces consequences for letting its debt swell to twice the size of gross domestic product. The government estimated Japan’s public debt would swell to 997.7 trillion yen ($12 trillion) by March 2012, up from 943 trillion yen this year.

On Thursday in the U.S., a surprise jump in applications for unemployment benefits and mixed earnings from large companies held Wall Street stocks to slight gains.

First-time applications for unemployment rose to 454,000 last week, the highest level since late October. Meanwhile, Amazon.com uncharacteristically missed Wall Street’s revenue target. It reported results after the market closed. Both Procter & Gamble Co. and rival Colgate-Palmolive Co. reported lower profits.

The Dow Jones industrial average inched up just 4.39 points to close at 11,989.83. The Dow traded above 12,000 for most of the day but failed to close above that level for the second day in a row. The Dow hasn’t closed above 12,000 since June 19, 2008, just as the financial crisis was worsening.

Traders also displayed caution ahead of Friday’s release of U.S. growth data in the October-December quarter and of the release of quarterly financial results from Chevron Corp., Ford Motor Co. and Honeywell International Inc., among others.

In currencies, the dollar fell to 82.65 yen in Tokyo Friday from 82.88 yen in New York late Thursday. The euro stood at $1.3713, down from $1.3729 late Thursday.

Benchmark crude for March delivery was down 13 cents at $85.51 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.69 to settle at $85.64 a barrel on Thursday.

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