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By Sarah Turner, MarketWatch
SYDNEY (MarketWatch) — Asia stocks fell on Thursday, as the conclusion of the U.S. election stoked fears about upcoming fiscal challenges for Washington.
Japan’s Nikkei Stock Average JP:100000018 -1.79% *fell 1.3%, while Australia’s S&P/ASX 200 index AU:XJO -0.83% *lost 0.9%, and South Korea’s Kospi KR:SEU -1.65% *dropped 1.4% after a late open.
In China, Hong Kong’s Hang Seng Index HK:HSI -1.40% *fell 1.3%, while the Shanghai Composite Index CN:000001 -1.02% *dropped 1.2.%
China’s week-long conference to usher in the country’s next leaders and policies kicked off Thursday. But with U.S. voters choosing President Barack Obama over challenger Mitt Romney, who had taken a harder line on China, Sino-U.S. relations now looked less likely to sour further.
“The last thing the world needed, at a time of economic fragility, was a fresh stand-off between these two economic superpowers,” said strategists at HSBC.
“If the market chooses to ignore the good news, it would suggest they are worried about the fiscal cliff,” HSBC said.
Wall Street closed Wednesday with heavy losses, with the Dow Jones Industrial Average DJIA -2.36% *suffering its biggest one-day drop this year, as investors moved to price in the implications of Obama’s re-election in terms of the U.S. “fiscal cliff” of tax hikes and spending cuts that will take place in January if no action is taken.
Fresh concerns also emerged Wednesday about Europe’s economic health after German industrial production fell sharply in September and the European Commission slashed its 2013 euro-zone growth forecast to 0.1% from 1%. Read: U.S. stocks slammed on fiscal-cliff fears
Barry Knapp, strategist at Barclays Capital, said that the U.S. election broadly maintained the status quo of a polarized federal government facing the looming fiscal cliff.
Click to Play
China-U.S. relations after election
China was a highly politicized issue during the presidential campaign, but what happens after the election?
“U.S. election results bring clarity on monetary policy — highly accommodative policy is here to stay — but not fiscal policy. The latter, in our view, remains problematic for risk sentiment,” he said.
Knapp highlighted risks to U.S. economic growth from potential tax increases, which he said the market was not discounting.
“This leaves Asia, particularly China, in a difficult spot. European demand is weak, and if U.S. demand also softens, the recent signs of stabilization — which we think may have been flattered by smartphone product launches — could fade, leading markets to expect another leg lower for global growth,” Knapp said.
The dollar USDJPY -0.1692% *bought 79.84 yen Thursday, down from ¥79.98 late Wednesday and from ¥80.36 Tuesday, with the move weighing on Tokyo-listed exporters.
Strategists at Bank of America Merrill Lynch said dollar-yen positions remained sensitive to U.S. fiscal cliff scenarios.
“Long [U.S. dollar vs. yen] is extraordinarily so, being predominantly driven by rate differentials,” they said, adding that “recent appreciation in dollar/yen could reverse.”
Japanese exporters were trading lower Thursday, with Canon Inc JP:7751 -2.65% * CAJ -2.36% *down 2.7%, Pioneer Corp. JP:6773 -3.47% * PNCOF -35.19% *lower by 3.5% and Honda Motor Co. JP:7267 -3.43% * HMC -1.62% *dropping 3%.
SYDNEY (MarketWatch) — Asia stocks fell on Thursday, as the conclusion of the U.S. election stoked fears about upcoming fiscal challenges for Washington.
Japan’s Nikkei Stock Average JP:100000018 -1.79% *fell 1.3%, while Australia’s S&P/ASX 200 index AU:XJO -0.83% *lost 0.9%, and South Korea’s Kospi KR:SEU -1.65% *dropped 1.4% after a late open.
In China, Hong Kong’s Hang Seng Index HK:HSI -1.40% *fell 1.3%, while the Shanghai Composite Index CN:000001 -1.02% *dropped 1.2.%
China’s week-long conference to usher in the country’s next leaders and policies kicked off Thursday. But with U.S. voters choosing President Barack Obama over challenger Mitt Romney, who had taken a harder line on China, Sino-U.S. relations now looked less likely to sour further.
“The last thing the world needed, at a time of economic fragility, was a fresh stand-off between these two economic superpowers,” said strategists at HSBC.
“If the market chooses to ignore the good news, it would suggest they are worried about the fiscal cliff,” HSBC said.
Wall Street closed Wednesday with heavy losses, with the Dow Jones Industrial Average DJIA -2.36% *suffering its biggest one-day drop this year, as investors moved to price in the implications of Obama’s re-election in terms of the U.S. “fiscal cliff” of tax hikes and spending cuts that will take place in January if no action is taken.
Fresh concerns also emerged Wednesday about Europe’s economic health after German industrial production fell sharply in September and the European Commission slashed its 2013 euro-zone growth forecast to 0.1% from 1%. Read: U.S. stocks slammed on fiscal-cliff fears
Barry Knapp, strategist at Barclays Capital, said that the U.S. election broadly maintained the status quo of a polarized federal government facing the looming fiscal cliff.
Click to Play
China-U.S. relations after election
China was a highly politicized issue during the presidential campaign, but what happens after the election?
“U.S. election results bring clarity on monetary policy — highly accommodative policy is here to stay — but not fiscal policy. The latter, in our view, remains problematic for risk sentiment,” he said.
Knapp highlighted risks to U.S. economic growth from potential tax increases, which he said the market was not discounting.
“This leaves Asia, particularly China, in a difficult spot. European demand is weak, and if U.S. demand also softens, the recent signs of stabilization — which we think may have been flattered by smartphone product launches — could fade, leading markets to expect another leg lower for global growth,” Knapp said.
The dollar USDJPY -0.1692% *bought 79.84 yen Thursday, down from ¥79.98 late Wednesday and from ¥80.36 Tuesday, with the move weighing on Tokyo-listed exporters.
Strategists at Bank of America Merrill Lynch said dollar-yen positions remained sensitive to U.S. fiscal cliff scenarios.
“Long [U.S. dollar vs. yen] is extraordinarily so, being predominantly driven by rate differentials,” they said, adding that “recent appreciation in dollar/yen could reverse.”
Japanese exporters were trading lower Thursday, with Canon Inc JP:7751 -2.65% * CAJ -2.36% *down 2.7%, Pioneer Corp. JP:6773 -3.47% * PNCOF -35.19% *lower by 3.5% and Honda Motor Co. JP:7267 -3.43% * HMC -1.62% *dropping 3%.
