World stock markets were mixed on Monday, with Tokyo's index down more than 1 per cent, as a recent rally over the $827 billion plan to resuscitate the US economy began to fade. Stocks have advanced strongly lately on expectations the US measures, expected to pass the Senate on Tuesday, will reverse the country's deepest recession in decades by stemming massive job losses and increasing spending.
A coming overhaul of the government's $700 billion financial bailout program, to be detailed by Treasury Secretary Timothy Geithner on Tuesday, also has given sentiment a lift. Among new measures under consideration are guarantees to help banks limit losses from their souring assets.
Yet most markets in Asia gave up some of their gains by the afternoon. Analysts say investors looking to capitalize on the markets' momentum, not a fundamental shift in sentiment, have fueled much of the rise.
"I don't think this rally will last," said Desmond Tjiang, who helps manage $4 billion in Asian equities as a chief investment officer at Fortis Investment Management in Hong Kong. "There's still bad macro news and bad corporate news that will outweigh the stimulus hopes in the near term," he said. "After the stimulus package, what other good news can there be? I'm just very cautious."
Japan's Nikkei 225 stock average fell 107.59, or 1.3 per cent, to 7969.03, while South Korea's Kospi was off 0.6 per cent at 1,202.69. Singapore and New Zealand stock markets also lost ground. In Hong Kong, the Hang Seng rose 0.8 per cent to 13,769.06 in a volatile session that saw the benchmark turn negative. Boosting Hong Kong was trade in China, where the Shanghai index extended its recent gains by 2 per cent.
Stock measures in Australia, Taiwan and India were higher as well.
As trading started in Europe, France's CAC 40 was off 0.5 per cent, Germany's DAX slipped 0.3 per cent and Britain's FTSE 100 was down 0.6 per cent.
In the US on Friday, investors looked past abysmal news about the country's job market and instead hoped it would increase pressure on lawmakers to pass the stimulus bill. The Dow industrials rose 217.52, or 2.7 per cent, to 8,280.59 after rising 106 on Thursday. Broader stock indicators also jumped. The Standard & Poor's 500 index rose 22.75, or 2.7 per cent, to 868.60.
But Wall Street futures sank on Monday, suggesting US markets would shed some of last week's gain. Dow futures fell 76, or 0.9 per cent, to 8,178 and S&P500 futures were down 11.1, or 1.3 per cent, at 856.60.
Earlier in Asia, there more signs of corporate distress. In Japan, the government reported a decline in machinery orders, while Nissan Motor Co. said it was slashing 20,000 jobs and had fallen into the red in the fiscal third quarter. Japan's No 3 automaker also forecast a net loss for the full year through March, providing fresh evidence of the pain Asia's exporters are feeling as Western consumers cut back their spending.
"The economic realities in the United States and Japan are so dire that more investors are becoming skeptical over the US economic and financial bailout plans," said Masatoshi Sato, market analyst at Mizuho Investors Securities Co. Ltd. "Optimism over the US measures that had supported the market is gone." Meanwhile, Japan's biggest brokerage firm Nomura Holdings tumbled more than 14 per cent on news it might be forced to sell more shares to raise capital.
Recent gains in commodities prices boosted raw materials producers and the shipping firms that transport their goods. Australia's BHP Billiton Ltd, the world's largest mining company, gained 3.4 per cent. Chinese aluminum producer Chalco advanced 6.7 per cent in Hong Kong, helped by an analyst upgrade. Oil prices retreated modestly in Asian trade, with light, sweet crude for March delivery exchanging hands at $39.66 a barrel, down 51 cents. The contract dropped a dollar to settle at $40.17 a barrel on the New York Mercantile Exchange overnight.
In currencies, the dollar weakened to 91.42 yen, down from 91.83. The euro traded at $1.2916, down from $1.2943.