Europe’s debt woes weighing down on Asian markets

<p>Asian stocks are set to point lower again today on the back of weak offshore leads. Offshore markets are still fragile as the impact of […]</p>

Asian stocks are set to point lower again today on the back of weak offshore leads. Offshore markets are still fragile as the impact of Europe’s debt woes works through the markets, capping a very challenging 2011 trading year. The S&P500 was off another 1.7% overnight closing at 1216, with losses accelerating after the key technical level of 1229 was breached.

Commodity and technology stocks – growth leveraged plays – had the largest losses, falling by at least 2%. Growth expectations for individual equities will be hosed down in early 2012 as reporting season gets underway. We think the market is preemptively pricing this impact before the year ends.

In Australian corporate news, telecommunications giant Telstra today reaffirmed guidance at its investor day, saying it expects a smoother first half/second half revenue and earnings composition profile. Telstra is seeing strong sales in mobiles, fixed broadband and network based applications offsetting weakness in classifieds.

In the materials space, global miner Rio Tinto has increased its all cash offer for Canadian uranium explorer Hathor to around C$654m, looking to shore up the uranium exposure and trump a rival offer. Hathor is still trading above the revised bid price, even though board has endorsed Rio’s revised bid.

In regional currencies, the Australia dollar slipped below parity against the US dollar overnight as risk appetite declined. The currency was slightly above the parity level at the time of writing but the bounce is defiantly not convincing.

The Japanese Yen continues to slowly appreciate, causing headaches for Japanese authorities which are already having to deal with export concerns from the recent Thai flooding disaster. The USD/JPY was last trading at 76.96. More intervention is likely soon.

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