HONG KONG (MarketWatch) — Asian markets retreated Tuesday as lingering uncertainty over the U.S. fiscal outlook and the next tranche of financial aid to Greece prompted a fresh wave of selling, hurting resource stocks and financials in particular.
Australia’s S&P/ASX 200 /zigman2/quotes/210598100/delayed AU:XJO -0.32% and China’s Shanghai Composite Index /zigman2/quotes/206600939/delayed CN:000001 +3.21% each skidded 1.5%, Taiwan’s Taiex stumbled 1.8%, and Hong Kong’s Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI +0.47% fell 1.1%.
Japan’s Nikkei Stock Average /zigman2/quotes/210597971/delayed JP:NIK +0.18% fell the least among major benchmarks, ending down 0.3%, but extended its streak of losses to seven sessions as the country’s weak economic outlook pressured sentiment. South Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 +0.26% also surrendered early gains to slide 0.6%.
The drop in Shanghai and Hong Kong came even as markets awaited the once-in-a-decade leadership changes at the Communist Party Congress, currently in session.
Is Japan on verge of recession?
Japan's economy shrank last quarter and could do so again in the current quarter, which would meet the common definition of a recession.
“China is likely to remain the center of focus for the region, and any comments from there could be a big sentiment driver,” said Stan Shamu, a market strategist at IG Markets.
Stock markets in India, Singapore and Malaysia were closed for a holiday.
Investor focus was affixed on the so-called fiscal cliff in the U.S. — heavy tax hikes and spending cuts that would occur in the absence of an agreement between Republicans and Democrats by the year’s end.
“While our base case remains that a compromise will be reached eventually, the risk of temporarily going over the fiscal cliff in the interim will be negative for risky assets,” Barclays strategists wrote in a note to clients.
Greece was another cause for concern, with The Wall Street Journal reporting about differences between euro-zone leaders and the International Monetary Fund on how to reduce the country’s debt to more manageable levels.
The report said that while the region’s ministers were confident about finding a way to agree on releasing a long-delayed $40 billion aid tranche, IMF Managing Director Christine Lagarde made clear there were differences on how to do that. Read: Euro zone aims for Nov. 20 Greek aid decision.
Stock losses in Asia spread across various sectors, with resources, financials and internationally exposed firms coming under particular selling pressure.
In Sydney, miners suffered despite overnight gains for some commodities. Fortescue Metals Group Ltd. /zigman2/quotes/202351558/delayed AU:FMG +0.99% /zigman2/quotes/204116626/delayed FSUMF +0.34% lost 2%, and Newcrest Mining Ltd. /zigman2/quotes/203840223/delayed AU:NCM +0.18% /zigman2/quotes/206026738/delayed NCMGF +1.17% fell 2.3%.
BHP Billiton Ltd. /zigman2/quotes/201448516/delayed AU:BHP +1.31% /zigman2/quotes/208108397/composite BHP -1.41% lost 1.6% in spite of saying that it expects significant valuation improvements on its shale assets in the U.S. Read: BHP expects boost for U.S. shale assets: reports.
In Hong Kong, PetroChina Co. /zigman2/quotes/205108732/composite PTR -1.22% /zigman2/quotes/206980083/delayed CN:601857 +0.95% /zigman2/quotes/204979431/delayed HK:857 +0.40% lost 1.9%, and China Coal Energy Co. /zigman2/quotes/201486584/delayed HK:1898 +1.60% /zigman2/quotes/200280825/delayed CN:601898 +1.98% /zigman2/quotes/205321671/delayed CCOZY 0.00% dropped 2.4%. In Shanghai, they declined 1.4% and 1.6%, respectively, while Zhongjin Gold Corp. /zigman2/quotes/207741711/delayed CN:600489 +1.89% sank 2.7%.
In Seoul, the key shipbuilding sector extended recent sharp losses, as Daewoo Shipbuilding & Marine Engineering Co. /zigman2/quotes/209608086/delayed KR:042660 -1.43% surrendered 4.6% and Hyundai Mipo Dockyard Co. /zigman2/quotes/209447815/delayed KR:010620 -0.33% retreated 2.2%.
Among major Asian financial names, Westpac Banking Corp. /zigman2/quotes/203084975/delayed AU:WBC -1.01% /zigman2/quotes/210300378/delayed WEBNF -2.44% gave up 2.2% in Sydney, Nomura Holdings Inc. /zigman2/quotes/206251373/delayed JP:8604 -1.67% /zigman2/quotes/207276383/composite NMR -1.41% lost 0.4% in Tokyo, KB Financial Group Inc. /zigman2/quotes/200043823/composite KB -1.33% shed 0.8% in Seoul, and Industrial & Commercial Bank of China Ltd. /zigman2/quotes/202401350/delayed IDCBY -0.41% /zigman2/quotes/201401473/delayed HK:1398 +0.24% /zigman2/quotes/202525815/delayed CN:601398 +0.81% lost 1.8% in Hong Kong and 1% in Shanghai.
QBE Insurance Group Ltd. /zigman2/quotes/207050271/delayed AU:QBE +0.11% /zigman2/quotes/201857553/delayed QBEIF -6.35% plunged 7.5% in Sydney on a string of broker downgrades after it issued a profit warning.
On the upside in Sydney, shares of Incitec Pivot Ltd. /zigman2/quotes/201665676/delayed AU:IPL +0.97% rallied 3.8%. The firm posted a 24% drop in annual profit, but its key explosives business nonetheless managed a pre-tax gain. Read: Incitec Pivot profit drops on fertilizer weakness.
In Tokyo, Olympus Corp. /zigman2/quotes/200860615/delayed JP:7733 +0.19% /zigman2/quotes/203009041/delayed OCPNF +0.16% jumped 5.9% after the company swung to a larger-than-expected profit in the fiscal second quarter.