World Economy

Asian Shares Dragged Lower by Japan

Asian Shares Dragged Lower by JapanAsian Shares Dragged Lower by Japan

A rout in Japanese shares led Asian markets lower on Friday as a gloomy suite of surveys on Japanese manufacturing sparked heavy fund selling and overshadowed upbeat news from China’s vast factory sector.

A renewed slip in oil prices added to the cautious mood, Reuters reported.

Spread betting firm IG also predicted opening losses of between 0.6 and 0.7% for the FTSE 100, DAX and CAC 40. Much of the damage was done by Japan’s Nikkei which sank over 3% in its steepest daily fall since mid-February.

A profit-dampening rise in the yen and selling by hedge funds for the new financial year bore some of the blame. But most pointed finger at a deeply disappointing survey of major manufacturers from the Bank of Japan which found sentiment at its lowest in nearly three years.

The report crystallized concerns that the BOJ’s dramatic shift to negative rates was not working, and might never work. It even outweighed positive surveys from China which showed factory activity growing for the first time in nine months and a much needed pick up in the services sector.

Not helping was Standard & Poor’s decision to cut China’s credit outlook to negative, saying Beijing’s reform agenda was likely to proceed more slowly than expected. Shanghai’s market fell 1% while Australia shed 1.6%. MSCI’s broadest index of Asia-Pacific shares outside Japan lost 1.6%.

 European Shares Low

European equities hit a one-month low on the first day of the quarter on Friday as Zurich Insurance fell sharply after its shares traded without the attraction of its latest dividend payout, and energy stocks tracked weaker oil prices.

The pan-European FTSEurofirst 300 index fell 1.5%, its lowest level in a month, extending the previous session’s losses of 1%. The benchmark index fell 7.7% in the first quarter.

The European Insurance sector fell 2%, the top sectoral decliner, after shares in Zurich Insurance fell nearly 9% as its stocks traded ex-dividend.

Energy stocks dropped 1.7% as a decline in crude oil prices put pressure on companies such as BP and Royal Dutch Shell, down 2.1% and 1.5% respectively.

On the positive side, shares in Thyssenkrupp rose 5.4% after German business paper Rheinische Post reported that India’s Tata Steel was planning to take a stake in Thyssenkrupp’s European steel unit.