2014.07.1102:38:55UTC+00Asian stocks drop to nine weeks' first weekly loss

Asian stocks dropped with its benchmark index heading towards the break of the longest gaining streak for the past two years as European financial risk drove the yen to rally. The gauge is well on its way to snap the nine weeks of consecutive gains this week.

The MSCI Asia Pacific Index shed 0.2% to 146.22, 10:59 am, Hong Kong time. Six out of ten of the gauge’s industry group declined. The trend shows that for every three shares that increased, five decreased. The index is on its way to a 0.9% loss for the current trading week following the year-high level of equity valuations. Japan’s Topix Index is set to face its sharpest weekly decline ever since April.

Japan’s Nikkei 225 Index and South Korea’s KOSPI Index is down by 0.52% or 79.34 pips to 15,137.13 and 0.78% or 15.64 pips to 1,987.20 respectively. Hong Kong’s Hang Seng Index also dropped with a 0.39% loss or 86.23 pips to 23,152.76 while China’s Composite Index is up by 0.42% or 8.60 pips to 2,046.13. Australia’s S&P/ASX 200 gained 0.32% or 17.35 pips to 5,481.80 while the CNBC 100 ASIA IDX is down by 0.26% or 18.93 pips to 7,386.30. Thailand markets are closed for a local holiday in their country.

The general drag in the Asian stocks is mostly attributed to the overnight slide from the European and US shares that are currently concerned about missed debt payments by companies associated to the second-biggest lender in Portugal. Banco Espirito Santo SA was pronounced protected by the central bank of Portugal following the controversy regarding its parent company not being able to make payments on short-term paper. The yen is on its sixth week high versus the dollar as US treasuries and gold rally.

Director of economics and strategy at First NZ Capital Ltd. commented, “The very benign attitude to risk that we’ve seen in markets recently was an accident waiting to happen, is not a sufficient enough catalyst to provoke a significant reassessment but it is a shot across the bow” He also adds that it emphasizes the risks that is intrinsic in the vulnerabilities of those in the euro zone.