Asian stocks slide

Asian shares fell on Friday, weighed down by tech stocks after lackluster sales outlooks from some sector heavyweights and as worries about the fiscal health of Greece and Portugal undermined investor confidence.

A massive recall of millions of vehicles by the world’s top automaker Toyota Motor Corp added to concerns over corporate earnings after poor outlooks from Motorola and Qualcomm dented optimism for the technology sector.

Samsung Electronics, the world’s top maker of memory chips and LCD screens, failed to lift the gloom despite its forecast-beating earnings as the region’s shares head for their worst monthly decline since early 2009.

Asia Pacific stocks outside Japan as measured by MSCI struck a 2-month low with the technology index down 1.8 percent and the material index 2.6 percent lower.

Fresh worries over public finances of Greece, Portugal and other smaller euro zone countries dragged the euro down to a six-month low against the dollar and a nine-month low versus the yen, a trend which has gained momentum as investors cut risk trades funded by the yen and dollar.

“Debt concerns in Europe, earlier-than-expected normalization of Chinese monetary policy and disappointing economic data in the U.S. are all adding up to force a number of investors to cut their positions,” said Khiem Do, head of the Asia multi-asset group at Baring Asset Management, which oversees $50 billion.

According to data from fund tracker EPFR Global, emerging markets equity funds saw their first week of net outflows in the period ended January 27 after 11 weeks of inflows as investors pared back their exposure amid fears of slowing growth in China, where authorities are reining in bank lending.

U.S. equity funds saw their biggest weekly outflow since late June while European equity finds suffered net redemptions for the third week in five, the data showed. Bond funds, meanwhile, saw inflows, particularly emerging market local currency-denominated bonds.

The strength of the yen currency also hammered Japanese stocks, which received a further setback after Toyota announced it would extend to Europe and China a recall of millions of vehicles due to faulty accelerator pedals and floor mats.

Japan’s Nikkei average fell 1.6 percent hit, by negative earnings surprises from firms such as chip equipment maker Advantest Corp which came on the back of Nippon Steel Corp’s warning of a first annual net loss in seven years.

U.S. stocks fell by as much as 1.9 percent overnight after both Qualcomm and Motorola reported earnings and outlooks that fell short of expectations. Qualcomm shares tumbled 14.2 percent and Motorola Inc slid 12.4 percent.

Several tech bellwethers this quarter have beaten modest expectations and still have been viewed unfavorably by the market, so the dismal reports were viewed even more negatively.

Fears that Athens will not be able to service its heavy debt also unnerved investors and prompted them to shun riskier investments, including stocks, although the country’s prime minister said it has not asked for a bailout.


Currencies linked to global growth such as the Australian dollar and the New Zealand dollar fell to multi-week lows as investors moved out of higher-risk assets and on caution ahead of U.S. fourth-quarter GDP data to be released later on Friday at 1330 GMT.

Even though data on Thursday showed U.S. durable goods orders rose and jobless claims fell in the world’s largest economy, analysts are wary it is not a strong recovery.

Mixed economic data from the world’s other leading economies also continues to keep investor sentiment cautious.

After Japan’s better-than-expected export growth earlier this week, data released on Friday showed the economy was in the grips of deflation with core consumer prices marking their tenth straight month of decline.

In commodities markets, crude oil steadied around $74 a barrel after three days of losses sparked by forecasts of tepid oil demand in rich industrialized nations.

A firm dollar and concern over the pace and scope of credit tightening in China drove Shanghai copper down nearly 2 percent, following a drop in London prices in the previous session.

Source: Reuters

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