Asian markets mostly slip on Italy uncertainty
HONG KONG (AFP) – Asian markets mostly fell on Tuesday, with dealers spooked by an election in Italy that left no clear winner, leading to political uncertainty and fresh fears about eurozone stability.
The dollar and euro extended the losses suffered in US trade as investors absorbed the Italian results, while there was also concern about the lack of progress in Washington to avoid spending cuts due to take effect Friday.
Tokyo tumbled 2.26 per cent, or 263.71 points, to 11,398.81, with profit-takers also moving in after the index enjoyed a big surge on Monday.
Sydney shed 1.03 per cent, or 52.2 points, to 5,003.6, and Seoul lost 0.47 per cent, or 9.51 points, to close at 2,000.01.
Shanghai tumbled 1.40 per cent, or 32.48 points, to 2,293.34, while Hong Kong fell 1.32 per cent, or 300.39 points, to 22,519.69.
Italy Tuesday looked headed for political deadlock as results from Sunday’s election indicated there would be no clear winner, while the biggest gainer was a protest party run by a popular comedian.
The polls show that while the leftists won the lower house, the party run by former prime minister Silvio Berlusconi had more seats in the upper house.
Investors fear the outcome will lead to political stalemate in the country and a possible return to the dark days of the region’s financial crisis if austerity measures introduced to cut Rome’s huge debt pile are reversed.
The developments in Italy sent a shiver through forex markets in New York, with the euro tumbling to $1.3065 and 120.12 yen.
In Asia, the single currency sat at $1.3045 and 119.70 yen, well down from the $1.3197 and 124.24 yen in Tokyo on Monday.
The dollar fetched 91.76 yen against 91.92 yen in New York, far off the 94.77 yen high seen Monday in Asia.
The split vote in Italy wiped out the yen’s Monday losses that were fuelled by reports Japan’s government is likely to nominate a man to run the central bank who is in favour of more aggressive monetary easing.
On Wall Street, the Dow tumbled 1.55 per cent in its biggest single-day drop since November, while the S&P 500 dived 1.83 per cent and the Nasdaq sank 1.44 per cent.
Traders are also keeping an eye on US lawmakers to see if they can muster an agreement to avoid the imposition of $85 billion in budget cuts – known as the sequester – that will come in on Friday.
Analysts have warned that if less drastic cuts are not agreed, the still-fragile economy could slip back into recession.
Oil prices fell, with New York’s main contract, light sweet crude for delivery in April, dropping 85 cents to $92.26 a barrel in the afternoon and Brent North Sea crude for delivery in April shedding 85 cents to $113.59.
Gold was at $1,593.60 at 0805 GMT compared with $1,593.30 late Monday.