An unexpected contraction in the U.S. economy at the end of 2012 sent Asian stock markets into retreat on Thursday.
The U.S. economy shrank in the fourth quarter for the first time since mid-2009, hurt by big cuts in defense spending, falling exports and sluggish growth in company stockpiles, the government reported on Wednesday. That put the brakes on a Wall Street rally that had pushed the Dow to near-record highs.
“The market has been looking for any excuse to pull back after such an epic month and has taken this news as the main lead for the day,” said Evan Lucas of IG Markets in Melbourne in an email commentary.
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The Nikkei 225 in Tokyo fell 0.5 per cent to 11,063.90 after the government reported lower—than—expected growth in December’s industrial production. Output climbed a seasonally adjusted 2.5 per cent from November but most analysts had forecast an improvement of more than 4 per cent.
In a statement released after a two-day policy meeting, the U.S. Federal Reserve acknowledged that the economy is still struggling to regain momentum. The central bank said that growth had “paused in recent months,” and while it was taking no new action, it would keep buying $85 billion of bonds a month.
With the Fed meeting behind them, traders and investors will now turn their focus back to company earnings and Friday’s nonfarm employment report.
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The Dow closed down 0.3 per cent at 13,910.42 on Wednesday after the government reported that the economy shrank an annualized 0.1 per cent in the October-December quarter of 2012. It grew 3.1 per cent the July-September quarter. The Standard & Poor’s 500 fell 0.4 per cent to 1,501.96. The Nasdaq composite index fell 0.4 per cent to 3,142.31
Benchmark oil for March delivery was up 5 cents to $97.99 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 37 cents to finish at $97.94 per barrel on the New York Mercantile Exchange
In currencies, the euro slipped slightly to $1.3566 from $1.3567 late Wednesday in New York. The dollar fell to 91.05 yen from 91.20 yen.