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Asia stocks drop on U.S. fiscal woes, Japan gains; Nikkei up 1.14%

Published 11/14/2012, 10:32 PM
Updated 11/14/2012, 10:35 PM

Investing.com - Asian stocks traded largely lower on Thursday as investors avoided equities in wake of soft U.S. and European economic indicators as well as ongoing fears that U.S. lawmakers may fail to steer the country away from a fast-approaching fiscal cliff.

During Asian trading on Thursday, Hong Kong's Hang Seng Index was down 0.91%, Australia's S&P/ASX200 was down 0.93%, while Japan’s Nikkei 225 Index was up 1.14%.

At the end of this year, the Bush-era tax cuts and other tax benefits expire at the same time pre-programmed cuts to government spending are scheduled to take effect, a combination known as a fiscal cliff that could send the country into recession next year if left unaddressed by Congress.

If untreated, the fiscal cliff could siphon over USD600 billion out of the U.S. economy next year alone in the form of rising taxes and cuts to government spending.

Lawmakers have expressed confidence that they'll avoid partisan bickering and cut a deal, but until an announcement hits the wire, investors will remain wary, especially those trading stocks.

Soft data out of the U.S. and Europe punished stock prices as well.

In the eurozone earlier, official data revealed that industrial production declined 2.5% in September, well beyond expectations for a more modest 1.9% decline.

The numbers sparked fears that the eurozone's preliminary gross domestic product rate for the third quarter will disappoint later Thursday.

France, Germany and Italy are also to release individual GDP reports.

Meanwhile in the U.S., lackluster sales data kept investors parked in the safe-haven dollar.

The U.S. Commerce Department reported earlier that retail sales fell by a seasonally adjusted 0.3% in October, weaker than expectations for a 0.2% decline.

Core retail sales, which exclude automobile sales, came in flat last month.

Analysts were expecting core retail sales to rise 0.2% in October, after rising by an upwardly revised 1.2% in September.

Retail sales serve as a good barometer for U.S. economic health.

Meanwhile, separate data revealed that U.S. producer price inflation fell unexpectedly in October, while core prices also dipped.

The Labor Department reported that producer prices fell by a seasonally adjusted 0.2% in October, compared to expectations for a 0.2% increase, after rising 1.1% in September.

The core producer price index declined 0.2% in October, defying expectations for a 0.1% increase, after coming in September.

Japanese stocks bucked the trend and rose on expectations that upcoming elections will see opposition leader Shinzo Abe become the next Prime Minister.

Abe has called for more aggressive policy action and stimulus from the Bank of Japan, which would weaken the Japanese currency and send stocks gaining.

In Hong Kong, top decliners included Tencent, down 4.89%, Li & Fung, down 2.53%, and China Unicom, down 2.45%.

In Australia, top decliners included Mirabela Nickel, down 10.84%, Mineral Deposits, down 10.53%, and Energy World Corporation, down 8.57%.

European stock futures indicated a higher opening.

France's CAC 40 futures pointed to a gain of 0.08%, while Germany's DAX 30 futures pointed to a gain of 0.10%. Meanwhile in the U.K., FTSE 100 futures were up 0.10%.

Dow Jones Industrial Average futures were up 0.05%, while the S&P 500 futures were up 0.12%.

U.S. data will move markets later Thursday.

The U.S. is to release a flurry of data, including reports on initial jobless claims, consumer price inflation, crude oil stockpiles, in addition to data on manufacturing activity in New York and Philadelphia.

The eurozone will release preliminary third-quarter gross domestic product rates later Thursday as well.








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