AFP/Tokyo
Asian markets fell yesterday as dealers ignored a surge on Wall Street, with worries about the global economy continuing to weigh on sentiment while Japan’s credit rating was cut.
A dealer works at a foreign exchange brokerage in Tokyo. The dollar slipped against the yen yesterday on disappointment over a Japanese plan to halt its currency’s rise
The dollar slipped against the yen on disappointment over a Japanese plan to halt its currency’s rise, which hit a post-war record last week, with many dealers saying the government was not bold enough.
Most regional bourses began on a high after the three main indexes in New York posted huge gains on hopes that Federal Reserve chairman Ben Bernanke will announce a fresh round of monetary easing to kickstart the US economy.
However, they soon retreated, with nervousness stoked by a downgrade by Moody’s of Japan’s credit rating, citing the country’s high debt levels and budget deficit.
Tokyo tumbled 1.07%, or 93.40 points, to end at 8,639.61 while Seoul closed 1.23%, or 21.90 points, lower at 1,754.78.
Sydney closed 0.14%, or 5.8 points, lower at 4,167.6.
Hong Kong tumbled 2.06%, or 408.74 points, to 19,466.79 while Shanghai fell 0.51%, or 12.93 points, to 2,541.09.
In other markets, Singapore fell 1.64%, or 45.25 points, to close at 2,719.90; Taipei fell 0.63%, or 47.30 points, to 7,502.93; Manila fell 0.20%, or 8.94 points, to 4,366.45; Wellington closed up 0.24%, or 7.93 points, at 3,287.52; Kuala Lumpur ended down 0.89%, or 13.22 points, at 1,469.15; Jakarta fell 0.86%, or 33.44 points, to 3,847.02 and Bangkok closed 1.03%, or 10.85 points, lower at 1,046.43.
Expectations are high that the Fed chief will announce new plans—such as a third round of quantitative easing—to try to deal with the stagnating US economy, which many fear could fall back into recession.
Sentiment was dented by the decision by Moody’s to cut Japan’s bond rating to Aa3 from Aa2, citing the “large budget deficits and the build-up in Japanese government debt since the 2009 global recession”.
It is the first time since the March 11 earthquake and tsunami that a major ratings agency has downgraded Japan’s sovereign debt. Moody’s said the outlook was stable.
That move was later followed by a downgrade of major banks Mizuho Bank, Mizuho Corporate Bank, Bank of Tokyo Mitsubishi-UFJ and Sumitomo Mitsui Banking Corp Moody’s said it made the move because the banks had large amounts of government debt.
The news sent the dollar up to ¥76.77 in Tokyo morning trade from 76.68 in New York late Tuesday.
However the greenback eased to ¥76.50 after Japan’s finance ministry set out measures to deal with the strong yen. The yen hit a post-war record high of 75.95 on Friday.
Finance Minister Yoshihiko Noda unveiled yesterday a $100bn facility to ease the impact of the surging unit on companies.
