Asia stocks drop on growth outlook fears
HONG KONG (MarketWatch) -- Asian markets skidded Friday as signs of a slowing world economy and a ratings downgrade of several major banks pushed investors away from risk assets before the weekend.
Resource sector stocks in particular tumbled after crude-oil prices (CLQ2) below $80 a barrel and gold futures (GCQ2) under $1,600 an ounce overnight in New York, with banks and other financial stocks also taking big losses.
"The economic indicators are not going to be good for the rest of the year. Manufacturing activity in Europe and China is weak, and the economies are slowing down. But [Asian markets] had a good rebound in June, so a pull-back is normal given what happened in U.S. markets overnight," Linus Yip, strategist at First Shanghai Securities in Hong Kong said.
South Korea's Kospi (SEU) was the region's worst performer of the day, dropping 2.2% as wary investors sold stocks across sectors.
Hong Kong's Hang Seng Index (HSI) dropped 1.4%, extending losses after European markets opened sharply on the downside. Mainland Chinese markets were closed for a holiday.
The performance brought a mixed week to an end for the regional indexes, with Japan's Nikkei the best performer among the five benchmarks mentioned above, with a 2.7% advance. The Hang Seng Index dropped 1.2%, while the Shanghai Composite had ended Thursday's session with a weekly loss of 2%.
Friday's soft performance in Asia came after a hefty sell-off on Wall Street, with regional stocks under selling pressure even as Dow Jones Industrial Average (DJIA) futures rose in Asian trading, pointing to a likely higher opening.
In addition to concerns over the growth outlook, independent stress tests of Spanish banks revealed capital needs for financial institutions in an adverse scenario could be as high as 62 billion euro ($78.8 billion). And after the U.S. markets' close, Moody's Investor Service downgraded 15 global banks citing volatility and risks in capital markets.
Yip said the correction was also tied to disappointment with the Federal Reserve's failure to announce more aggressive stimulus measures this week.
Among other banks,
Resource firms were pressured throughout the region.
Elsewhere in the resources sector,
Global growth concerns hurt exporters across Asia. Fashion retailer
But a relatively soft yen lent support to some blue-chip names in Tokyo.
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