Asian markets were mixed in tentative trade yesterday Thursday Aug 2 ahead of a meeting of the European Central Bank that investors hope will produce a fresh round of stimulus measures to support the euro.
The US Federal Reserve’s decision to hold off any such moves had little impact on sentiment, analysts said, but added that if expectations were not met by the ECB shares could tumble.
Tokyo stocks closed 0.13 per cent higher. The Nikkei 225 Index gained 11.33 points to 8,653.18 while the Topix index of all first-section shares rose 0.44 per cent or 3.20 points to 732.98.
Chinese shares closed down 0.57 per cent. The Shanghai Composite Index slid 12.18 points to 2,111.18.
The property sector was the big loser, with the sub-index down 4.53 per cent on tightening fears. Beijing Capital Development slumped 9.83 per cent to 10.18 yuan, Poly Real Estate sank 9.17 per cent to 10.30 yuan and Gemdale dropped 6.38 per cent to 5.43 yuan.
“Investor sentiment has turned sour… and it will take time to see the market drag itself out of the current bearish environment,” Zhang Yanbing, an analyst at Zheshang Securities, told Dow Jones Newswires.
Sydney added 0.16 per cent, or 6.7 points, to 4,269.5 while Seoul lost 0.56 per cent, or 10.53 points, to 1,869.40.
Eyes were on the European Central Bank’s policy meeting later yesterday for some action.
HONG KONG: STOCKS slipped 0.66 per cent yesterday, snapping a five-day rally, as traders awaited a European Central Bank meeting later in the day amid hopes for fresh stimulus measures for the eurozone.
The benchmark Hang Seng Index eased 130.18 points to end at 19,690.20. But it managed to close above 19,677.2, its current 200-day moving average, a technical level it has struggled with since mid-May.
SHK Financial strategist Daniel So said a key issue was whether the ECB decided to buy sovereign bonds.
SINGAPORE: MOST Southeast Asian stock markets ended weaker yesterday with Singapore falling from a near one-year high after the US Federal Reserve stopped short of signalling fresh stimulus measures, disappointing investors.
Investors were also cautious ahead of a European Central Bank meeting which was expected to discuss policy actions, including resuming its bond-buying programme.
In Singapore, the benchmark Straits Times Index closed down 0.49 per cent, or 14.89 points, at 3,036.19.
KUALA LUMPUR: SHARE prices on Bursa Malaysia were marginally higher yesterday bolstered by gains seen in selected heavyweights led by Petronas Gas and Tenaga, dealers said.
The FTSE Bursa Malaysia KLCI (FBM KLCI) was 0.98 point higher at 1,633.45. The local market started the day on a positive note, but was weighed down by profit taking in selected blue chips and index-linked counters such as Genting, IOI Corp and Armada by midday.
Dealers said the uncertainty over the outcome of the ECB meeting later yesterday and the lack of fresh stimulus by the US Fed kept some investors on the sideline.
Losers led gainers 465 to 303, while 346 counters closed unchanged, 494 untraded and 15 others suspended.
Volume eased to 1.175 billion shares worth RM1.647 billion from 1.354 billion shares valued at RM1.864 billion.
In other markets:
* Manila closed 0.10 per cent lower, giving up 5.32 points to 5,293.40.
* Jakarta fell 0.90 per cent, or 37.35 points, to 4,093.11.
* Mumbai slid 0.19 per cent or 33.02 points to 17,224.36.
* Bangkok was closed for a public holiday while Taipei was closed owing to a typhoon.
VIETNAM: Vietnamese shares ended in the green today but liquidity shrank as both buyers and sellers were in high caution.
The benchmark VN Index rose 3.55 points or 0.86% to 416.1. Volume fell 20.7% to 21.9 million shares worth of VND330.8 billion. Put through trading contribute 3.2 million shares worth of VND50.59 billion.
The VN30 added 4.36 points or 0.89%, to 494.12. Amongst its 30 members, 15 gained, 4 lost and 11 unchanged.
