Asian stocks slide on weak sentiment; Australian consumer data upbeat but not enough to support the market

<p>Asian markets booked heavy losses with weak sentiment compounding. The MSCI Asia Pacific Ex-Japan index shed 2.96% its August low. The Nikkei 225 index was […]</p>

Asian markets booked heavy losses with weak sentiment compounding. The MSCI Asia Pacific Ex-Japan index shed 2.96% its August low. The Nikkei 225 index was 1.3% lower in late afternoon trading. Japan’s central bankers reaffirmed concerns over growth, citing recent European problems as a hindrance as the world’s third largest economies tries to build momentum following a spate of natural disasters. China continues to be the positive mouthpiece across the region but comments from senior officials that China has the capacity and willingness to support the world’s financial system did little to boost regional confidence. 

Europe remains the ground zero for this market downturn. Societe Generale SA had its debt and deposit ratings cut by one level to Aa3 from Aa2 with a negative outlook by Moody’s Investors Service. Despite the cut, the bank has adequate capital to support its exposure to Greece, Portugal and Ireland, Moody’s said in a statement today.

Australian corporate news remains very quiet. A better than expected reading on consumer confidence did little to help the market as regional issues were too hard to brush off. The September reading on consumer confidence rose 8.1% to 96.9 points according to compilers Westpac and the Melbourne Institute. 

Meanwhile, the Australian dollar was sold heavily after the bureau announced core inflation averaged a seasonally adjusted rise of 0.6%in the second quarter, compared with the first. At the end of July, it reported a rise of 0.9% for the second quarter. The A$/US$ was last trading at 1.0210, down from its intraday high of 1.0370. 

With the ASX200 holding the all important 4000 mark this afternoon, all eyes will be on the U.S. and European trading session today. There aren’t too many brave traders willing to go against the downward trend at the moment, although as we have repeatedly been saying value is starting to become very difficult to dismiss. 

Australia’s iconic department store and retail bellwether Myer will report its 2011 full year earnings tomorrow, a number which will be closely watched and scrutinised by the market. Myer has continued to talk up its profit, reaffirming guidance of a moderate fall in earnings this year compared to its rival David Jones which has bluntly made clear the challenging retail environment. Should Myer’s profit be poorly composed and guidance downgraded for 2012, the market might continue selling off shares. It will be hard to see how management can surprise on the upside in the current market environment. 


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