Asian stock markets closed lower on Tuesday, as concerns over the outlook for the US ahead of a slew of bank earnings and trumped initial technology-driven gains on better-than-expected results from companies including IBM, Samsung and LG Philips.
Citigroup (NYSE:C) kicks off quarterly results this week from a number of big US banks that are expected to show a big hit from the global credit squeeze. Reporting later in the US day, Citi is expected to announce a writedown of as much of $20bn and more than 20,000 job cuts.
"Theres just a lot of nervousness out there," said David Cohen, director of Asian economic forecasting at Action Economics in Singapore. "Thats going to remain the story over the near term."
Taiwan (NYSE:TSM) was the only sunny spot with shares rallying for a second day as investors bet on improved business relations with China after the pro-Beijing opposition Kuomintang partys victory in parliamentary elections. The Taiex finished up 3.1 per cent at 8,428.84 after rising as much as 4.5 per cent. TSMC added 4.7 per cent to T$57.50, while Cathay Financial jumped 7 per cent, the maximum allowed by stock exchange rules, to T$77.1.
The MSCI Asia Pacific Index declined 1 per cent to 150.57, reversing an earlier gain of 0.6 percent.
Gold was trading around $908.18 an ounce in Asia after hitting a lifetime high of $914 overnight. The yen also strengthened, trading in the region of 107.85 to the dollar.
In Tokyo, the Nikkei closed below 14,000 for the first time in over two years, breaching a psychological barrier for some investors. The stronger yen weighed down shares of exporters such as automakers which rely on the US for a significant portion of their profit and whose repatriated earnings are eroded by a stronger currency at home.
The Nikkei 225 slid 1 per cent to 13,972.63 and the broader Topix dropped 2 per cent to 1,350.20. The market was closed Monday for a national holiday.
Honda (NYSE:HMC), Japans third-largest automaker, continued last weeks decline, sliding 4.4 per cent to Y3,260, the lowest in almost a year. Larger rival Toyota (NYSE:TM) lost 1.8 per cent to Y5,530.
Gloom in the market deepened after Bank of Japan Governor Toshihiko Fukui said that the impact of the subprime turmoil in the US and Europe is bigger than initially envisaged. The Topix banking index fell 1.4 per cent to 282.61.
One brighter note was Fast Retailing, the maker of the Uniqlo brand of clothing, which surged 8.8 per cent to Y8,320 following positive earnings last week.
In South Korea, better-than-expected results from chipmaker Samsung Electronics and LCD screen manufacturer LG Philips blunted sharp falls elsewhere on the Seoul market.
The Kospi fell 1.1 per cent to 1,746.95. Samsung slipped 0.2 per cent to Won531,000 after rising 2.5 per cent earlier after saying that quarterly profit had fallen by less than expected and giving an upbeat outlook for 2008. LG Philips, which on Monday reported bigger-than-expected quarterly earnings, ended down 0.1 per cent at Won45,700, after initially jumping 3.2 per cent.
Hong Kong sank to a four-month low, with the Hang Seng index dropping 2.4 per cent to 25,837.78. HSBC lost 2.1 per cent to HK$120.80, a 27-month low, while Hong Kong Exchanges fell for a fourth straight day, shedding 3.6 per cent to HK$184.90.
On the mainland, the Shanghai Composite fell 1 per cent to 5,443.791. Elsewhere, Indonesian shares fell nearly 3 per cent.
Australian shares sagged as Centro Properties, the heavily indebted owner of 700 shopping malls in the US, abruptly replaced its chief executive and said it had asked lenders to extend a February 15 deadline to refinance $3.9bn of debt.
Centro shares halved in value in the first 20 minutes of trading after being suspended since Thursday, before ending down 30 per cent at 60 Australian cents.
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