Forexpros – Asian stocks fell Tuesday on fears that rising borrowing costs in Spanish debt auctions signaled the European debt crisis was heating up in Madrid and threatening to cool the economy across all of Europe, a key Asian trading partner.
During Asian trading on Tuesday, Hong Kong’s Hang Seng Index was down 0.35%, Australia’s S&P/ASX200 was down 0.38%, while Japan’s Nikkei 225 Index was down 0.37%.
Stock market investors quickly turned their attention from market-friendly election results in Greece to soaring borrowing costs in Spain.
In Spain, the yield on the 10-year note shot up above 7%, the highest since the launch of the euro over a decade ago.
Yields at around 7% tend to depict a country in need of a bailout, similar to ones arranged for Greece, Ireland and Portugal.
Eurozone finance ministers recently arranged a EUR100 billion bailout facility for Spain to use to recapitalize its banks, but talk the country itself will need rescuing continued to grow.
Meanwhile in Italy, the yield on Italian 10-year notes hit 6.10% on concerns that sovereign debt contagion was headed towards one of the eurozone’s largest economies.
High borrowing costs offset market-friendly Greek elections, where the conservative New Democracy political party edged out the leftist Syriza on Sunday.
The results reflected a view that Greeks want to stick with the euro.
In Hong Kong, top decliners included Esprit Holdings, down 1.86%, China Overseas, down 1.59%, and Sino Land, down 1.43%.
In Australia, top decliners included Fairfax Media, down 4.62%, Bathurst Resources, down 4.40%, and Energy World Corporation, down 4.23%.
European stock futures indicated a mixed opening.
France’s CAC 40 futures pointed to a loss of 0.13%, while Germany’s DAX 30 futures signaled a loss of 0.09%. Meanwhile, in the U.K., the FTSE 100 futures indicated a gain of 0.03%.
Dow Jones Industrial Average futures were down 0.07% while the S&P 500 futures were down 0.12%.
Later Tuesday, the Reserve Bank of Australia is to publish the minutes of its June policy-setting meeting.
Leaders from the Group of 20 nations are to hold a second day of talks at a summit in Mexico.