Asia stocks slump on Europe debt crisis impasse
Friday, November 25, 2011
BANGKOK (AP) — Asian stock markets were mostly lower Friday as the results of a meeting among leaders of Europe’s biggest economies disappointed investors and Portugal’s credit rating was lowered to junk.
Japan’s Nikkei 225 index fell marginally to 8,161.87 while South Korea’s Kospi lost 0.9 percent at 1,779.93. Hong Kong’s Hang Seng dropped 0.8 percent to 17,790.54 and Australia’s S&P/ASX 200 shed 1.4 percent at 3,989.
Investment sentiment continued to wane after a meeting Thursday in Strasbourg, France of the leaders of the three biggest euro economies: Italian Premier Mario Monti, French President Nicolas Sarkozy and German Chancellor Angela Merkel.
The three leaders pledged to push for changes to European Union treaties to bring the fiscal policies of countries using the euro common currency more in line with each other.
Many investors were hoping Merkel might drop her steadfast opposition to a greater role for the European Central Bank or the creation of a eurobond that would pool the debts of all countries in the currency union. Some experts believe the ECB is the only institution capable of getting Europe past its debt crisis.
Piled onto the disappointment from the Strasbourg summit was a debt demotion for Portugal.
Fitch Ratings, citing Portugal’s large fiscal imbalances, its high indebtedness across all sectors and an adverse macroeconomic outlook, reduced the country’s credit rating to BB+. That means Portugal is considered non-investment grade by Fitch, making it even more difficult for the struggling country to return to the bond markets.
In the U.S., markets were closed for the Thanksgiving on Thursday. A crucial test comes on so-called Black Friday — the day that kicks off the holiday shopping season.
How well retailers do during the biggest shopping season of the year will have consequences for the still-fragile U.S. economic recovery.
The spending of consumers, which accounts for about 70 percent of U.S. economic activity, can impact stores’ expansion plans and inventory decisions into the new year. That trickles through the rest of the economy, from suppliers to jobs.
The November-December period accounts for 25-40 percent of annual sales. About a quarter of jobs in the U.S. are directly or indirectly supported by the retail industry.