Asian stocks hit after S&P’s US warning

Sovereign debt issues that have plagued European markets for several months took a turn for worse, hitting Asia’s main indices on Tuesday after Standard & Poor’s warned on US debt.

S&P revised its credit rating outlook for the US to negative, causing global stocks to plunge and gold to hit a record just shy of $1,500 an ounce.

The FTSE Asia Pacific index was down 1 per cent at 259.69, falling for a third day.

Falling risk appetite caused a flight into the safety of the yen, pushing the Japanese currency to a three-week high. In Tokyo, the stronger yen weighed on exporters, with Toyota Motor down 3.1 per cent Y3,125.

Chipmakers lost ground after Texas Instruments of the US reported a downbeat second-quarter outlook. Chip-testing group Advantest lost 3.2 per cent to Y1,405, Renesas Electronics lost 5.4 per cent to Y678 and Elpida Memory fell 4.8 per cent to Y1,117.

TDK, the maker of electronic components, shed 7.6 per cent to Y3,980 after Goldman Sachs cut its target price, citing the potential loss of business revenues if Samsung were to sell its hard disk drive operations to Seagate of the US. TDK is Samsung’s exclusive supplier of HDD heads.

The Nikkei 225 Average ended the session down 1.2 per cent to 9,441.03.

In Seoul, Samsung Electronics gained 0.9 per cent to Won875,000. LG Electronics rose 4.5 per cent to Won105,000 and LG Display surged 6.9 per cent to Won38,600 after a positive second-quarter earnings outlook.

The Kospi index, however, fell 0.7 per cent to 2,122.7 as financial shares extended losses.

In Sydney, resource stocks were lower as S&P’s move sparked concerns about the global economic recovery.

Rare-earth metals miner Lynas was the worst performer, down 6.9 per cent to A$2.29. Gold miner Newcrest Mining dropped 0.8 per cent to A$40.80 after announcing that gold production could be 4.4 per cent lower than its previous forecast for the year.

The S&P/ASX 200 slid 1.4 per cent to 4,793.3.

Hong Kong’s Hang Seng index was off 1.3 per cent to 23,520.62 as energy producers were hit by lower crude prices.

China’s Shanghai Composite index lost 1.9 per cent to 2,999, led by insurers and property developers. The BSE Sensex index was up 0.2 per cent to 19,121.83, supported by gains for stocks in early European trade.