Asian markets retreat on weak economy, earnings

[sajiv]

BANGKOK, Thailand – Asian stock markets faltered Friday, dragged down by a sell-off in Tokyo as new data underlined the severity of Japan's economic slump and quarterly reports from leading companies like Sony and Toshiba showed profits tumbling.

Markets had logged some gains earlier in the week, buoyed by an upbeat earnings outlook from British lender Barclays and a $819 billion stimulus package in the U.S. moving closer to reality, but were jolted back to reality by a new slew of bad economic and corporate news.

"Investors are looking for a magic bullet but there isn't one. There isn't one solution that by itself can solve all the complex problems that the world economy faces," said Arjuna Mahendran, head of Asian investment strategy at HSBC Private Bank in Singapore.

"In typical myopic fashion, markets are alternating between despair and hope," he said. "The problem is that there is no real visibility about earnings and the economic situation and there may not be until the second half of this year or very late in the year."

Japan's Nikkei 225 stock average fell 287.08, or 3.5 percent, to 7,964.16 as investors reeled from a mounting pile of bad results from major companies and the latest economic data, which showed industrial production falling at a record pace and unemployment jumping.

Hong Kong's Hang Seng was down 0.5 percent at 13,091.65, South Korea's Kospi retreated 0.5 percent while markets in Singapore, India and Malaysia also lost ground. Australia's main index gained 0.4 percent. Markets in mainland China are closed all week for the Lunar New Year.

Industrial output at the Japan's manufacturers plunged 9.6 percent from the previous month in December, the largest drop since Tokyo began measuring such data in 1953, as companies slashed production to cope with slowing global demand. The unemployment rate in the world's second-biggest economy jumped to 4.4 percent in December from 3.9 percent the previous month.

Investors in Tokyo were rattled by the combination of the overnight decline on Wall Street, the dismal economic indicators and depressing earnings forecasts, said Kazuhiro Takahashi, Daiwa Securities SMBC equity general manager in Tokyo.

"The Nikkei quickly fell because of more bad news about the economy," Takahashi said. "And many investors expect there will be more bad news."

Sony Corp. on Thursday reported that its net profit in the October-December quarter plunged 95 percent to 10.4 billion yen ($115.6 million) and reiterated that it would post a net loss for the full fiscal year through March. Toshiba Corp. also said Thursday it expects a loss for the full year due to plummeting demand for its flash memory chips, used to store data in consumer gadgets like music players and digital cameras.

Honda Motor Corp., which releases results later Friday, slid 8.3 percent. Megabank Mitsuibishi UFJ Finance was down 5.5 percent and Sony dived 6.3 percent.

Investors were jittery after Thursday's decline in U.S. markets, where the Dow Jones industrial index slid 2.7 percent to 8,149.01, while the S&P 500 index dropped 3.3 percent to 845.14. The Nasdaq composite index fell 3.24 percent, to 1,507.84.

U.S. stock index futures were narrowly mixed. Dow futures were up 22 points, or 0.27 percent, to 8,134, while Nasdaq futures were down 1.25, or 0.1 percent, to 1,204.75.

Oil languished below $42 a barrel in Asia as more dismal U.S. economic numbers offset news that OPEC may further cut production. Light, sweet crude for March delivery rose 26 cents to $41.70 a barrel by midday in Singapore in electronic trading on the New York Mercantile Exchange.

In currencies, the dollar fell to 89.29 yen from 89.92 late Thursday in New York, while the euro declined to $1.2887 from $1.2934.