Asian Stocks Take Step Back as Optimistic Investors Get Cold Feet
The bears were back in Asian markets on Monday after the United States said its two troubled motor vehicle manufacturers had failed to show they could trade their way back to profitability.
A 9 percent month-on-month decline in Japan’s February manufacturing output further spooked investors.
The Jakarta Composite Index fell 3 percent to close at 1,419.09. “It is a sharp correction and has alarmed investors enough to stay cautious after recent sharp gains,” an analyst with a foreign securities company said.
Downbeat comments from major US banks and mounting woes at American automobile giants underlined that recent optimism about economic recovery might be premature.
Japan’s Nikkei 225 stock average sank 373.53 points, or 4.3 percent, to 8,253.44, and Hong Kong’s Hang Seng slid 427.51, or 3 percent, to 13,691.99. South Korea’s benchmark was down 3.1 percent while markets in Singapore, Australia and Thailand fell about 2 percent or more.
Asia’s retreat followed a sell-off on Wall Street on Friday as investors booked profits on the Dow Jones industrial average’s 21 percent gain over 13 trading days. Further losses in Asia seem likely today with the Dow about 3.5 percent down at noon on Monday.
Regional currencies were not immune on Monday. The rupiah and the South Korean won led the basket south. The high-yielding rupiah slid nearly 2 percent to 11,700 per dollar.