Investing.com - Asian stock markets were sharply lower on Monday, as growing concerns over rising Spanish borrowing costs and fears over China’s economic growth outlook prompted investors to shun riskier assets.
During late Asian trade, Hong Kong's Hang Seng Index fell 0.5%, Australia’s ASX/200 Index declined 0.5%, while Japan’s Nikkei 225 Index tumbled 1.75%.
The cost of insuring Spanish government debt against default rose to an all-time high on Friday, after a report showed that Spain’s banks borrowed a record amount from the European Central Bank in March, underlining concerns about the health of the sector.
Spanish 10-year yields settled the week at 5.97%, after hitting the key 6.0%-level earlier Friday, the highest since early December. Similar-maturity Italian yields increased to 5.52%, while Portuguese yields climbed to 12.56%.
There have been renewed concerns of further debt contagion in the euro zone in recent weeks amid fears Spain will be the next in the euro zone to require a bailout.
Also weighing on market sentiment were Chinese growth figures released on Friday, showing that the Chinese economy grew at the slowest pace in almost three years in the first quarter.
A deeper slowdown in China would impair a global expansion that is already faltering because of the implementation of harsh austerity measures in Europe.
The news prompted investors to shun riskier assets, such as stocks and industrial commodities, and flock to the relative safety of the U.S. dollar.
In Japan, the Nikkei came under heavy selling pressure, with exporters and financial sector stocks leading losses.
Shares in digital camera maker Canon, which heavily relies on Europe as an export market, sank 2.4%, Nikon shares dropped 2.3%, while automakers Honda and Nissan slumped 1.95% and 2.4% respectively.
Meanwhile, Japanese megabanks all traded at least 3% lower, with Mitsubishi UFJ Financial Group down 3.5%, Mizuho Financial Group falling 3% and Sumitomo Mitsui Financial Group slumping 3.1%.
Investment banks Nomura Holdings and Daiwa Securities also contributed to losses, retreating 2.55% and 3.15% respectively.
The Nikkei rallied more than 19% in the first three months of the year, buoyed in large part by an unexpected easing announcement by the Bank of Japan in February, but the index has fallen nearly 6% since the start of April.
Most market participants expect the correction to continue until the end of the month, when the BoJ meets for its April policy meeting, amid expectations the central bank will implement new easing measures.
Elsewhere, shares in Hong Kong declined, as shares in the airline sector were pressured after China Eastern Airlines and China Southern Airlines issued profit warnings last week.
China Eastern tumbled 4.95%, while China Southern declined 2.25% and Hong Kong carrier Cathay Pacific Airways retreated 1.85%
Financial sector stocks were lower, with index heavyweight HSBC Holdings down 1.55% and Bank of China shares dropping 1.5%.
Elsewhere in the sector, Industrial and Commercial Bank of China slipped 1% after a report that Goldman Sachs sold USD2.5 billion worth of shares in the lender at a 3% discount from last Friday’s closing price to Singapore state investor Temasek.
Meanwhile, in Australia, miners declined amid concerns over the health of the global economy. Gold producer Newcrest Mining fell 2.7%, while Rio Tinto slumped 1.15%.
Looking ahead, European stock markets were set to open lower, as Spain’s debt fears weighed on market sentiment.
The EURO STOXX 50 futures pointed to a loss of 0.75%, France’s CAC 40 futures fell 0.4%, London’s FTSE 100 futures dipped 0.4%, while Germany's DAX futures pointed to a loss of 0.7% at the open.
Later in the day, the U.S. was to release government data on retail sales and a report on manufacturing activity in New York, as well as official data on net long-term securities transactions and business inventories.
During late Asian trade, Hong Kong's Hang Seng Index fell 0.5%, Australia’s ASX/200 Index declined 0.5%, while Japan’s Nikkei 225 Index tumbled 1.75%.
The cost of insuring Spanish government debt against default rose to an all-time high on Friday, after a report showed that Spain’s banks borrowed a record amount from the European Central Bank in March, underlining concerns about the health of the sector.
Spanish 10-year yields settled the week at 5.97%, after hitting the key 6.0%-level earlier Friday, the highest since early December. Similar-maturity Italian yields increased to 5.52%, while Portuguese yields climbed to 12.56%.
There have been renewed concerns of further debt contagion in the euro zone in recent weeks amid fears Spain will be the next in the euro zone to require a bailout.
Also weighing on market sentiment were Chinese growth figures released on Friday, showing that the Chinese economy grew at the slowest pace in almost three years in the first quarter.
A deeper slowdown in China would impair a global expansion that is already faltering because of the implementation of harsh austerity measures in Europe.
The news prompted investors to shun riskier assets, such as stocks and industrial commodities, and flock to the relative safety of the U.S. dollar.
In Japan, the Nikkei came under heavy selling pressure, with exporters and financial sector stocks leading losses.
Shares in digital camera maker Canon, which heavily relies on Europe as an export market, sank 2.4%, Nikon shares dropped 2.3%, while automakers Honda and Nissan slumped 1.95% and 2.4% respectively.
Meanwhile, Japanese megabanks all traded at least 3% lower, with Mitsubishi UFJ Financial Group down 3.5%, Mizuho Financial Group falling 3% and Sumitomo Mitsui Financial Group slumping 3.1%.
Investment banks Nomura Holdings and Daiwa Securities also contributed to losses, retreating 2.55% and 3.15% respectively.
The Nikkei rallied more than 19% in the first three months of the year, buoyed in large part by an unexpected easing announcement by the Bank of Japan in February, but the index has fallen nearly 6% since the start of April.
Most market participants expect the correction to continue until the end of the month, when the BoJ meets for its April policy meeting, amid expectations the central bank will implement new easing measures.
Elsewhere, shares in Hong Kong declined, as shares in the airline sector were pressured after China Eastern Airlines and China Southern Airlines issued profit warnings last week.
China Eastern tumbled 4.95%, while China Southern declined 2.25% and Hong Kong carrier Cathay Pacific Airways retreated 1.85%
Financial sector stocks were lower, with index heavyweight HSBC Holdings down 1.55% and Bank of China shares dropping 1.5%.
Elsewhere in the sector, Industrial and Commercial Bank of China slipped 1% after a report that Goldman Sachs sold USD2.5 billion worth of shares in the lender at a 3% discount from last Friday’s closing price to Singapore state investor Temasek.
Meanwhile, in Australia, miners declined amid concerns over the health of the global economy. Gold producer Newcrest Mining fell 2.7%, while Rio Tinto slumped 1.15%.
Looking ahead, European stock markets were set to open lower, as Spain’s debt fears weighed on market sentiment.
The EURO STOXX 50 futures pointed to a loss of 0.75%, France’s CAC 40 futures fell 0.4%, London’s FTSE 100 futures dipped 0.4%, while Germany's DAX futures pointed to a loss of 0.7% at the open.
Later in the day, the U.S. was to release government data on retail sales and a report on manufacturing activity in New York, as well as official data on net long-term securities transactions and business inventories.