Nikkei slides as junk status looms

SHOCK at the speed with which Wall Street's rally died on Thursday left Asian markets floundering. A second look at the results of internet systems firm Cisco Systems, which had sparked Wednesday's surge, showed that the apparent strong earnings growth owed more to cost-cutting than a sales leap. That sent the tech-heavy Nasdaq index tumbling almost 3% on Thursday, although it had shot up 8% the day before.

Traders in Japan were also braced for another downgrading of the country's credit rating after reports that Moody's was about to put the country in the junk bond category. Tokyo's Nikkei 225 Average slipped 102.19 points to 11,531.11, underpinned by old economy stocks continuing to hold firm on brighter economic news.

Last month, Japan's consolidated index of economic indicators turned positive for the first time in 15 months and the Bank of Japan reported that wholesale prices were holding steady, raising hopes that the deflationary cycle is coming to an end. Next week, the Japanese government is expected to put out a more bullish view of recovery prospects.

While this all may be good news for the likes of utility companies, the tech slide in the US, where a survey of stores also showed retail spending was stagnating, hammered exporters and computerrelated stocks. Chips and computers giant Toshiba tumbled more than 3% while mobile phone operator NTT DoCoMo shed a similar amount after sharp gains yesterday on better-than-expected results.

Nissan shares continue to be favourably re-rated after the company reported a 70% surge in profits last year, and the shares climbed almost 2% to match their six-year high.

Bulls of Hong Kong's market, who had been predicting a break through 12,000 on the Hang Seng index, had a second day of disappointment as further profit-taking took it down 54.86 to 11645.90. A bearish broker report unsettled shares of HSBC Holdings, which had led the market higher earlier in the week, and they retreated for a second day, losing 50 cents to HK$94.75. Market losses were limited by support for property stocks.

Falling microchip prices and gloomier prospects for makers of semiconductors depressed South Korean stocks, pushing down the Kospi 20.74 points to 817.93. Samsung Electronics, the world's largest memory-chip maker, tumbled 5% after key DRam prices fell 3%.

Signs of a thaw in diplomatic relations with China rescued Taiwan's Weighted Average, which added 68.02 points to 5807.30. Bank stocks in Australia continued to fall as the central bank warned that more interest rate rises were in the pipeline and the All Ordinaries index dipped 6.40 points to 3279.1. News Corp suffered from nerves ahead of results due next week, and fell 2.1% on expectations that it will reveal heavy write-downs on US investments.

Singapore's market shook off Wall Street woes, the Straits Times index rising 2.34 points to 1735.95. Thailand's SET index crept up 1.39 to 382.09 but Malaysia's Kuala Lumpur Composite index drifted 6.12 points to 788.54 and the Jakarta Composite index in Indonesia lost 3.84 to 543.91.

Prices and indices in this section are from various sources and calculated at different times and may not always match those listed elsewhere on the site.