In a choppy trading session, Asian markets sold off after the National Association of Realtors reported disappointing U.S. housing data after Asian markets closed yesterday. U.S. existing home sales plunged 27.2% m/m in July, worse than the 13.4% m/m decline economists surveyed by Bloomberg expected. Previously owned homes purchases rose at an annual pace of 3.83 million. (See RGE critical issue: U.S. Housing Demand: The Post-Homebuyer Tax Credit Collapse Continues). Further support of the selloff came from S&P’s one notch downgrade of Ireland’s long term sovereign credit rating from AA to AA-. (See RGE critical issue: Irish Debt Fears Return After S&P Downgrades Sovereign Rating to AA-)
The MSCI Asia Pacific Index fell 1.4% to 116 while the MSCI ASIA APEX 50 lost 0.8% to 733.
In Japan, stocks declined led by exporters on weaker global recovery outlook. The Nikkei 225 lost 1.7 % to a 16-month low of 8,845 led by exporters after the finance ministry said overseas sales slowed last month to 23.5% y/y. Toyota dropped 2.3%.
In Hong Kong, stocks fell on heightened concern that the recovery is faltering. The Hang Seng Composite fell 0.1% to 20,635. Aluminum Corp fell 1.8% while Intime declined 3.6%.
In mainland China, stocks also fell as developers and banks dropped after yesterday’s gains amid investors concerns about the government stance on curbing lending to prevent asset bubbles in the property market. The Shanghai SE Composite fell 2% to 2,597. Poly Real Estate declined 3.6% while Vanke dropped 4%. Airline stocks fell following an Embraer jet crashed in the city of Yichun.
In India, stocks declined after the central bank cited inflation as a major concern. The BSE SENSEX 30 lost 0.7% to 18,180.
In Australia, the S&P/ASX 200 index fell 1.4% to 4,320 while in Korea the KRX 100 lost 1.5% to 3,642. BHP said its second half profits doubled from a year ago to US$ 6.59 billion. Its shares nonetheless declined 0.3% in Sydney.
In currencies, the yen led the decline across major Asian currencies falling0.13% to 84.53 on investors’ flight to safe haven. The Aussie dollar fell0.1% to 1.132 while the New Zealand kiwi declined 0.54%.
10-year JGBs advanced with the yield down 1.7 bps to 0.929%. Sovereign cash yields fell as investors sought safety while sovereign CDS spreads widened in the region. Corporate spreads widened in Japan with the iTraxx Japan index up 1.1 bps to 115 bps. Elsewhere in the region, corporate spreads narrowed with the Markit iTraxx Asia ex-Japan 50 IG down 3.5 bps to 130 bps.
Click Table to Enlarge
All rights reserved, Roubini GlobalEconomics, LLC