Asian stocks slump after heavy Wall Street losses

Friday, 3 June 2011 00:01 - - {{hitsCtrl.values.hits}}

HONG KONG, (AFP) - Asian shares tumbled in early trade on Thursday, following heavy losses on Wall Street after another batch of weak data stoked concerns over the state of the global economy.

Tokyo was also weighed by political uncertainty as Prime Minister Naoto Kan faced a vote of no-confidence, adding to investors’ nervousness about the already struggling economy.

Tokyo slumped 1.55 percent by the break, Hong Kong dived 1.69 percent, Sydney shed 1.82 percent and Seoul sank 1.29 percent while Shanghai was 0.87 percent off.

Regional stocks were given the worst possible start when the Dow suffered its worst performance in several months, diving 2.22 percent on Wednesday while the broader S&P 500 fell 2.28 percent and the tech-rich Nasdaq lost 2.33 percent.

Traders in the United States went into a sell-off as they digested a slew of miserable data suggesting the world’s number one economy is stalling.

Payrolls firm ADP said the private sector added 38,000 jobs in May, well below the 170,000 expected and raising concerns that key government payrolls figures out on Friday will also be worse than hoped.

The Institute of Supply Management’s manufacturing survey plummeted nearly seven percentage points from April to a 19-month low.

Adding to dealers’ woes, US auto sales in May fell 8.3 percent from April and 3.7 percent year on year, according to the research firm Autodata.

The market was not helped when, late in the session, Moody’s rating agency again downgraded Greek debt and gave it a negative outlook, raising the already high stakes in rescue negotiations for the imperiled eurozone member.

On Wednesday manufacturing data across Asia pointed to an easing in the region’s leading emerging economies, with the purchasing managers’ indexes in China, India, South Korea and Taiwan showing slower growth.

“The US data were atrocious, China still seems on course to raise rates in June, Moody’s cut its rating on Greece, and Japan’s politics is in a shambles -- so we have all the selling factors lined up today,” he told Dow Jones Newswires.

In Japan, embattled Prime Minister Kan faces a no-confidence vote on Thursday with a sizeable revolt expected from his own party, leaving the result on a knife-edge and adding to concerns about Asia’s number two economy.

The dollar rose to 81.19 yen in early Tokyo trade, from 80.91 yen late New York Wednesday while the euro edged up to $1.4355 from 1.4331.

The single European unit was at 116.55 yen, up from 115.99.

Oil was down. New York’s main contract, light sweet crude for July delivery, lost 21 cents to $100.08 a barrel and Brent North Sea crude for July delivery dipped eight cents to $114.45.

Gold opened at $1,541.50-$1,542.50 per ounce, up from its Wednesday close of $1,530.50-$1,531.50.