Sun, Sep 24, 2006 - Page 10 News List

Asia struggles as US feel-good factor ebbs

CAUTIOUS Worrying Fed data sparked early losses in Taipei which were limited by hopes for end-quarter window-dressing and a rally in firms with a presence in China


A Pakistani investors reads the newspaper at the stock exchange in Karachi, Pakistan, on Friday. Pakistani stocks are likely to surge despite trading hours being reduced in the holy month of Ramadan as investors see positive results from Pakistani President Pervez Musharraf's visit to the US, dealers said.


Asian stocks closed lower on Friday, hit by losses on Wall Street after US data showing a surprise contraction in a key industrial region pointed to a possibly sharper-than-expected US slowdown, dealers said.

They said this was more than enough to offset any lingering feel-good factor from the US Federal Reserve's decision to leave interest rates on hold, with that move now being taken instead as another indicator that all may not be well with the US economy.

A regular Philadelphia Federal Reserve survey fell to minus 0.4 points last month from a positive 18.5 in July, compared with forecasts for 14.4, with Wall Street losing 0.69 percent as a result.

"The sharp drop in the Philadelphia Fed index is a warning sign that maybe the economy is slowing more than believed," said Joel Naroff of Naroff Economic Advisors in New York.

Tokyo, down 1.26 percent, was especially under pressure after recent very mixed Japanese data and concerns about the country's main export market.

"It would be correct to read the current situation as a global slowdown -- no longer a peaking-out -- and this includes Japan," said Norihiro Fujito, a senior strategist at Mitsubishi UFJ Securities.

Dealers said that should both the US and Japanese economies slow in tandem, then the region could be in for a rough ride as exports come under pressure.


Taiwanese share prices closed little changed as initial losses driven by Wall Street's overnight weakness were offset by rotational interest, dealers said.

Bellwether technology stocks lost ground in line with their US counterparts, but some laggard "China Concept" companies gained on the back of an appreciating yuan.

The TAIEX lost 4.29 points at 6,885.60, off a low of 6,854.02 and a high of 6,890.90, on turnover of NT$64.38 billion (US$1.96 billion).

Declines led gainers 527 to 505, with 204 stocks unchanged.

President Securities (統一證券) manager Johnny Lee said the early losses sparked by Wall Street's weakness were pared significantly by rotational interest and expectations of window-dressing by fund managers before the end of the quarter.

"Wall Street's lead convinced investors to stay cautious, given concerns over the US economic outlook," but hopes for end-quarter window-dressing and a rally in some companies with a presence in China on the rising value of the yuan helped limit the fall, Lee said.


Japanese share prices sank to a six-week low on fears that a global economic slowdown will undercut company profits, dealers said.

They said that after losses overnight on Wall Street, sentiment was further hit by a local survey showing business sentiment may be peaking out.

The Tokyo Stock Exchange's benchmark NIKKEI-225 index tumbled 199.56 points or 1.26 percent to 15,634.67, the lowest closing level since Aug. 11.

The broader TOPIX index of all first-section shares dropped 16.48 points or 1.04 percent to 1,563.60 for its weakest finish since Aug. 8.

Losers led gains 1,267 to 346, with 84 stocks flat.

September is historically one of the toughest months for stocks and this year is proving no exception, with a weak US manufacturing index overnight stoking concerns about the pace of the US economic slowdown, dealers said.


South Korean share prices closed sharply lower, falling 1.35 percent as Wall Street's overnight downturn on much weaker-than-expected data prompted heavy foreign investor selling, dealers said.

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