Asian Stock markets outlook may 8 2012

Indonesia stock info - Asian Stock markets outlook may 8 2012 ; Stock markets in Asia slumped yesterday, with indexes in Singapore, Hong Kong, Japan and Australia recording their biggest daily falls this year as investors fled to safety after election results in Greece and France renewed fears over the euro zone's financial stability.

"It may not have been Black Monday across Asian markets, but it was certainly a dark shade of grey," said Mr Jason Hughes, head of premium client management at IG Markets Singapore.

Singapore's Straits Times Index (STI) fell 2.2 per cent to close at 2,924.95. Hong Kong's Hang Seng Index fell 2.6 per cent, Japan's Nikkei-225 lost 2.8 per cent, while Australia's ASX-200 shed 2.2 per cent. China's Shanghai Composite ended flat, escaping the selling rout as government measures to boost liquidity in the local equities markets offset concerns about the euro zone.

Sentiment was also hurt by a weak April job report in the United States last Friday that showed employers in the world's largest economy adding a much lower than forecast 115,000 workers to their payrolls, the smallest gain in six months.

In Singapore, 27 of the 30 STI component stocks ended lower, with 20 falling more than 2 per cent. In the broad market, losers overwhelmed gainers 370 to 61 as 2.4 billion shares worth S$1.4 billion changed hands. Cyclical stocks led the declines, as investors sought to lower their exposure to companies perceived as having earnings that are heavily dependent on global economic conditions.

The election result cast doubt on whether any party could form a government soon, let alone continue with the austerity programmes that the European Union (EU) and the International Monetary Fund (IMF) warned Greece must adhere strictly to in order to get bailout funds.

Traders said that Socialist candidate Francois Hollande's defeat of incumbent President Nicolas Sarkozy was no surprise, even as it was seen as a challenge to the German-dominated vision of economic austerity as a way out of the euro zone crisis.

In a note to investors, DBS analysts said the election result affirmed a "political backlash against fiscal austerity, with Germany and France potentially on a collision course on how to steer the euro zone out of its sovereign debt crisis".

Investors worry that Mr Hollande will spend more than he should to bolster a flagging economy, rather than move ahead with labour market and business reforms that economists say France sorely needs to lift competitiveness.

Related Post: