June 3, 2012, 11:20 p.m. ET
2nd UPDATE: Asian Shares Slump, Japan's Topix at Lowest Since 1983
-- Nikkei drops 2%, Hang Seng Index 2.3% down, S&P ASX 200 1.7% lower
-- Hang Seng Index erases 2012 gains
(Updates prices, adds quote, adds information on gold miners, Japanese companies)
By Daniel Inman
HONG KONG--Asian stocks slumped Monday with Japan's Topix Index tumbling to its lowest since 1983 after poor unemployment data in the U.S. cast further doubts over the health of the global economy.
The flight to safety pushed Hong Kong's index 2.3% down, erasing all of its gains so far this year, while Japan's Nikkei fell 2%, and earlier hit its lowest in 2012. The Topix, a broader measure of the Japanese equity market activity, fell 2%.
After Asian markets closed on Friday, the U.S. reported nonfarm payrolls rose 69,000 in May, the smallest increase for a year, while unemployment in the world's largest economy edged up to 8.2%, the first increase in just under a year. Earlier on Friday, two reports showed that activity in the Chinese manufacturing sector is slowing.
"We're certainly seeing a synchronized global economic slowdown, so we are at a crossroads in global markets--do we get another strong leg down or do we bounce as the market anticipates policy action?" Chris Weston, institutional dealer at IG Markets, said.
Asian fund managers shifted their weighting of global equities to "slightly underweight" in May, from "neutral" in April, as concerns over Europe grow, according to a Dow Jones Newswires poll published June 1. It was the first time they have slipped below the "neutral" footing since December last year.
The dollar recovered slightly Monday against the yen, trading at 78.17, on speculation the Bank of Japan may intervene in the currency markets to push the yen weaker. After stepping up the rhetoric late last week, with the yen rising as high as 77.99 late on Friday, Japanese Finance Minister Jun Azumi declined to comment on exchange rates to reporters early on Monday.
Japanese exporters, under pressure from a strengthening yen, continued to decline as investors moved away from manufacturers towards safe-haven sectors, such as foods pharmaceuticals and railroads. Honda Motor and Canon were down 2.7% and 4% respectively; while food company Ajinomoto and Central Japan Railway climbed 2.6% and 0.2%.
Australia's S&P ASX 200 hit a six-month low, falling to 3992.4, crawling back to 3996.20, a 1.7% fall. Korea's Kospi fell 2.6% and Singapore's Straits Times Index was 1.5% lower.
Gold gained 3.3% last week, reaching a three-week high, which turned out to be a boon for Australian gold miners: Newcrest Mining added 3.4%, Evolution Mining jumped 5% and Silver Lake Resource climbed 5.6%.