HONG KONG (MarketWatch) — Asian markets suffered broad losses Thursday, bringing a solid month of gains for most regional equities to an end, as investors reacted to a weak set of earnings reports and downbeat economic data from the U.S.
Hong Kong’s Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI +0.27% and Australia’s S&P/ASX 200 index /zigman2/quotes/210598100/delayed AU:XJO -1.60% declined 0.4% each, South Korea's Kospi /zigman2/quotes/210598069/delayed KR:180721 +1.18% slipped 0.1%, and Philippines’ main index finished 0.5% lower.
China’s Shanghai Composite Index /zigman2/quotes/206600939/delayed CN:000001 -1.25% finished 0.1% higher, while Japan’s Nikkei Stock Average /zigman2/quotes/210597971/delayed JP:NIK -3.34% and Taiwan’s Taiex each ended up 0.2% after a choppy trading session.
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The session’s broad losses came as U.S. stocks retreated from five-year highs overnight, after the Federal Reserve said economic activity had paused in recent months. News of an unexpected contraction for the U.S. economy in the fourth quarter also weighed on sentiment. Read: U.S. stocks drop on economic worries.
Peter Lai, a director at DBS Vickers, said stocks had risen significantly in recent sessions, and that the pullback was due to a “lack of short-term catalysts.”
Ahead of the Chinese New Year holidays in February, “people are trying to stay out of the market,” he said.
Strong monthly performance
Japanese shares led January’s gainers in the Asia-Pacific, with the Nikkei rising 7.2%, while the stock benchmarks in China, Hong Kong and Australia added at least 4.7% during the month.
South Korea’s Kospi defied the broad trend, slipping 1.8% during the month, amid worries about the impact on the nation’s exporters as a weakening yen improved prospects for their Japanese counterparts.
The day’s weakness came after some of the major Asian markets hit multi-year highs in the previous session. On Wednesday, the Nikkei had ended at its best level since April 2010, while the Australian S&P/ASX 200 and the Hang Seng Index both reached levels not seen since April 2011.
Perpetual Investments market-research chief Matthew Sherwood attributed the strong recent performance in global markets to a perception that risks to global growth were diminishing, as well as to the ample liquidity being provided by central banks.
“We need to start to see a turnaround in earnings” for the rally in stocks to continue at the same pace, he said.
Earnings-related news weighed on several stocks in the region Thursday.
Angang Steel Ltd. /zigman2/quotes/209338869/delayed HK:347 -1.12% /zigman2/quotes/207174324/delayed CN:000898 -1.39% tumbled 5% in Hong Kong and 2.7% in Shenzhen after warning it saw a bigger loss in 2012 than the year before, prompting a downgrade to neutral at J.P. Morgan. Angang Steel expects 2012 net loss to widen.