Asian stocks extended their slump yesterday as last year’s rally showed more signs of petering out. Most markets pulled back as investors sold down a broad range of sectors, adding to sharp losses over the last couple weeks. The euro recovered modestly after tumbling to its lowest point against the dollar in nearly seven months.
Investors took little comfort in US figures released on Friday that showed the world’s largest economy grew at an annualized rate of 5.7 percent last quarter.
While beating forecasts, the strong growth was spurred by the relatively short-term demand created by companies restocking their inventories and raised doubts about the sustainability of the US’ turnaround once government stimulus measures begin to wane.
“There’s no doubt that kind of growth will not last,” said Jan Friederich, a senior economist for the Economist Intelligence Unit in Hong Kong.
“Markets are factoring in a relatively robust and sustained recovery and any signs that may be overly optimistic will have huge implications,” he said. “It’s very likely there will be a lot of disappointment later this year.”
Japanese markets fluctuated, with the Nikkei 225 stock average up 18.19 points, or 0.2 percent, at 10,216.23.
In China, news that manufacturing activity was still strong last month, albeit down slightly, was taken as more evidence the government would maintain its efforts to keep a lid on growth and inflation. Shanghai led Asia’s slide, falling 57.06, or 1.9 percent, to 2,932.23, and Hong Kong’s Hang Seng index shed 109.89 points, or 0.6 percent, to 20,012.10.
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