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Asia stocks fall

Surprise contraction in US GDP in the fourth quarter influences retreat

Image Credit: REUTERS
People look at a stock index board outside a brokerage in Tokyo January 30, 2013. Japan's Nikkei average ended above 11,000 points for the first time in 33 months on Wednesday, led by gains in exporters and interest rate-sensitive sectors such as real estate on persistent expectations of more monetary easing by the Bank of Japan.
Gulf News

Bangkok: An unexpected contraction in the US economy at the end of 2012 sent Asian stock markets into retreat Thursday.

The US economy shrank in the fourth quarter for the first time since mid-2009, hurt by big cuts in defence spending, falling exports and sluggish growth in company inventories, the government reported 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.

The Nikkei 225 in Tokyo fell 0.6 per cent to 11,047.59 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.

Hong Kong’s Hang Seng fell 0.5 per cent to 23,698.19. South Korea’s Kospi shed 0.4 per cent to 1,957.13. Australia’s S&P/ASX 200 fell 0.2 per cent to 4,885.90, following 10 straight sessions of gains. Benchmarks in Taiwan, Indonesia and Malaysia fell. Mainland China was mixed. The Philippines rose.

In a statement released after a two-day policy meeting, the US 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. Lucas of IG Markets said he thinks a good jobs report could be just what the markets need to resume their upward momentum.

“If we see positive data there, it will reinforce the idea that the pressure is easing and economic data in the US is continuing to get better,” he said.