Asian stocks skid on earnings jitters

January 13, 2009

, TOKYO, January 13 – Worries about the impact of the economic crisis on corporate earnings weighed on Asian shares on Tuesday, with Tokyo plunging almost five percent amid reports of a big loss at Sony.

US aluminium giant Alcoa reported a bigger-than-expected quarterly loss after Wall Street closed on Monday, adding to investor jitters.

"A disappointing start to the reporting season — as seen in Alcoa\’s large loss — is pressuring stock markets in Asia," said Dariusz Kowalczyk, chief investment strategist at SJS Markets in Hong Kong.

Tokyo, which was closed on Monday, was hardest hit, slumping 4.79 percent by the close.

Media reports that technology giant Sony is set to post its first annual operating loss in 14 years due to weak demand added to the gloomy mood, following fresh losses on Wall Street.

Elsewhere, Sydney shed 0.78 percent while Shanghai lost 1.5 percent in late trade and Hong Kong slipped 1.2 percent. But Seoul ended up 0.9 percent and Taipei added 1.76 percent.

Analysts said the losses also reflected renewed worries among investors about the health of the US economy following Friday\’s poor jobs report, which eroded optimism about US president-elect Barack Obama\’s stimulus plans.

"Investors eyes\’ are refocusing on the real economy," said Masatoshi Sato, a strategist at Mizuho Investors Securities.

"News reports that Sony is likely to post an operating loss might be contributing to the deteriorating market sentiment," he added.

Sony, a bellwether of corporate Japan, is reportedly set to sink into the red in the financial year to March.

The Japanese icon is likely to post an operating loss of 100 billion yen (1.1 billion dollars) due to sagging demand and a stronger yen, the Nikkei business daily reported. Sony shares plunged 8.9 percent.

The strength of the yen has become a major headache for Japanese exporters, who are also suffering from weak sales as consumers in the United States and Europe in particular tighten their belts to cope with the recession.

Overnight in New York, the Dow Jones Industrial Average fell 1.46 percent as traders braced for the start of a quarterly earnings season that is expected to highlight the impact of the deepening economic crisis.

Even the once-booming Chinese economy is now feeling the pain, with exports dropping for a second month in December as the global crisis hits its trade-dependent economy.

Japan\’s current account surplus shrank 65.9 percent in November from a year earlier as exports slumped due to weak demand in recession-hit overseas economies.

Renewed fears about the health of banking giant Citigroup also contributed to the sour mood, dealers said.

Citigroup is reportedly close to a deal to cede control of its Smith Barney brokerage unit to Morgan Stanley to raise cash.

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