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Asia stocks drop amid Greece uncertainty, U.S. fiscal woes

Published 11/13/2012, 02:45 AM
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Investing.com - Asian stock markets were broadly lower during late Asian trade on Tuesday, as growing uncertainty surrounding Greece’s bailout plan and mounting fears over the looming fiscal crisis in the U.S. dampened appetite for riskier assets.

During late Asian trade, Hong Kong's Hang Seng Index fell 0.9%, Australia’s ASX/200 Index tumbled 1.5%, while Japan’s Nikkei 225 Index ended down 0.2%.

Concerns over Greece’s fiscal woes intensified on Monday after euro zone finance ministers postponed approval of an urgently needed EUR31.5 billion bailout installment for the debt-strapped country. The decision has been postponed until 20 November.

Greece was to hold an auction of government bonds later Tuesday, in order to raise enough money to repay EUR5 billion of debts maturing on Friday.

Investors also remained concerned over the looming “fiscal cliff” in the U.S., approximately USD600 billion in automatic tax hikes and spending cuts due to come into effect on January 1.

There are fears that U.S. lawmakers will repeat the same political divisiveness displayed during the debt ceiling crisis, which led Standard & Poor's to downgrade the U.S.’s AAA rating in August 2011.

In Tokyo, the Nikkei fell for a seventh straight session to hit a fresh four-week closing low, as exporters came under pressure from a strengthening yen.

A stronger yen reduces the value of overseas income at Japanese companies when repatriated, dampening the outlook for export earnings.

Consumer electronics makers Toshiba and Nikon slumped 1.5% and 2.15% respectively, while construction machinery maker Komatsu lost 0.9%.   

On the upside, Olympus saw shares rally 5.9% after the company reported a larger-than-expected profit in the fiscal second quarter.

Meanwhile, shares in Hong Kong declined, headed for the lowest close in four weeks, as energy shares came under pressure from reports Beijing could cut gasoline and diesel prices for a fourth time this year.

Oil giants PetroChina and Sinopec retreated 1.45% and 2.7% respectively, while CNOOC was down 0.65%.

Property firms also contributed to losses, with New World Development falling 3.85%, Sino Land dropping 1.15% and Shimao Property Holdings losing 2.6%.

Elsewhere, shares in Australia were pressured by losses in miners, which fell amid concerns over the outlook for global growth.

Gold producer Newcrest Mining slumped 2.3%, while mining giants Rio Tinto and BHP Billiton retreated 1/65% and 1.6% respectively.

Insurance giant QBE Insurance Group tumbled added to the previous day’s 8.3% plunge by dropping another 7.5%, as a number of brokerages cut ratings on the firm.

On Monday, QBE cut its full-year earnings outlook and estimated its share of losses from U.S. super-storm Sandy would range between USD350 million and USD450 million.

Looking ahead, European stock market futures pointed to a lower open, amid concerns over a delayed bailout payment for Greece, while fears that the economic outlook for the euro zone is deteriorating also weighed.

The EURO STOXX 50 futures pointed to a loss of 0.5% at the open, France’s CAC 40 futures shed 0.55%, London’s FTSE 100 futures dipped 0.3%, while Germany's DAX futures pointed to a drop of 0.5%.

Later Tuesday, the U.S. was to release official data on the federal budget balance.

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