News Column

Asian Stocks Tumble On Iraq Jitters

August 8, 2014

CANBERA (Alliance News) - Asian stocks fell sharply on Friday, as fears that the crises in Iraq and Ukraine could hit global growth overshadowed signs of a strengthening US labor market. Investors became nervous after US President Barack Obama authorized air strikes against ISIS militants in northern Iraq to protect American personnel and civilians under seize.

Meanwhile, after imposing a ban on a range of food and agricultural imports, Russia said it was considering banning transit flights by airlines from the EU and the US to the Asia-Pacific region.

Chinese shares bucked the regional downward trend as investors cheered stronger-than-expected exports data. The benchmark Shanghai Composite index rose 0.31% to 2,194.42, while Hong Kong'sHang Seng index slipped 0.23% to 24,331.41.

China posted a merchandise trade surplus of USD47.3 billion in July, official data showed, topping forecasts for a surplus of USD26.0 billion following the USD31.56 billion surplus in June. Exports surged an annual 14.5%, beating expectations for a 7.5% gain, while imports slid 1.6% from a year earlier, versus forecasts for an increase of 3.0%.

Japanese shares fell the most in five months as news of US airstrikes against Sunni extremists in northern Iraq sparked a sharp uptick in the yen. The benchmark Nikkei average dropped 454 points or 2.98% to 14,778.37, a two-month low, while the broader Topix index declined 2.4%.

Nikon shares slumped 9.4% to hit a three-year low after announcing disappointing first-quarter results the previous day. The company lowered its full-year operating profit forecast by 16%, citing weaker-than-expected sales of digital cameras in Europe. Mitsubishi Materials Corp, Sumitomo Metal Mining, Olympus, Nippon Electric Glass and Nisshin Steel plunged 7-10%. Japan Tobacco, which has a large exposure to Russia, retreated 3.8%.

SoftBank Corp, which reported a 16% fall in first-quarter operating profit, closed down 3.4%. Mitsubishi Corp. fell 3.4% on reporting a 17% decline in net profit for the April- June quarter. Electronic components maker Taiyo Yuden Co. plummeted 8.9% after posting a quarterly loss. Shares of Japan Display slumped 7%. The world's biggest maker of LCD panels for smartphones and tablets posted a wider-than-expected loss for the April-June quarter, citing weaker orders from US and European firms.

In economic news, the Bank of Japan left its asset purchase policy unchanged and maintained its pledge to expand monetary base at an annual pace of 60-70 trillion yen following the conclusion of its two-day policy setting meeting. The central bank offered a bleaker view on exports and output while reiterating that the economy continues to perform broadly in line with expectations.

Japan posted a current account deficit of 399.1 billion in June, the Ministry of Finance said - sliding into the red after four straight months of surplus. The headline figure missed forecasts for a shortfall of 325.7 billion yen following the 522.8 billion yen surplus in May. Exports grew 4.4% year-over-year to 6.115 trillion yen, while imports spiked 13.9% to 6.652 trillion yen.

Australian shares extended losses into a sixth day to end at a five-week low, hit by geopolitical concerns and as the Reserve Bank cut its growth and inflation forecasts for the year, reflecting declining mining investment and ongoing fiscal consolidation. The benchmark S&P/ASX 200 index closed down 1.3% at 5,435.3. The big four banks fell between 1.5% and 1.8%. Rio Tinto shares rose 0.2%. The mining giant's profit more than doubled in the six months through June despite a sharp drop in iron ore prices.

Rival BHP Billiton dropped 1.9% and Fortescue Metals Group tumbled 3.4%, while gold miner Newcrest advanced 1.7%. Shares of digital real estate marketing firm REA Group plunged 8.7% despite the company posting a 37% increase in full-year profit. Media firm News Corporation shed 2.6% as it reported a drop in annual revenue and profit.

On the economic front, the current monetary policy is appropriately formulated to aid in achieving target inflation and sustainable growth in demand, the Reserve Bank of Australia said in its quarterly statement on monetary policy. The statement reiterated that the most prudent course is likely to be a period of stability for interest rates.

Separately, the total number of home loans in Australia grew a seasonally adjusted 0.2% in June from the previous month, the Australian Bureau of Statistics said - standing at 52,153. That was shy of forecasts for an increase of 0.6%.

Seoul shares tumbled amid growing tensions in Iraq and Ukraine. The benchmark Kospi average fell 1.14% to 2,031.1, extending its losing streak to a fourth straight session. Market heavyweight Samsung Electronics lost 3.1%, Hyundai Motor, the country's largest automaker, dropped 1.5% and its affiliate Kia Motors Corp declined 1.3%.

New Zealand stocks fell sharply, joining a global sell-off as investors assessed the impact of the Ukraine crisis on the global economy. Investors also turned cautious ahead of the reporting season beginning next week. The benchmark NZX-50 index dropped 0.83% to 5,055.20, its lowest level since April 8.

Outdoor apparel retailer Kathmandu Holdings led the declines on the exchange, falling 4.1% to USD3.24, while Fletcher Building and Spark New Zealand, formerly Telecom Corp, lost about 2% each. Among top gainers, Diligent Board Member Services rallied 2.9% and Pacific Edge advanced 1.5%.

Elsewhere, India's Sensex and Singapore's Straits Times index were down about a percent each, Indonesia's Jakarta Composite was down 0.2% and the Taiwan Weighted average slid half a percent.

On Wall Street, the major averages fell about half a percent each overnight, with the Dow Jones Industrial Average falling to a three-month closing low, as uncertainty following Russia's surprisingly harsh retaliatory measures over Western sanctions overshadowed upbeat jobless claims data.

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Source: Alliance News

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