Asian stocks tumble on concerns

Bloomberg

JFE Holdings, the world’s third-largest steelmaker, slumped 9.5 percent in Tokyo as U.S. and European factory output declined. Woodside Petroleum lost 10 percent in Sydney after crude sank to the lowest level in three years. Taiwan Semiconductor Manufacturing slid after cutting profit targets.

Australia’s benchmark S&P/ASX 200 Index extended declines to 4.2 percent after the central bank reduced interest rates by one percentage point.

"The world is in recession and earnings will fall next year for most companies the world over including Asia," said Hugh Young, managing director in Singapore at Aberdeen Asset Management, which oversees about $45 billion in assets. "Asia is in pretty good shape for surviving, not in great shape for growing."

The MSCI Asia Pacific Index dropped 4.5 percent to 78.96 as of 4:56 p.m. in Tokyo yesterday. The gauge has lost 50 percent this year, the steepest decline on record. Japan’s Nikkei 225 Stock Average lost 6.4 percent to 7,863.69.

The yen traded near a five-week high against the dollar on speculation declines in global manufacturing and stocks prompted investors to sell higher-yielding assets funded in Japan’s currency.

The yen earlier climbed to the strongest level in more than a week versus the euro on mounting evidence of a deepening economic slump. The Australian dollar fell against the Japanese and U.S. currencies after the central bank lowered its benchmark interest rate by 1 percentage point, more than most economists forecast, and the lowest level in six years.

"Sliding global equities are likely to increase risk aversion among investors, putting upward pressure on the yen," said Masafumi Yamamoto, head of foreign-exchange strategy for Japan at Royal Bank of Scotland in Tokyo. "We may see the yen re-test this year’s high of 90.93 against the dollar in the near term."The yen traded at 93.30 per dollar as of 4:57 p.m. in Tokyo from 93.19 late in New York Monday. It reached 92.89, the highest level since Oct. 28. The currency was at 117.63 per euro from 117.52. It touched 117.24, the strongest since Nov. 21. The dollar was little changed at $1.2610 per euro.