Asian markets edge lower on Spain woes
HONG KONG: Asian shares edged lower Tuesday following a global sell-off on renewed concerns that the weight of eurozone sovereign debt would force Spain to seek a full state bailout.
Investors also treaded with caution after ratings agency Moody’s downgraded its outlook for Germany, delivering a stark warning that not even Europe’s largest and most pivotal economy was immune from the rolling crisis.
Tokyo fell 0.42 per cent, Shanghai slipped 0.14 per cent, Seoul lost 0.29 per cent, while Sydney was 0.17 per cent off.
Hong Kong’s stock market delayed its opening to 1:00 pm (0500 GMT) after a severe typhoon hit the southern Chinese business hub.
Spain’s borrowing costs on Monday climbed to a high considered unsustainable, sparking fears that the eurozone’s fourth-largest economy may require a bailout.
The yield — the rate of return investors earn — on the benchmark Spanish 10-year government bond jumped to 7.498 per cent from 7.225 per cent on Friday, well above the 7.0 per cent danger level for long-term funding.
In addition, Moody’s Investors Services revised to negative from stable its outlook on the sovereign ratings of Germany, the Netherlands and Luxembourg.
Eyes were also on Greece, with auditors from the European Union, International Monetary Fund and the European Central Bank due in Athens this week for another inspection of the new government’s economic programme.
The report will determine whether Greece will receive fresh loans of 31.5 billion euros by September due under its debt rescue programme.
Markets in Europe and the United States fell heavily overnight on mounting eurozone debt concerns.
In the United States, the Dow Jones Industrial Average fell 0.79 per cent, while European stocks took a pummelling, with London’s benchmark FTSE 100 index of top companies down 2.09 per cent and in Frankfurt, the DAX 30 lost 3.18 per cent.
The euro, which hit a 12-year low against the yen on Monday, bought $1.2123 and 94.86 yen in Tokyo morning trade, down from $1.2137 and 95.13 yen in New York.
However it was an improvement from Asian trade Monday when it dropped to 94.24 yen, its lowest level since November 2000.
The dollar, meanwhile, traded at 78.23 yen against 78.37 yen as the Japanese currency is increasingly seen as a safe-haven unit amid turmoil in Europe and an uncertain US economic recovery.
The swings on the currency markets came as Japan’s Finance Minister Jun Azumi repeated warnings about the yen’s soaring value and hinted at another possible currency market intervention in a bid to tame the unit.
“We will not rule out any measures against excessive moves and will take decisive action when that’s deemed necessary,” he told reporters.
On oil markets New York’s main contract, light sweet crude for September delivery, shed 27 cents to $87.87 a barrel in morning trade and Brent North Sea crude for delivery in September was six cents lower at $103.20.
Gold was at $1,576.51 at 0415 GMT from $1,571.22 on Monday.