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Asian markets slip on lack of Fed stimulus hint

Asian markets fell Friday as European debt woes and disappointment at US Fed chief Ben Bernanke’s failure to commit to any new stimulus measures overshadowed a surprise Chinese interest rate cut.

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Japanese shares were dented despite figures showing the economy grew faster than first thought, while the strong yen and weak demand in Europe hit the country’s exports.

Tokyo tumbled 2.09 percent, or 180.46 points, to 8,459.26 while Seoul shed 0.67 percent, or 12.31 points, to 1,835.64 and Sydney fell 1.09 percent, or 44.9 points, to 4,063.7.

Hong Kong slipped 0.94 percent, or 175.95 points, to 18,502.34 and Shanghai lost 0.51 percent, or 11.68 points, to close at 22,81.45.

In closely watched comments on Thursday, Bernanke told Congress he was upbeat about “moderate” growth in the world’s top economy and was “prepared to take action” to provide support, but gave no hint of stimulus measures.

Traders had been hoping for an indication that the central bank was willing to step in to protect the country from headwinds in Europe as well as weakness in China.

“Chairman Bernanke’s testimony to the Senate was balanced, disappointing those who were looking for a clear signal” that a US economic recovery was on its way, Barclays Capital said in a note to clients.

Adding to the gloom was news that Fitch had slashed Spain’s credit rating by three notches Thursday, from A to BBB — just above junk — and warned it would likely stay in recession this year and next.

The cut moved Madrid a step closer to needing an international bailout, following the path of Greece, Ireland and Portugal, as it grapples with a fiscal crisis as well as a struggling banking sector.

Spain’s banks now needed “around 60 billion euros ($75 billion) and as high as 100 billion euros ($125 billion) in a more severe stress scenario”, Fitch said.

The euro fetched $1.2460 and 98.80 yen in early European trade, compared with $1.2561 and 100.01 yen late Thursday in New York.

The common currency had risen in US trade on hopes for European Central Bank action to help quell the eurozone’s financial turmoil.

The dollar was at 79.26 yen against 79.58 yen.

Global concerns deflected attention from Beijing’s decision to cut interest rates for the first time in three-and-a-half years as it looks to boost its own economy, which has been hit by a string of downcast data in recent months.

The People’s Bank of China late Thursday said it would cut rates by 25 basis points — the first cut since late 2008 during the financial crisis — while also easing restrictions on deposit and lending rules.

“It will probably take more than one interest rate cut to put the economy on an upward trajectory,” Howhow Zhang, head of research at Shanghai consulting firm Z-Ben Advisors, told Dow Jones Newswires.

In Japan the government said the economy grew 1.2 percent in January-March from the previous three months, revising upward a preliminary figure of 1.0 percent growth.

On an annualised basis, the economy grew a revised 4.7 percent in the quarter, higher than a preliminary 4.1 percent rise, according to the Cabinet Office.

However, exports took a hit after the yen reached record highs against the dollar late last year while surging energy prices sent import costs higher, denting the country’s trade surplus. The ongoing crisis in Europe also saw demand in Japan’s biggest export market tumble.

On Wall Street the Dow rose 0.37 percent, extending Wednesday’s 2.4 percent rally, the S&P 500 was flat and the tech-rich Nasdaq fell 0.48 percent.

Oil prices eased. New York’s main contract, light sweet crude for delivery in July, was down $2.41 to $82.41 a barrel and Brent North Sea crude for July delivery shed $2.22 to $97.71 in the late afternoon.

Gold was at $1,577.05 an ounce at 1035 GMT, compared with $1,625.33 late Thursday.

In other markets:

• Singapore closed down 0.77 percent, or 21.37 points, at 2,737.89.

Commodities firm Olam International was down 2.70 percent at Sg$1.63 while DBS Bank shed 1.29 percent at Sg$13.05.

• Taipei fell 1.14 percent, or 80.66 points, to 6,999.65.

HTC shed 6.88 percent to Tw$352.0 while TSMC was 1.25 percent lower at Tw$77.9.

• Manila shed 0.57 percent, or 28.89 points, to end at 4,994.07.

Philippine Long Distance Telephone fell 0.57 percent to 2,430 pesos and Alliance Global dropped 2.50 percent to 11.68 pesos.

• Wellington closed 0.70 percent, or 24.48 points, lower at 3,449.47.

Fletcher Building shed 1.3 percent to NZ$6.21 and Telecom fell 2.6 percent to NZ$2.44 and Chorus dropped 1.88 percent to NZ$3.14.

• Kuala Lumpur eased 0.30 percent, or 4.69 points, to 1,570.62.

Budget carrier AirAsia lost 1.35 percent to end at 3.65 ringgit, while plantation giant Sime Darby shed 0.21 percent to 9.69 ringgit. Telekom Malaysia gained 0.18 percent to 5.44 ringgit.

• Jakarta fell 0.40 percent, or 15.27 points, to 3,825.33.

Aneka Tambang fell 1.65 percent to 1,190 rupiah, Astra International lost 2.21 percent to 6,650 rupiah and Telekomunikasi Indonesia slid two percent to 7,350 rupiah.

• Bangkok rose 0.77 percent, or 8.57 points, to 1,127.10.
• Mumbai gained 0.42 percent, or 69.82 points, to 16,718.87.