Asian Market Update - June 29, 2010

Jun 29, 2010 -- Asian markets reversed direction to close sharply lower Tuesday and set the tone for a global stock selloff as worries for the Chinese growth picture reemerged.

China's main index closed at a 14-month low. The dollar hit an eight-week low against the yen, while crude oil futures shed more than $1 a barrel during Asian trading hours.

The Conference Board said its leading economic indicator for China rose 0.3% in April, correcting a previous reading of 1.7% increase, which the group said was the result of a calculation error. The 0.3% reading is a sharp pullback from the 1.2% rise recorded in March.

China's main stock index tumbled 4.3% to close at a 14-month low of 2,427, down 108 points during the session. Shenzhen's share benchmark tumbled 5.4%. Hong Kong's Hang Seng Index dropped 1.2%.

Financials fronted the broad-market declines. Shanghai-listed shares of China Construction Bank ended 3.5% lower, while China Merchants Bank fell 3.6%.

Agricultural Bank of China remains in focus after setting a lower price range for the Shanghai portion of its initial public offering. Institutions will begin applying for the Shanghai portion of the IPO from Thursday, while retail investors will be given the chance to apply next week. The joint IPO is slated to become the world's largest at $23.2 billion if over-allotment options are exercised, according to news reports.

Resource stocks fell, including Jiangxi Copper, down 2.5% in Hong Kong and 2.2% in Shanghai.

In Tokyo, China's market weakness and a strengthening yen pressured stocks. Japan's benchmark Nikkei Stock Average ended the day down 1.3% at 9,570.7, while the broader Topix finished down 1% at 852.2.

The dollar was fetching 88.84 yen in afternoon trade, the greenback's weakest value in eight weeks; a strong yen hits exporters' global profits. Export-focused electronics firms were among the leading decliners, including Canon and Hitachi, each down nearly 3%. Sony (SNE) did scrape back to post a 0.2% gain.

Economic data added to sour sentiment. Japan's unemployment rate rose in May to a seasonally adjusted 5.2%, according to government data released Tuesday, marking an increase from 5.1% in April and confounding expectations for a drop in the jobless rate.

Australia's All Ordinaries dropped 0.9%, Taiwan's average dropped 1%, the Seoul Composite tumbled 1.4%.

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