Asian markets opened lower before falling to close even lower on concern that international demand is softening. Investors’ sentiment remains pessimistic amid dismal U.S. initial jobless claims. (See RGE Critical Issue: U.S. Labor Market: Initial Unemployment Claims Climb Higher).
The MSCI Asia Pacific Index lost 1.4% to 118, closing the week up 0.5% while the MSCI ASIA APEX 50 lost 0.5% to 748 to end the week flat.
In Japan, stocks declined on concerns that international demand is weakening. The Nikkei 225 lost 2% to 9,179. Sharp declined 2.7% after news reports that the company is cutting its liquid-crystal display output. Toyota, with 30% exposure to North America, fell 1.8%. Convenience same store sales rose 0.5%y/y in July after falling 1.5% y/y in June.
In Hong Kong, stocks fell led by developers on global growth concerns and continued tight measures aimed at curbing asset bubbles. The Hang Seng Composite fell 0.4% to 20,982, closing the week flat. CPI came in at 1.3%, lower than the 2.9% economists expected.
In mainland China, stocks declined on concern that inflation will delay monetary easing and banks’ loan provisions for local government will erode their profits. The Shanghai SE Composite lost 1.7% to 2,642 to close the week flat. Bank of Communications fell 1% while ICB declined 0.5%.
In India, stocks fell led by financials on expensive valuation.The BSE SENSEX 30 declined 0.3% to 18,402 for a weekly gain of 1.3%. ICICI bank dropped 1.9% while HDFC bank fell 0.8%.
In Australia, the S&P/ASX 200 index fell 1.1% to 4,431 while in Korea; the KRX 100 lost 0.3% to 3,730.
On currencies, the yen rose 0.34% to 85.29 while other Asian currencies weakened on the flight to quality. The Aussie dollar and the New Zealand Kiwi both weakened more than 1.6%.
10-year JGBs rose with the yield down 0.5 bps to 0.935%. Sovereign CDS spreads widened across the region. Corporate spreads also widened with the Markit iTraxx Asia ex-Japan 50 IG up 5.2 bps to 124 bps and the iTraxx Japan index up 4.5 bps to 115 bps.
Click Table to Enlarge
All rights reserved, Roubini GlobalEconomics, LLC