Investing.com - Asian stock markets retreated on Thursday, as lingering concerns over Spain’s fiscal health and growing fears Italy will be the next euro zone country to require a bailout weighed on market sentiment.
Investors also continued to cut back their exposure to riskier assets ahead of weekend elections in Greece, which could determine the course of the country’s future in the euro zone.
During late Asian trade, Hong Kong's Hang Seng Index shed 0.8%, Australia’s ASX/200 Index dipped 0.5%, while Japan’s Nikkei 225 Index eased down 0.2%.
Growing concerns over rising borrowing costs in Spain and Italy, as well as jitters ahead of weekend elections in Greece continued to weigh appetite for riskier assets.
Spanish 10-year yields rose to 6.85% on Wednesday, a euro-era record high and fast approaching the critical 7%-level, which led Greece, Portugal and Ireland to seek financial rescue packages. Similar-maturity Italian yields increased to 6.29%, the highest since mid-January.
Late Wednesday, ratings agency Moody’s downgraded Spain’s sovereign-debt rating to Baa3 from A3, while placing the country on review for a possible further downgrade. The downgrade by Moody’s followed a similar move earlier Wednesday from Egan-Jones, which lowered its rating on Spain to CCC+ from B.
Spain became the fourth euro zone nation to seek a rescue over the weekend. Some investors fear it is only a matter of time before Italy becomes the next country to ask for help.
Meanwhile, disappointing retail sales data out of the U.S. further weighed on sentiment. Official data Wednesday showed that retail sales fell by a seasonally adjusted 0.2% in May, falling for the second successive month and marking the first back-to-back- decline in two years.
In Tokyo, the Nikkei finished modestly lower, as investors eyed the outcome of a policy setting meeting by the Bank of Japan on Friday.
Market analysts expect the central bank to hold fire on further easing, as policy makers continue to monitor developments in Europe and a Federal Reserve decision on further easing next week.
Shares in troubled chip maker Renesas Electronics surged 14.9% after Mainichi Shimbun reported the company has entered talks with Bank of Tokyo, Mitsubishi UFJ and other banks for JPY50 billion of loans.
Meanwhile, shares in Hong Kong were lower, as clothing retailer Esprit extended heavy losses from the previous session.
Esprit shares tumbled 12%, adding to Wednesday nearly 22% plunge, after the company said Chairman Hans-Joachim Korber resigned less than 24 hours after its CEO quit.
Shares in the financial sector came under pressure, with China Construction Bank shares falling 4.4% and Bank of China retreating 2.15%.
Shares of Li & Fung, which is the world’s biggest supplier of toys to major U.S. retailers, slid 2.75%.
Elsewhere, shares in Australia declined on the back of losses for top miners and banks slumped.
ANZ Banking Group ended the session 1.25% lower, Westpac Banking Group slumped 0.95, while Newcrest Mining and BHP Billiton declined 1% and 0.55% respectively.
On the upside, fund manager Perpetual rallied 10.1% after the Australian Financial Review reported that the firm may be about to get its second private-equity approach in two years.
Looking ahead, European stock markets looked set to open flat to mildly higher, ahead of an Italian government debt auction later in the day.
The EURO STOXX 50 futures pointed to a modest 0.1% gain, France’s CAC 40 futures were flat, London’s FTSE 100 futures eased up 0.1%, while Germany's DAX futures pointed to an advance of 0.2% at the open.
Later in the day, Italy was set to auction as much as EUR4.5 billion of government bonds. The euro zone is to release official data on consumer price inflation, while the European Central Bank was to produce its monthly bulletin.
The U.S. was also to produce official data on consumer price inflation, in addition to a government report on initial unemployment claims.
Investors also continued to cut back their exposure to riskier assets ahead of weekend elections in Greece, which could determine the course of the country’s future in the euro zone.
During late Asian trade, Hong Kong's Hang Seng Index shed 0.8%, Australia’s ASX/200 Index dipped 0.5%, while Japan’s Nikkei 225 Index eased down 0.2%.
Growing concerns over rising borrowing costs in Spain and Italy, as well as jitters ahead of weekend elections in Greece continued to weigh appetite for riskier assets.
Spanish 10-year yields rose to 6.85% on Wednesday, a euro-era record high and fast approaching the critical 7%-level, which led Greece, Portugal and Ireland to seek financial rescue packages. Similar-maturity Italian yields increased to 6.29%, the highest since mid-January.
Late Wednesday, ratings agency Moody’s downgraded Spain’s sovereign-debt rating to Baa3 from A3, while placing the country on review for a possible further downgrade. The downgrade by Moody’s followed a similar move earlier Wednesday from Egan-Jones, which lowered its rating on Spain to CCC+ from B.
Spain became the fourth euro zone nation to seek a rescue over the weekend. Some investors fear it is only a matter of time before Italy becomes the next country to ask for help.
Meanwhile, disappointing retail sales data out of the U.S. further weighed on sentiment. Official data Wednesday showed that retail sales fell by a seasonally adjusted 0.2% in May, falling for the second successive month and marking the first back-to-back- decline in two years.
In Tokyo, the Nikkei finished modestly lower, as investors eyed the outcome of a policy setting meeting by the Bank of Japan on Friday.
Market analysts expect the central bank to hold fire on further easing, as policy makers continue to monitor developments in Europe and a Federal Reserve decision on further easing next week.
Shares in troubled chip maker Renesas Electronics surged 14.9% after Mainichi Shimbun reported the company has entered talks with Bank of Tokyo, Mitsubishi UFJ and other banks for JPY50 billion of loans.
Meanwhile, shares in Hong Kong were lower, as clothing retailer Esprit extended heavy losses from the previous session.
Esprit shares tumbled 12%, adding to Wednesday nearly 22% plunge, after the company said Chairman Hans-Joachim Korber resigned less than 24 hours after its CEO quit.
Shares in the financial sector came under pressure, with China Construction Bank shares falling 4.4% and Bank of China retreating 2.15%.
Shares of Li & Fung, which is the world’s biggest supplier of toys to major U.S. retailers, slid 2.75%.
Elsewhere, shares in Australia declined on the back of losses for top miners and banks slumped.
ANZ Banking Group ended the session 1.25% lower, Westpac Banking Group slumped 0.95, while Newcrest Mining and BHP Billiton declined 1% and 0.55% respectively.
On the upside, fund manager Perpetual rallied 10.1% after the Australian Financial Review reported that the firm may be about to get its second private-equity approach in two years.
Looking ahead, European stock markets looked set to open flat to mildly higher, ahead of an Italian government debt auction later in the day.
The EURO STOXX 50 futures pointed to a modest 0.1% gain, France’s CAC 40 futures were flat, London’s FTSE 100 futures eased up 0.1%, while Germany's DAX futures pointed to an advance of 0.2% at the open.
Later in the day, Italy was set to auction as much as EUR4.5 billion of government bonds. The euro zone is to release official data on consumer price inflation, while the European Central Bank was to produce its monthly bulletin.
The U.S. was also to produce official data on consumer price inflation, in addition to a government report on initial unemployment claims.