Asian Stocks Decline for Second Week on U.S. Jobs, European Debt Concerns
Asian stocks fell for a second week after a U.S. jobs report missed economist estimates and concern grew that Europe’s crisis of government debt is spreading.
LG Electronics Inc., which counts North America as its biggest market, slumped 11 percent in Seoul this week after a government report showed U.S. employers hired fewer workers in May than forecast. Nintendo Co., a Japanese game maker that gets 34 percent of its sales in Europe, retreated 8.1 percent after the euro weakened. Mitsui & Co., which holds a stake in an oil field operated by BP Plc where an oil spill is unfolding, tumbled 9.5 percent in Tokyo on concern earnings will suffer.
The MSCI Asia Pacific Index slid 0.9 percent to 112.44 this week. The gauge plunged 3.3 percent on June 7, its steepest drop since March 30, 2009, after a Hungarian government official said the country’s economy was in a “very grave situation.”
“What I’m afraid of is that the volatility of the euro can trigger turmoil in the financial markets, prompting investors to reduce risk assets including stocks,” said Akio Yoshino, chief economist in Tokyo at Societe Generale Asset Management (Japan) Inc., which manages the equivalent of $18 billion.
Japan’s Nikkei 225 Stock Average tumbled 2 percent this week even as a government report showed Japan’s gross domestic product rose at an annualized 5 percent rate in the three months ended March 31, faster than the 4.2 percent projected by economists.
The S&P/ASX 200 Index gained 1.3 percent in Sydney, as gains in oil and copper prices lifted mining companies. The statistics bureau reported on June 10 that the jobless rate fell to 5.2 percent in May from 5.4 percent from the previous month.
The MSCI Asia Pacific Index has slumped about 13 percent from its high this year on April 15 amid growing concern European countries in addition to Greece will struggle to curb their budget deficits or repay debt. The decline has dragged the average price of companies in the gauge to 14.4 times estimated earnings, compared with 20.1 times at the beginning of this year, according to data compiled by Bloomberg.
Companies relying on demand in the U.S. dropped after Labor Department figures on June 4 showed the country’s private payrolls rose by 41,000, trailing the 180,000 gain projected by economists. LG Electronics Inc., South Korea’s No. 2 electronics maker, lost 11 percent to 94,600 won. James Hardie Industries SE, the biggest seller of home siding in the U.S., slumped 8.6 percent to A$6.9 in Sydney.
The euro sank to an eight-year low against the yen this week, depreciating to as low as 108.08 on June 7. A weaker euro reduces the value of European income at Japanese companies.
Nintendo, the maker of the Wii video-game machine, fell 8.1 percent to 24,480 yen. Sony Corp., which makes the rival PlayStation 3 player, declined 7.2 percent to 2,571 yen. Honda Motor Co., a carmaker that gets 81 percent of its revenue outside Japan, slipped 7.8 percent to 2,606 yen.
Peter Szijjarto, a spokesman for the Hungarian Prime Minister, said on June 4 that the nation’s economy is in a “very grave situation” and that it was “no exaggeration” to talk about a default. State Secretary Mihaly Varga said the next day that comments about a possible default were “unfortunate.”
“We might as well think Hungary is in the same situation as Greece,” said Societe Generale’s Yoshino. “I remember Greece’s announcement on its deficit didn’t appear to be a big deal in the media coverage at first.”
Fitch Ratings further fueled concern about Europe after saying June 8 that the U.K. is facing a “formidable” challenge in curtailing its budget shortfalls. In April, Greece, Spain and Portugal had their credit ratings cut by Standard & Poor’s as spending to stimulate their economies swelled budget deficits.
Mitsui, Japan’s second-biggest trading company by market value, tumbled 9.5 percent to 1,092, this week’s biggest drop on the Nikkei 225. Through its subsidiary, the company holds a 10 percent stake in the Mississippi Canyon 252 block in the Gulf of Mexico, the location of BP’s leaking well. The worst spill in U.S. history has cost BP $1.25 billion, the company said June 7.
Commodity-linked shares advanced as prices for oil and copper rose. BHP Billiton Ltd., the world’s largest mining company, climbed 1.9 percent to A$38.58 in Sydney, and Rio Tinto Group, the world’s No. 3 mining company, gained 2.2 percent to A$69.1. Oil jumped 4.8 percent this week before Asian markets closed, while copper gained 2.1 percent.