Asian markets sink amid caution after rally
Asian stock markets dropped on Tuesday amid worries about the staying power of a three-month rally.business Updated: Jun 09, 2009 12:10 IST
Asian stock markets dropped on Tuesday amid worries about the staying power of a three-month rally.
Major markets like Tokyo and Hong Kong shed 1 per cent or more, while the dollar slipped against the yen.
Stocks worldwide wide have surged since March on expectations that the deepest stretch of the global recession may be over. But uncertainty about the strength of any recovery is leading many investors to question whether the recently rally may have overvalued companies. The threat of inflation, as government spend hundreds of billions and cut interest rates to historic lows to prop up their economies, is also unsettling investors more and more. "Investors are a bit cautious and happy to be taking some profits," said Miles Remington, head of Asian sales trading at BNP Paribas Securities in Hong Kong. "You're caught between a rise of such speed and tremendous gains versus other concerns. So in the short term there could be some downside."
Japan's Nikkei 225 stock average lost 101.64, or 1 per cent, to 9,763.99.
Hong Kong's Hang Seng fell 1.3 per cent to 18,020.45 and South Korea's Kospi was off 1.1 per cent at 1,378.03.
Taiwan's market, which has surged nearly 50 per cent from lows in March, slid 3.4 per cent in the region's worst performance of the day. Australian and Singapore markets were also lower In mainland China, Shanghai's index pulled back 1.1 per cent as investors across Asia awaited figures due out Thursday about the country's inflation rate.
Wall Street's session was largely directionless as investors wavered between concerns the rally is overheating and fears of missing any more upside.
The Dow closed mostly flat, up 1.36, or less than 0.1 per cent, at 8,764.49. The Standard & Poor's 500 index slipped 0.95, or 0.1 per cent, to 939.14.
Wall Street futures pointed to a lower open in the US Dow futures slipped 20, or 0.2 per cent, to 8,739 and S&P futures dropped 1.5, or 0.2 per cent, to 937.30.
Oil prices rose in Asia as traders mulled whether a weak global economy justified a doubling of crude since March. Benchmark crude for July delivery was up 37 cents at $68.46 a barrel; the contract fell 35 cents overnight.
In currencies, the dollar edged down to 98.11 yen from 98.39 yen. The euro was lower at $1.3872 from $1.3927.