By V. Phani Kumar, MarketWatch
HONG KONG (MarketWatch) — Japanese and Australian stocks fell Tuesday after worries over China and a slump in commodities prompted a sell-off on Wall Street, although many regional markets came off their lows as buyers circled back in after recent losses.
“With no news or data, Asia saw limited follow-through of the risk-off move, prompting a solid bout of short-covering,” said Sue Trinh, a strategist at RBC Capital Markets.
The Nikkei Stock Average /zigman2/quotes/210597971/delayed JP:NIK +1.27% ended fell 0.4% and the broader Topix /zigman2/quotes/210598092/delayed JP:180460 +0.93% lost 1.3% in Japan. Australia’s S&P/ASX /zigman2/quotes/210598100/delayed AU:XJO +1.15% gave up 0.3% and Hong Kong’s Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI +2.96% lost 0.x%, with all three markets paring early losses.
Rebounding from early declines, China’s Shanghai Composite Index /zigman2/quotes/206600939/delayed CN:000001 +2.74% inched up 0.5% after a three-day losing streak, and South Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 +1.81% ended up 0.1%, after the government unveiled a supplementary budget that analysts said will provide a small fiscal stimulus to the economy.
Regional markets opened the day on a downbeat note after hefty overnight losses of between 1.8% and 2.4% for major U.S. stock benchmarks. But they steadily recovered as the day progressed, after all major regional markets slumped Monday in the wake of downbeat Chinese economic data.
U.S. equity index futures were pointing to a higher opening on Wall Street by late afternoon in Hong Kong, however. Dow Jones Industrial Average futures were up 63 points at 14,575, while S&P 500 futures gained 0.5%, to 1,550.80. Read Indications column.
Many regional financial, property and construction stocks advanced to support regional markets Tuesday.
In Shanghai, China Pacific Insurance Group Co. /zigman2/quotes/207266327/delayed CN:601601 +3.07% rose 4.3% and China Railway Construction Corp. /zigman2/quotes/210155888/delayed HK:1186 +0.19% added 1.6%, while in Seoul, Hyundai Engineering & Construction Corp. /zigman2/quotes/210277561/delayed KR:000720 +2.24% added 1.1% and Industrial Bank of Korea /zigman2/quotes/204740999/delayed KR:024110 0.00% gained 0.8%.
The rise in Seoul came after the government introduced a 17.3 trillion won ($15.53 billion) supplementary budget, of which about a third will used for additional spending.
In Hong Kong, China Life Insurance Co. /zigman2/quotes/206573290/composite LFC 0.00% /zigman2/quotes/202359856/delayed HK:2628 +2.12% gained 1.5% and China Overseas Land & Investment Ltd. /zigman2/quotes/205731176/delayed HK:688 +0.84% /zigman2/quotes/202573805/delayed CAOVY +1.55% climbed 0.9%.
But most regional commodity stocks ended lower, despite the recovery from the day’s lows, following a $140 loss for gold futures and a plunge for silver futures traded in New York.
In Sydney, gold miners Newcrest Mining Ltd. /zigman2/quotes/203840223/delayed AU:NCM +2.57% /zigman2/quotes/203286036/delayed NCMGY +0.06% and Perseus Mining Ltd. /zigman2/quotes/205179925/delayed AU:PRU +3.43% /zigman2/quotes/202190906/delayed PMNXF +3.21% dove 5.1% and 5.8%, respectively.
In Hong Kong, Zhaojin Mining Industry Co. /zigman2/quotes/203361399/delayed HK:1818 +2.54% /zigman2/quotes/200275285/delayed ZHAOF -10.42% slid 3.4%, and retailer Chow Tai Fook Jewellery Group Ltd. /zigman2/quotes/201592411/delayed CJEWF +0.61% /zigman2/quotes/208947199/delayed HK:1929 +3.70% skidded 3.2%. Shares of Zhongjin Gold Corp. /zigman2/quotes/207741711/delayed CN:600489 +1.56% lost 3.3% in Shanghai, while Korea Zinc Co. /zigman2/quotes/202765860/delayed KR:010130 +2.14% , which has an exposure to precious metals, plummeted 4.9% in Seoul.
The broader resource sector also weakened after brokerages including HSBC, Royal Bank of Scotland and J.P. Morgan downgraded their economic forecasts in the wake of Monday’s disappointing first-quarter economic data from China, one of the biggest consumers of global commodities.
Focus on China to calm Korea tensions
U.S. Secretary of State John Kerry's makes efforts to smooth tensions in Korea and enlist Japan and China in the process. Photo: Getty Images.
“While a small miss in China’s gross domestic product and industrial production data was the primary catalyst for the share-market selloff, the underlying reasons for the decline are a supply-driven decline in some commodity markets, a leverage-inspired crash in gold prices and, in the case of the Australian market, full valuations for many stocks,” said CMC Markets chief market analyst Ric Spooner.
Mining heavyweight BHP Billiton Ltd. /zigman2/quotes/201448516/delayed AU:BHP +2.05% /zigman2/quotes/208108397/composite BHP +2.20% lost 0.5%, and Woodside Petroleum Ltd. /zigman2/quotes/203437212/delayed AU:WPL -3.75% /zigman2/quotes/206334215/delayed WOPEY -4.14% gave up 1.7% Sydney.
Jiangxi Copper Co. /zigman2/quotes/201668148/delayed HK:358 +2.68% /zigman2/quotes/201334192/delayed CN:600362 +4.13% /zigman2/quotes/204256025/delayed JIXAY -2.45% and PetroChina Co. /zigman2/quotes/204979431/delayed HK:857 +2.09% /zigman2/quotes/206980083/delayed CN:601857 +1.56% /zigman2/quotes/205108732/composite PTR +1.69% gave up 1.9% each in Hong Kong, while in Shanghai, Jiangxi shed 0.7% and rebounded in afternoon trade to end 0.1% higher.
In Japan, exporters and financials — which had powered gains of more than 25% for the two major stock benchmarks in the year to date — suffered another day of weakness. Exporters in particular came under pressure as the U.S. dollar /zigman2/quotes/210561789/realtime/sampled USDJPY +0.0477% hovered around ¥97, after testing the ¥100 level unsuccessfully last week.
Sony Corp. /zigman2/quotes/201361720/delayed JP:6758 +1.19% slid 4.1%, and Toyota Motor Corp. /zigman2/quotes/200537742/composite TM +1.78% /zigman2/quotes/203803129/delayed JP:7203 +2.14% lost 1.6%, while among banks, Mitsubishi UFJ Financial Group Inc. /zigman2/quotes/207520099/delayed JP:8306 +1.44% gave up 3.6%.
Shares of wireless telecom Softbank Corp. /zigman2/quotes/207303954/delayed JP:9984 +3.50% /zigman2/quotes/202815238/delayed SFTBF +1.99% plunged 6.8% in Tokyo, after Dish Network Corp. /zigman2/quotes/207505872/composite DISH +1.32% topped its bid for U.S. peer Sprint Nextel Corp. /zigman2/quotes/208685669/composite S +5.45% .