SINGAPORE -- Asian share markets were lower Monday after a large fall in Wall Street Friday. The downbeat mood was compounded by news commercial lender CIT Group had filed for Chapter 11 bankruptcy protection -- the fifth largest on record -- over the weekend.
"It's a fairly measured response to the falls on Wall Street," said RBS head of sales Justin Gallagher in Sydney. "Nervousness will continue this week (But) I'm still confident that we can form a base and move higher into year end."
Japan's Nikkei 225 was down 2.6% with Australia's S&P/ASX 200 down 2.0% and South Korea's Kospi Composite falling 1.1%, while New Zealand's NZX-50 was off 1.5%. The Dow Jones Industrial Average futures contract was 29 points higher in screen trade, following the DJIA's 2.5% fall Friday.
The spike in risk aversion and the yen's strength in early trade were hurting Tokyo shares.
"Investors may not take large positions before tomorrow's (Japan national) holiday, but they have no choice but to sell today," said Tsuyoshi Kawata, senior strategist at Nikko Cordial Securities. The Nikkei 225 "will probably stay weak all day long," he added.
Toshiba fell 3.0%, while Sony declined 4.7% despite Friday announcing an improved earnings outlook for this fiscal year.
Australian shares fell to a seven-week low on broad-based declines, led by BHP Billiton, down 2.5%, National Australia Bank, down 3.0% and Macquarie, off 4.8%.
Australia's largest department store chain Myer Holdings closely-watched trading debut saw the shares opening at a discount to their offer price. Shares opened at A$3.88, compared to the A$4.10 a share price investors paid in the group's initial public offering, which valued the retailer at A$2.4 billion -- the largest IPO in Australia in more than two years.
In South Korea, stocks in steelmaker, technology and automobile sectors paced the market lower as these firms were considered more sensitive to the economic outlook. "After the Kospi retreated below the key 60-day moving average (around 1625), which had been a firm support, the index will likely continue (to fall and) test the next support at the 120-day moving average around 1530," said Park So-yeon at Korea Investment & Securities in Seoul.
"We shouldn't see those negative U.S. economic data as a sign that another economic downtrend may begin" because it's natural for data to be inconsistent in a recovery," added Park.
Posco was down 3.3%, Hyundai Motor fell 3.2%, and Samsung Electronics lost 1.5%.
New Zealand shares were hurt by a drop in cyclical stocks. Chemicals maker Nuplex Industries fell 3.2% and chip maker Rakon was off 2.6% to NZ$1.14. Brad Gordon, adviser at Macquarie Equities in Auckland, said he doesn't expect a "significant selloff" in the market, noting that it was a general retreat for many stocks.
In currency markets, the U.S. dollar fell to Y89.17 against the yen in early, its lowest level since Oct. 15, on news of the CIT Group bankruptcy. The pair has since regained its footing and was off lows on short-covering ahead of U.S. ISM manufacturing data due later in the global day. The pair was last at Y90.02 from Y90.07 in New York late Friday.
The euro traded in a narrow range but remained top-heavy as investors were reluctant to buy risky assets amid uncertainty about the pace of the global economic recovery. The euro was trading at $1.4730 from $1.4727 late in New York on Friday, and was at Y132.55 against the Japanese yen, from Y132.63.
Traders say the focus in currency markets will shift to this week's central bank policy meetings, including the Reserve Bank of Australia and the Federal Reserve.
Expectations for the RBA to hike interest rates were reinforced after the Australian government revised its 2009/10 GDP forecast higher, to 1.5% growth from a 0.5% contraction previously expected. It now expects unemployment by mid-2010 to be 6.5%, down from May budget forecast of 8.25%. The 2009-10 budget deficit was now expected at A$57.7 billion, slightly wider than A$57.6 billion expected in May.
"It is this week's central bank meetings which have the potential to cause the most market reaction. Any hint from the Fed that an end is in sight for their ultra-loose policy stance would surely send US bond yields, and the U.S. dollar, rapidly higher," said Mike Jones, currency strategist at Bank of New Zealand in Wellington.
The lead December Japanese government bond futures contract was higher, up 0.19 point at 138.18 points while the 10-year cash JGB yield was down 2.0 basis points at 1.385%. The bond market was supported by the Nikkei's fall.
Spot gold was down 70 cents from New York, around $1,043.70 a troy ounce.
Crude oil was trading lower after falling $2.87 on Friday, with Nymex December crude down 30 cents at $76.70 a barrel on Globex.