Written by Minjune Kim
Stock markets sagged across much of the Asia-Pacific region on Monday, unnerved by news over the weekend that the US lender CIT Group had filed for bankruptcy, and following a dismal showing on Wall Street on Friday. Upbeat economic news from China, South Korea and Australia did little to lift the mood in most of the region as investors focused instead on the fact that the US recovery remains feeble — a fact that was hammered home by weak US consumer spending data Friday.
Asian markets tumbled Monday as a heavy loss on Wall Street at the end of last week was compounded by the bankruptcy of US bank CIT at the weekend, hitting confidence for a global economic recovery. Tokyo lost 2.31 percent, Sydney 2.21 percent and Seoul 1.37 percent as dealers went into sell-off mode. Hong Kong lost 0.61 percent, after having been almost three percent lower at one point. Benchmarks in New Zealand, Taiwan and Singapore also fell, though the region recovered some early losses on strength in mainland China. The Shanghai Composite index was the only major market in positive territory, up 2.7 percent on stronger manufacturing figures and higher bank earnings. The broader Standard & Poor's 500 index fell 29.92, or 2.8 percent, to 1,036.19, and the Nasdaq composite index dropped 52.44, or 2.5 percent, to 2,045.11.U.S. markets were headed for a higher open. Dow futures rose 26 points, or 0.3 percent, to 9,690, while S&P futures climbed 3.3, or 0.3 percent, to 1,036. Oil prices were higher after a big fall, with benchmark crude for December delivery up 22 cents to $77.22 a barrel. The contract dropped $2.87 to settle at $77.00 on Friday.
US consumer spending data released on Friday, which showed a 0.5 per cent drop in September, revealed that American shoppers, concerned about their job prospects, remain reluctant to open their wallets — bad news for Asia’s export-dependent economies.
Combined with the CIT Group insolvency that served as a reminder that the US economy and financial system remain under considerable pressure, analysts said.
‘‘CIT filing for Chapter 11 bankruptcy protection is the culmination of difficulties for the lender that investors would have been well aware of. Still, it will at least refocus attention on underlying economic challenges and underpin risk unwinding trades,’’ Patrick Bennett, a strategist at Société Générale in Hong Kong, said in a note.
Combined with the CIT Group insolvency that served as a reminder that the US economy and financial system remain under considerable pressure, analysts said.
‘‘CIT filing for Chapter 11 bankruptcy protection is the culmination of difficulties for the lender that investors would have been well aware of. Still, it will at least refocus attention on underlying economic challenges and underpin risk unwinding trades,’’ Patrick Bennett, a strategist at Société Générale in Hong Kong, said in a note.
No comments:
Post a Comment