HONG KONG: The Korean crisis and global economic woes jolted Asian stock markets on Wednesday although Hong Kong and Shanghai revived somewhat after sharp losses in the previous session.
Tokyo’s Nikkei index was down 0.75 percent by lunch following sharp losses early in the day, while Sydney’s S&P/ASX 200 index was down 0.26 percent in the afternoon.
Seoul’s Kospi index was off by 0.64 percent after initially falling 2.33 percent in its first reaction to Tuesday’s outbreak of artillery fire on the border with North Korea.
Hong Kong’s Hang Seng was up 0.53 percent and Shanghai’s Composite index was 0.20 percent higher. Traders said that Tuesday’s Korean hostilities were making investors more risk averse, compounding problems such as the eurozone debt crisis, worries about China’s economy and a US Federal Reserve forecast of much slower US growth next year than previously expected.
In Tokyo, stocks in companies with exposure to the troubled eurozone such as Sony, Nikon and Mazda noticeably suffered. However, in Australia investment adviser Chris Macdonald of RBS Morgans voiced cautious optimism. “Equity markets have been punched from all angles, but Australia is holding up quite well considering the barrage from China acting against inflation, the Korean skirmish, the European sovereign debt crisis, weak US housing data and the FBI investigation of hedge funds,” he told Dow Jones Newswires.
Traders were mostly guarded about the comeback by Hong Kong and Shanghai, after the Hang Seng Index plummeted 2.67 percent on Tuesday.
“The index is still on the downtrend in the near-term, while today’s rise is merely a technical rebound,” said Linus Yip, strategist at First Shanghai.
US stocks closed sharply lower on Tuesday following the warning from the Federal Reserve and declines in Europe, weighed notably by energy stockssuch as Chevron and Exxon Mobil.
The blue-chip Dow Jones Industrial Average slipped 1.27 percent, the broader S&P 500 index fell 1.43 percent and the tech-rich Nasdaq lost 1.46 percent. The euro edged higher in Asian trade despite Standard & Poor’s move to lower its credit ratings for Ireland.