On the Hanoi Stock Exchange, the HNX gained 0.28 point or 0.41% to 68.98. Trading volume fell 17.5% to 26.1 million shares worth VND431.2 billion.
HNX30 rose 0.71 point or 0.55% to 130.07.
EUROPE: European shares rose yesterday, buoyed by banking sector gains in a volatile trading session as investors tried to assess the likelihood of concrete policy action from the European Central Bank.
By mid-day, the FTSEurofirst 300 index was up 0.6 per cent to 1,074.41 points, while the Euro STOXX 50 index rose 0.8 per cent to 2,350.27 points,
In morning deals, London’s benchmark FTSE 100 index added 0.26 per cent to 5,727.76 and the Paris CAC 40 won 0.12 per cent to 3,325.52, while Frankfurt’s DAX 30 dropped 0.09 per cent to 6,747.62. Madrid’s IBEX 35 index slid 0.28 per cent, but Milan’s FTSE-MIB eked out a gain of 0.03 per cent.
Michel Juvet, chief investment officer at Swiss bank Bordier, said he has an “overweight” position on European equities. “Valuations are cheapest among European equities.”
AMERICA: European leaders on Thursday gamely promised to keep tackling the continent’s debt crisis. But the markets wanted much more.
Stocks sank across the U.S. and Europe, the euro fell against the dollar and investors dumped bonds issued by the governments of Spain and Italy. Investors had been expecting more immediate action from the European Central Bank and were disappointed by the plan’s lack of details, especially considering the ECB president’s pledge last week to do “whatever it takes” to keep the euro intact.
The Dow Jones industrial average fell 92.18 points to 12,878.88. The Dow had been down as much as 192 shortly after noon.
The Standard & Poor’s 500 index fell 10.32 to 1,365. The Nasdaq composite index lost 10.44 to 2,909.77.
It was the fourth day in a row of losses; U.S. stocks haven’t risen since ECB President Mario Draghi’s now-famous three-word promise one week ago.
Investors had been hoping for clear action from the ECB, such as a cut in interest rates or clear plans to buy more European government bonds, which could lower borrowing costs for troubled countries like Spain and Italy.
But Germany’s central bank, which has footed much of the bill for bailing out other European countries, declined to go along. And so Draghi on Thursday had to tell a highly anticipated news conference that the ECB “may” intervene in the bond market. He promised the ECB would consider other emergency measures in coming weeks.
The yield, or interest rate, on Spain’s benchmark 10-year bond jumped to 7.06 percent from 6.68 percent late Wednesday, making it more expensive for the country to borrow money. The yield on Italy’s 10-year bond rose to 6.30 percent from 5.85 percent. Other countries have been forced to seek bailouts once their rates rose above 7 percent.
In the U.S., he noted, there was a half-year lag between the Treasury Department announcing it would buy stakes directly in banks in the fall of 2008 and investors becoming comfortable by the spring of 2009 that there wouldn’t be uncontrollable bank failures.
“People look at Euroland and say, ‘Why don’t they get something done there?’” Bertelsen said. “How quickly they forget what a miserable six months it was here.”
In the U.S., thoughts of Europe were close at hand. General Motors and Kellogg reported lower quarterly profits and put some of the blame on Europe.
In other trading:
—Knight Capital Group, the trading firm whose technical glitch sent trading of dozens of stocks into chaos early Wednesday, lost 63 percent of its value, plunging $4.36 to $2.58. In two days, it has lost 75 percent of its value.
—Abercrombie & Fitch dropped 15 percent and Aeropostale dropped 33 percent after both companies warned of weak second-quarter sales. Abercrombie lost $4.96 to $29.06. Aeropostale lost $6.37 to $13.08.
—A smattering of positive signs about the economy got lost in the greater maelstrom. Retailers including Target, Limited Brands and Gap announced that July sales beat expectations. Shares of all three companies climbed, with the biggest increase at Gap. It rose 13 percent, gaining $3.75 to $33.17.
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