By Michael Kitchen, MarketWatch
LOS ANGELES (MarketWatch) — Asian stock markets followed their U.S. peers lower Tuesday, as a rise overnight in Spanish and Italian government-bond yields stoked concerns that Europe’s debt crisis was deepening.
Hong Kong’s Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI -1.09% finished down 0.8%, while Japan’s Nikkei Stock Average /zigman2/quotes/210597971/delayed JP:NIK -0.39% dropped 0.7%, South Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 -1.49% lost 0.9%, Australia’s S&P/ASX 200 /zigman2/quotes/210598100/delayed AU:XJO -0.33% fell 0.4%, and China’s Shanghai Composite /zigman2/quotes/206600939/delayed CN:000001 -0.06% ended almost flat.
The moves came after the Dow industrials /zigman2/quotes/210598065/realtime DJIA -0.78% lost 0.6% and the S&P 500 /zigman2/quotes/210599714/realtime SPX -1.05% fell 1% Monday, as Italy’s and Spain’s costs for borrowing climbed.
“There’s renewed concern about the euro-debt crisis because the Italian and Spanish bond yields continue to rise, meaning the impact of the debt crisis has already spread,” said KGI Asia Chief Operating Officer Ben Kwong.
Kwong also cited a rise in the dollar, which he said tends to drive foreign investors holding U.S. currency out of Asian equities, as the exchange rate drives down the value of foreign-denominated assets.
“Normally when the U.S. dollar rebounds, the fund flow will be less favorable to commodities and [non-U.S.] equities,” he said.
Companies with large exposure to the global growth outlook were among the decliners. In Hong Kong, Lenovo Group Ltd. /zigman2/quotes/205368244/delayed HK:992 -4.31% /zigman2/quotes/201114980/delayed LNVGF -4.01% retreated by 1.3%, and Esprit Holdings Ltd. /zigman2/quotes/205943307/delayed HK:330 -1.41% /zigman2/quotes/209270177/delayed ESHDF -2.78% fell 2.9%, while on the Sydney bourse, global shopping-mall operator Westfield Group Australia lost 2.4%.
But Japanese exporters took a larger hit, carrying an additional weight from the strong yen, with the U.S. dollar /zigman2/quotes/210561789/realtime/sampled USDJPY -0.4906% trading around the ¥77 level. Shortly after the close of Tokyo trading, the dollar was buying ¥76.98.
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Against this backdrop, Sony Corp. /zigman2/quotes/201361720/delayed JP:6758 -0.57% /zigman2/quotes/208567357/composite SNE -1.20% gave up 1.5%, Elpida Memory Inc. tumbled 9.1%, Renesas Electronics Corp. /zigman2/quotes/203872935/delayed JP:6723 -0.90% /zigman2/quotes/201351352/delayed RNECY -0.15% fell 4.1%, and Sharp Corp. /zigman2/quotes/203224600/delayed JP:6753 -0.54% /zigman2/quotes/207472799/delayed SHCAF +3.24% dropped 1.7%.
In Hong Kong, stock in China Construction Bank Corp. /zigman2/quotes/208974133/delayed HK:939 -1.37% /zigman2/quotes/209484779/delayed CICHF -3.88% rose 1.1%, even as its Shanghai-listed shares /zigman2/quotes/208058581/delayed CN:601939 +0.15% lost 0.4% after Bank of America Corp. /zigman2/quotes/200894270/composite BAC -1.41% sold off a 4% stake in CCB at a discount.
Bernstein Research said in a note Tuesday that the share sale was a positive for CCB, adding they “expect the sale to remove a significant overhang on the stock.” See report on Bank of America’s CCB share sale.
Meanwhile, a 0.9% decline in Nymex crude-oil futures during New York trading, with a further drop during Asian trading hours, helped push many energy stocks lower.
In Tokyo, Inpex Corp. /zigman2/quotes/206689846/delayed JP:1605 -0.23% /zigman2/quotes/207958170/delayed IPXHY -0.66% dropped 2.5%, and Japan Petroleum Exploration Co. /zigman2/quotes/201212147/delayed JP:1662 -1.14% /zigman2/quotes/202925532/delayed JPTXF -1.12% ended with a 2.9% loss, while on the Hong Kong exchange, PetroChina Co. /zigman2/quotes/204979431/delayed HK:857 -1.17% /zigman2/quotes/205108732/composite PTR -0.98% /zigman2/quotes/206980083/delayed CN:601857 -0.19% traded down 1.7%.
Australian uranium miners rose after Prime Minister Julia Gillard signalled her government plans to end a long-standing ban on selling uranium to India. See report on Australian plans to open uranium sales to India.
Shares in Paladin Energy Ltd. /zigman2/quotes/203269866/delayed AU:PDN -5.38% /zigman2/quotes/202157125/delayed PALAF +7.69% closed 3.1% higher, while Toro Energy Ltd. climbed 10.4% /zigman2/quotes/208586219/delayed AU:TOE 0.00% /zigman2/quotes/209211253/delayed TOEYF -1.19% and Deep Yellow Ltd. /zigman2/quotes/201770590/delayed AU:DYL -2.44% /zigman2/quotes/206547112/delayed DYLLF 0.00% rocketed to a 28% gain.
Despite Tuesday’s generally bearish tone on Asian markets, KGI Asia’s Kwong said the selling may be short-lived.
“I don’t think the pressure to correct is too strong, since it’s near December and investors expect the markets will perform better in a traditional year-end rally,” he said.
However, Kwong added that Asian markets are still primarily driven by news and sentiment rather than technical factors, so any development on Europe’s debt crisis, U.S. monetary policy or Chinese inflation would trump expectations for December share gains.