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Its been a bad begining to the week for Asia. Following a slide on Wall Street on Friday when crude oil neared US$140, and the latest emplyment data showed a steep increase in U.S. unemployment, shares on most Asian bourses have fallen.
Fears that the United States may be heading for a recession were re-ignited after the Labour Department said Friday that the U.S. unemployment rate jumped to 5.5 percent in May from 5.0 percent in April. It was the biggest monthly increase since February 1986 Forbes reported.
On Monday, South Korea’s KOSPI fell 23.35 points or 1.3 percent to close at 1,808.96, In Tokyo, the Nikkei 225 index finished down 308.06 points or 2.1 percent at 14,181.38, Singapore’s Straits Times index closed down 62.71 points or 2 percent at 3,084.02, and the Kuala Lumpur Composite Index (KLCI) fell 17.59 points or 1.4 percent to 1,230.98, off a low of 1,223.45. The Taiwan weighted index closed down 1.8 percent at 8,587.96, while the Jakarta composite index closed up 7.84 points or 0.3 percent at 2,410.08, off a low of 2,352.60. India’s Sensex provisionally ended 444.14 points or 2.85 percent lower at 15,128.04.
Meanwhile, currencies nosedived against a broadly stronger dollar after Federal Reserve Chairman Ben Bernanke’s warning on inflation fanned expectations of higher U.S. interest rates later this year as well. The dollar jumped to a three-month high against the yen on Tuesday. The Singapore dollar fell as far as 1.3695 to the U.S. dollar, down 0.6 percent from late Asian trade on Monday. The Malaysian ringgit fell a fifth of a percent to 3.269 per dollar.
But the Chinese yuan bucked the region’s weakness, hitting a post-revaluation high at 6.9140 per dollar amid indication that Chinese policy makers still favour using a stronger currency to fight inflation. The yuan has gained 5.5 percent versus the dollar so far this year, the second best performer in Asia after the Taiwan dollar, which has risen 6.9 percent. The Thai baht, which has fallen sharply in recent sessions, rebounded almost 0.9 percent to 32.95 per dollar, as investors moved to cover their short positions, reported Reuters.
