Asian markets still in the red; Australian surf wear maker Billabong issues profit downgrade

<p>Asian stocks were down on negative news coming out of Europe when news that North Korean leader Kim Jong Il died, sending markets even lower. […]</p>

Asian stocks were down on negative news coming out of Europe when news that North Korean leader Kim Jong Il died, sending markets even lower.

South Korea’s Kospi 200 index fell more than 4% on the news before recovering. Japan and South Korean leaders plan to hold telephone talks as the Asian trading session wraps up.

The Australian dollar continued its fall against the US dollar, last trading at around 99.18 cents and near its intra-day low. The US dollar briefly rallied against the Japanese Yen before falling back below 78.00, last at around 77.90.

Gold gave away some of Friday’s gains to last settle at around US$1588/lb and copper futures were pointing to similar losses.

North Korea’s leader died of exhaustion brought on by a sudden illness according to the official Korean Central News Agency. While the impact will have little consequences for stocks directly, with North Korea largely an isolated market and economy, confidence across the region could suffer in the face of uncertainty. There doesn’t seem to be any military threat at this stage nor anything substantial to impact regional trade but all eyes are on the tense situation.

There were some opportunistic positions on the news. South Korean defense equipment provider Speco Co. saw a 15% rally in its share price following the news. The conglomerate also produces other civil construction and industrial services products.

Still, traders are cautious about holding stocks going into the holiday period. Around eight shares declined for each that gained on the MSCI Asia Pacific index which was down in excess of 2% in early afternoon Tokyo trading.

Australian listed Billabong International lost 44% after a larger than expected profit downgrade. Resources and energy stocks were also lower on the Australian market.

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.