Struggling U.S. economy causes Asian markets to slip

May 05, 2011 09:03 am | Updated 09:04 am IST - BANGKOK

A woman walks past a bank electronic board showing the Hang Seng index. File photo

A woman walks past a bank electronic board showing the Hang Seng index. File photo

Signs that the U.S. economy may be struggling dampened investor sentiment in Asia on Thursday.

Hong Kong’s Hang Seng index dropped 0.2 per cent to 23,271.31. On mainland China, the Shanghai Composite Index lost 0.2 per cent to 2,860.48, while the smaller Shenzhen Composite Index rose 0.1 per cent to 1,188.63. Australia’s S&P ASX 200 fell 0.1 per cent to 4,738.10.

Benchmarks in Singapore, Malaysia, Indonesia and New Zealand also fell, but Taiwan’s TAIEX bucked the trend and rose 0.8 per cent to 9,016.06. Markets in South Korea and Japan were closed for a holiday.

On Wall Street on Wednesday, stocks fell after payroll processor ADP said companies added 179,000 new jobs in April, far fewer than economists had expected. That raised worries about what the government’s monthly jobs report for April will reveal when it is released on Friday.

In a separate report, the Institute for Supply Management said its service sector index rose at the slowest pace in 8 months in April, as many companies express concerns about higher food and gas prices.

The U.S. service industry employs about 90 per cent of the U.S. work force, so signs of a slowdown in the service sector index have implications for the overall economy.

Oil dropped below $110 per barrel on Wednesday after a U.S. government report showed that supplies of petroleum products are growing as demand weakened in the U.S.

Benchmark crude for June delivery dropped 60 cents to $108.64 per barrel on the New York Mercantile Exchange on Thursday. The contract lost $1.81 to settle at $109.24 per barrel on Wednesday.

Signs that the U.S. economic recovery is slowing also dragged down oil prices, which hurts the energy companies whose fortunes depend on them.

Hong Kong-listed shares of PetroChina, China’s biggest oil and gas company, lost 1.9 per cent while China Petroleum & Chemical Corp., Asia’s biggest refiner, slipped 0.8 per cent.

But shares in airlines, which benefit from lower oil prices, were up. China Eastern Airlines Corp. Ltd. rose 2.4 per cent; China Southern Airlines Co. Ltd. was 2 per cent higher. Taiwan’s EVA Airways Corp. was 0.7 per cent higher.

Shares of Hong Kong-listed Zijin Mining Group, China’s biggest gold miner, dropped 1.9 per cent, a day after a court in south-eastern China ordered the company to pay a $4.6 million fine for toxic mine spills at the Zijinshan Gold and Copper Mine nearly a year ago.

The Dow Jones industrial average fell 0.7 per cent to close at 12,723.58. The Standard & Poor’s 500 index fell or 0.7 per cent to 1,347.32. The Nasdaq composite index fell 0.5 per cent to 2,828.23.

In currencies, the euro dropped to $1.4840 from $1.4849 late Wednesday in New York. Earlier on Wednesday the dollar fell to $1.4942, its lowest point since December 2009.

The dollar weakened against Japan’s currency to 80.44 yen from 80.58 yen.

0 / 0
Sign in to unlock member-only benefits!
  • Access 10 free stories every month
  • Save stories to read later
  • Access to comment on every story
  • Sign-up/manage your newsletter subscriptions with a single click
  • Get notified by email for early access to discounts & offers on our products
Sign in

Comments

Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.

We have migrated to a new commenting platform. If you are already a registered user of The Hindu and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.