04 March 2013: Asia tumbles on China worry

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Asian  shares slipped on  Monday as China tightened its grip on the property sector. Beijing increased Friday  required down payments and loan rates for buyers for second homes in cities where prices have been quickly  increasing  in an effort to contain housing costs. This had immediately a negative effect on the Chinese markets and led to a tumble in Asia. The MSCI-index for ASIA-Pacific shares are 1,3 % down after Shanghai shares slipped 2,3 %.

 Slower growth in  Chinese increasingly important services sector had also an impact. The growth in this sector was slower than in five months, reinforcing the view that the Chinese recovery remains modest. The slower Chinese growth had an immediate effect on Australia where the AXJO index fell 1.2 %. Japan was the only positive spot.  The Nikkei 225rose 0,6 % as the sole gainer in the region. Export companies were boosted by a weaker yen and surprisingly strong US manufacturing and consumer sentiment.

 The new Governor of Bank of Japan (BOJ) stated that BOJ is ready to take whatever measures necessary to get Japan out of the vicious deflation circle. USD/JPY trades at 93,33. In spite of its budget problems USD is trading on a six months high against a basket of currencies. Currency speculators have over the last week increased their bets in favour of the US dollar.

 Evidence of Europe’s problem with Spain at risk needing a state bailout is weighing in on the Euro.  Data presented on Friday showed that Germany and Ireland are the only Euro zone members with factory output growth last month. Joblessness within the Euro zone rose to an all-time high. The Euro steadied at 1.3015 after slipping to a low of 1.2966 on Friday, the lowest level seen in 3 months.

 Concerns about the negative impact from the USA spending cuts also weighed in on US crude which is down to USD 90.59 a barrel. Brent is trading at 110,50. Gold and silver prices are hurt by the strong dollar.

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