By V. Phani Kumar, MarketWatch
HONG KONG (MarketWatch) -- Most Asian markets fell Friday on
caution ahead of the U.S. nonfarm payrolls data, while Japanese
stocks dropped for a third straight day as exporters came under
pressure from the yen's sharp gains overnight.
Australia's S&P/ASX 200 dropped 0.9% and South Korea's Kospi
ended 1.8% lower. Hong Kong's Hang Seng Index shed 1.4% in
afternoon trade, entering a so-called correction territory, having
dropped 10% from a recent peak.
Friday's broad regional declines came amid some fears related to
the U.S. jobs data, with analysts at Barclays saying "it appears
that markets are positioning for a weaker number." Economists
surveyed by MarketWatch were expecting an addition of 173,000 U.S.
jobs in May, up from 165,000 in April.
"All eyes will be on the U.S. jobs report today ... as the
market adjusts their expectations of the [Federal Reserve's]
tapering timing. Ahead of the releases, investors will likely stay
on the sidelines," said Anthony Lam, a strategist at Crédit
Agricole.
China's Shanghai Composite reversed early gains and fell 1.4% in
afternoon trade, staying on course for a seventh straight day of
losses. The drop came ahead of a long weekend, and before the
release of a slew of economic data over the next three days,
including monthly inflation and exports.
Mainland Chinese markets were slated to close Monday through
Wednesday for the Dragon Boat Festival. Australian markets were
also set to close on Monday for a national holiday.
Japan roller-coaster
Meanwhile, Japan's Nikkei Stock Average (USDJPY) ended the day
0.2% lower at 12,877.53 after another roller-coaster ride that
moved the benchmark in a wide range between 12,548.20 and
13,106.20.
The benchmark had earlier in the day suffered a bigger drop to
record losses of more than 20% from the peak it reached on May 23,
entering a so-called bear-market territory. The broader Topix
skidded 1.9%.
A Dow Jones Newswires report said a hedge fund run by
billionaire investor George Soros was back placing bets in Japan,
shorting the yen and snap up local stocks.
Meanwhile, the U.S. dollar (USDJPY) traded under Yen97 for most
of the trading day in Tokyo, after dipping below Yen96 overnight --
more than 2 full yen under the Yen99.18 mark it held just before
stock trading in Japan ended Thursday.
The yen's rally against the dollar (DXY) was accompanied by
similar moves in other major currencies, including the euro
(EURUSD) and the Australian dollar (AUDUSD) , after European
Central Bank President Mario Draghi signaled further monetary
easing measures were on the back burner for the moment.
Still, some analysts said a surprise improvement in U.S.
employment could just as swiftly reverse the dollar's Thursday
drop.
"If payrolls surprise to the upside and print at 175,000 or
better, all of the liquidation of dollar-long positions that we saw
today, particularly in the [dollar-yen] could be reversed quickly
and aggressively, with the pair potentially trading back above
Yen98 in a blink of an eye," said BK Asset Management managing
director Kathy Lien.
Stock movers
Exporters in Japan took a hit from fears over the impact on
their earnings from a strengthened local currency.
Toyota Motor Corp. (TM) lost 2.8%, Mazda Motor Corp. (MZDAY)
shed 2.6%, Toshiba Corp. (TOSYY) retreated 3.4%.
In Sydney, the drop came amid worries over the local economy.
The S&P/ASX ended the day nearly 10% lower from the 52-week
high it set last month.
"There is a sense that Australia could move into recession in
early 2014, as the response to the 200 basis-point rate cuts over
the last 18 months has seen almost no change in the habits of the
Australian consumer," said IG Markets strategist Evan Lucas.
Shares of Newcrest Mining Ltd. (NCMGF) plunged 7.6% after the
miner said it expected to write down up to 6 billion Australian
dollars ($5.7 billion) due to previous weakness for the metal. The
drop came despite an increase in gold futures overnight.
Airline stocks suffered, however, after the Australian Financial
Review reported that Air New Zealand Ltd. was seeking permission to
further raise its stake in Virgin Australia to 26 %, sparking
takeover speculation.
Virgin Australia Holdings Ltd. (VBHLF) retreated 4.5%, while
larger rival Qantas Airways Ltd. (QUBSF) dropped 2.7%. But in
Wellington trade, Air New Zealand (AIR.NZ) climbed 2%.
In Hong Kong, heavyweight HSBC Holdings PLC (HBC) dropped 1.6%
to weigh on the broader market, although several beaten-down stocks
bounced: China Coal Energy Co. (CCOZY) gained 1.4%, and mobile
service provider China Unicom Hong Kong Ltd. (CHU) rose 0.8%.
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