Asian stocks lower after Japan credit downgrade
Wednesday, August 24, 2011
BANGKOK (AP) — Asian stock markets retreated Wednesday after Moody’s downgrade of Japan’s credit rating offset positive sentiment from a day of big gains on Wall Street.
Japan’s Nikkei 225 index fell 0.2 percent to 8,716.76 after opening higher. South Korea’s Kospi dropped 1.6 percent to 1,749.27 and Hong Kong’s Hang Seng lost 1.1 percent to 19,656.19.
Australia’s S&P/ASX 200 was little changed at 4,173.70. Markets in Singapore, Indonesia and Taiwan fell.
The downdraft in Asia came despite a strong day on Wall Street. Sentiment was dented after Moody’s Investors Service downgraded Japan’s credit rating to Aa3 from Aa2, citing weak growth prospects for the world’s No. 3 economy, massive government debt and constant political uncertainty. The new rating is three notches below Moody’s top Aaa rating.
The downgrade, which puts Moody’s rating in line with other major credit rating agencies, is the latest blow for Japan after its economy remained mired in recession in the second quarter due to tumbling factory production and exports following the March 11 earthquake and tsunami.
Mining shares sank after prices for gold and some other metals slipped. BHP Billiton, the world’s largest mining company, lost 0.1 percent and Fortescue Metals Group Ltd. fell 0.9 percent in Sydney.
Australia’s Macarthur Coal Ltd. rose 1.5 percent after announcing it had nearly doubled its full year profit and repeated its advice to shareholders to reject a takeover offer from U.S energy giant Peabody Energy Corp. and Luxembourg-based steelmaker ArcelorMittal.
Meanwhile, Hong Kong-listed China Life Insurance Co., the country’s biggest life insurer, dropped 11.3 percent after announcing its first-half profit fell 28 percent from a year earlier as premium growth slowed and claims rose.
In New York on Tuesday, buyers returned to the stock market, searching for bargains after reports of better-than-expected manufacturing activity out of China and Europe.
The Dow Jones industrial average closed with a gain of 3 percent at 11,176.76. Indexes that track smaller stocks did even better, a sign that investors were more willing to take on risk. The S&P 500 index rose 3.4 percent to 1,162.35. The Nasdaq composite, which tracks mainly technology companies, rose 4.3 percent to 2,446.06.
Benchmark oil for October delivery was down 9 cents to $85.35 in electronic trading on the New York Mercantile Exchange. Crude rose $1.02 to finish at $85.44 on Tuesday.
In London, Brent crude for October delivery was up 4 cents to $109.35 on the ICE Futures exchange.
In currencies, the euro fell to $1.4402 from $1.4423 in late trading Tuesday in New York. The dollar fell to 76.61 yen from 76.66 Japanese yen.
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