Asian stocks slipped on Monday while the yen and U.S. dollar advanced, with investors expecting another week of grim news on corporate earnings and the global economy.
Rising inventories and a severe pullback in consumer demand in the face of a global economic crisis have had a shock effect on companies around the world and many have been slashing their forecast results for 2009. Hitachi Ltd (nyse: HIT - news - people ) stocks tumbled 18 percent after it warned of a record annual loss.
Dismal U.S. economic reports as well as uncertainty about a massive fiscal stimulus package in Washington helped spark the worst Wall Street January performance ever. U.S. Treasury bonds meanwhile have provided little solace since dealers have been lately more concerned about the government's growing borrowing needs to finance multiple rescue plans.
"There's no question that the global economy has worsened a notch more, and concerns about this will be in a tug-of-war with expectations for economic stimulus policies," said Hiroichi Nishi, general manager at the equity division of Nikko Cordial Securities in Tokyo.
Japan's Nikkei share average fell 0.5 percent, down for a second day. In addition to Hitachi, shares of bearing maker NTN Corp and Fujifilm (nasdaq: FUJI - news - people ) Holdings Corp both fell after the companies slashed their profit outlooks.
In Australia, where the benchmark stocks index was down 1 percent, shares of miner Rio Tinto Ltd were up 6.2 percent after state-owned Chinese aluminium company Chinalco held talks with Rio to take a stake in the firm.
Stocks in Asia-Pacific outside Japan were down 1.1 percent, according to an MSCI index.
Hong Kong's Hang Seng index fell 2 percent, weighed by a 1.6 percent decline in HSBC (nyse: HBC - news - people ). Europe's largest bank has seen its Hong Kong-listed stock post a sixth consecutive month of declines in January.
THE YEN'S TREND IS YOUR FRIEND
The yen rose against major currencies, proving the haven of choice for global investors seeking safety.
"Basically, the market trend has not changed after data in the U.S. and the euro zone showed faltering economies," said Yuichiro Nakamura, FX dealer at Shinkin Central Bank in Tokyo. "The yen is the key beneficiary, and the dollar is the next."
The U.S. dollar was at 89.65 yen, slipping 0.3 percent from late U.S. trade on Friday. The euro declined 0.8 percent to 114.38 yen.
The euro dipped to a two-month low against the dollar around $1.2715 amid anxiety about the slumping economy in Europe and ahead of a European Central Bank meeting this week.
The Australian and Indonesian central banks were also expected to set policy this week, with both expected to deliver interest rate cuts in hopes of easing the blow of global recession.
Japanese government bonds were in demand with equity markets under pressure. The lead 10-year bond future rose 0.1 point to 139.01, though it has remained in a fairly narrow trading range for the last two months.
U.S. Treasuries were mostly a bit higher after crashing in January. The benchmark 10-year note's yield, which moves in the opposite direction of the price, was at 2.85 percent compared with 2.86 percent late on Friday in New York.
The yield shot up 63 basis points in January, the biggest monthly increase since April 2004, according to Reuters data. The move up in yields has narrowed their difference with corporate bond yields, increasing their appeal for investors as a hedge against adverse movements in government debt.
"A worse economy pushes government yields down but credit spreads wider. A better economy does the opposite. For high-quality bonds (A rated), these two effects could nicely offset each other, producing a similar return for the holder under either scenario," said asset allocation strategists with JPMorgan in London in a note.
The U.S. crude oil future for March delivery has kept above $40 a barrel for about two weeks, with the market speculating on additional measures by OPEC to put a floor under prices.
Crude was up 22 cents to $41.91 a barrel
Rising inventories and a severe pullback in consumer demand in the face of a global economic crisis have had a shock effect on companies around the world and many have been slashing their forecast results for 2009. Hitachi Ltd (nyse: HIT - news - people ) stocks tumbled 18 percent after it warned of a record annual loss.
Dismal U.S. economic reports as well as uncertainty about a massive fiscal stimulus package in Washington helped spark the worst Wall Street January performance ever. U.S. Treasury bonds meanwhile have provided little solace since dealers have been lately more concerned about the government's growing borrowing needs to finance multiple rescue plans.
"There's no question that the global economy has worsened a notch more, and concerns about this will be in a tug-of-war with expectations for economic stimulus policies," said Hiroichi Nishi, general manager at the equity division of Nikko Cordial Securities in Tokyo.
Japan's Nikkei share average fell 0.5 percent, down for a second day. In addition to Hitachi, shares of bearing maker NTN Corp and Fujifilm (nasdaq: FUJI - news - people ) Holdings Corp both fell after the companies slashed their profit outlooks.
In Australia, where the benchmark stocks index was down 1 percent, shares of miner Rio Tinto Ltd were up 6.2 percent after state-owned Chinese aluminium company Chinalco held talks with Rio to take a stake in the firm.
Stocks in Asia-Pacific outside Japan were down 1.1 percent, according to an MSCI index.
Hong Kong's Hang Seng index fell 2 percent, weighed by a 1.6 percent decline in HSBC (nyse: HBC - news - people ). Europe's largest bank has seen its Hong Kong-listed stock post a sixth consecutive month of declines in January.
THE YEN'S TREND IS YOUR FRIEND
The yen rose against major currencies, proving the haven of choice for global investors seeking safety.
"Basically, the market trend has not changed after data in the U.S. and the euro zone showed faltering economies," said Yuichiro Nakamura, FX dealer at Shinkin Central Bank in Tokyo. "The yen is the key beneficiary, and the dollar is the next."
The U.S. dollar was at 89.65 yen, slipping 0.3 percent from late U.S. trade on Friday. The euro declined 0.8 percent to 114.38 yen.
The euro dipped to a two-month low against the dollar around $1.2715 amid anxiety about the slumping economy in Europe and ahead of a European Central Bank meeting this week.
The Australian and Indonesian central banks were also expected to set policy this week, with both expected to deliver interest rate cuts in hopes of easing the blow of global recession.
Japanese government bonds were in demand with equity markets under pressure. The lead 10-year bond future rose 0.1 point to 139.01, though it has remained in a fairly narrow trading range for the last two months.
U.S. Treasuries were mostly a bit higher after crashing in January. The benchmark 10-year note's yield, which moves in the opposite direction of the price, was at 2.85 percent compared with 2.86 percent late on Friday in New York.
The yield shot up 63 basis points in January, the biggest monthly increase since April 2004, according to Reuters data. The move up in yields has narrowed their difference with corporate bond yields, increasing their appeal for investors as a hedge against adverse movements in government debt.
"A worse economy pushes government yields down but credit spreads wider. A better economy does the opposite. For high-quality bonds (A rated), these two effects could nicely offset each other, producing a similar return for the holder under either scenario," said asset allocation strategists with JPMorgan in London in a note.
The U.S. crude oil future for March delivery has kept above $40 a barrel for about two weeks, with the market speculating on additional measures by OPEC to put a floor under prices.
Crude was up 22 cents to $41.91 a barrel
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