Asia Roundup: Down on grim US outlook

Asian markets mostly fell yesterday Wednesday July 18 after US Federal Reserve chief Ben Bernanke warned of a further slowdown in the US economy and a “frustratingly slow” rise in employment.

Tokyo fell 0.32 per cent, or 28.26 points, to 8,726.74, Sydney shed 0.42 per cent, or 17.20 points, to 4,123.6, while Seoul gave up 1.48 per cent, or 27.05 points, to 1,794.91.

In testimony to Congress Bernanke offered a gloomy outlook for the US, warning that after growth of around just two per cent in January-March, “available indicators point to a still-smaller gain in the second quarter”.

“Given that growth is projected to be not much above the rate needed to absorb new entrants into the labour force, the reduction in the unemployment rate seems likely to be frustratingly slow,” he added.

The comments weighed on already nervous traders, who have also been hit by ongoing concerns over the eurozone and weakness in the Chinese economy.

Despite Bernanke’s comments there was a positive close on Wall Street, where investors seemed to focus on the prospects for further stimulus measures from the Fed.

HONG KONG: Stocks fell 1.11 per cent after US Federal Reserve chief Ben Bernanke’s glum outlook for the country, while HSBC was a big drag.
The benchmark Hang Seng Index gave up 215.45 points to close at 19,239.88 on turnover of HK$42.50 billion.
Traders were concerned ahead of the reporting season for half-year earnings.

SINGAPORE: Shares ended flat, edging up 2.41 points to 3,017.21.
Singapore Telecom was up 1.16 per cent at S$3.48 and oil rig maker Keppel Corp advanced 1.5 per cent to S$11.06.
Credit Suisse Private Bank remained positive on Singapore equities and said “the Singapore market can provide some protection during a market downdraft, given its handsome dividend yield”. It said it sees a positive earnings revision trend and attractive valuations as the main investment case for Singapore.

KUALA LUMPUR: Share prices closed higher for the third consecutive day yesterday at Bursa Malaysia, despite cautious trading in the Asian markets, dealers said.
At 5pm, the FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) ended 5.85 points higher at 1,645 after trading between 1,640.39 and 1,645.39 throughout the day.
A dealer said the Asian stock markets were broadly lower during late trade yesterday after US Federal Reserve chairman gave a bleak assessment of the US economy and failed to signal a fresh round of stimulus to boost growth.

In other markets:

* Taipei fell 1.09 per cent, or 77.95 points, to 7,049.05.

* Manila closed 1.22 per cent lower, giving up 64.57 points to 5,220.55.

* Wellington closed 0.15 per cent, or 5.19 points, higher at 3,474.06.

* Jakarta was almost unchanged, nudging 0.96 points up to 4,081.64.

* Bangkok closed 0.33 per cent lower, losing 4.07 points to 1,220.14.

* Mumbai rose 0.47 per cent, or 79.71 points, to 17,185.01. Bajaj Auto rose 5.20 per cent to 1,522.35.

VIETNAM: Vietnamese shares continued to post gain today as investors picked up stocks on hope of better economic conditions in the second half.
The benchmark VN Index rose 1.28 points or 0.31% to 418.83. Volume rose 2.6% to 49.4 million shares worth of VND790.7 billion. Put through trading contributed 11.96 million shares worth of VND256.95 billion.
The VN30 gained 1.07 points or 0.22%, to 494.11. Amongst its 30 members, 12 gained, 14 lost and 4 unchanged.
On the Hanoi Stock Exchange, the HNX bucked trend to close down 0.37 point or 0.52% to 71.03. Trading volume fell 5.17% to 38.4 million shares worth VND369.3 billion.
HNX30 lost 1.6 points or 1.18% to 134.63.

EUROPE:  Europe’s main stock markets rose slightly yesterday as traders looked ahead to more testimony on the US economy from Federal Reserve chairman Ben Bernanke and digested a unique German bond auction.
London’s FTSE 100 benchmark index of leading shares edged up 0.07 per cent to 5,633.10 points in late morning trade.
Frankfurt’s DAX 30 index gained 0.14 per cent to 6,586.56 points and in Paris the CAC 40 won 0.49 per cent to 3,192.43.
“European markets have registered mild gains today (Wednesday) on hopes that Fed chairman Bernanke will reveal more details on the central bank’s stance on upcoming easing measures at his second day before US Congress,” said Ishaq Siddiqi, an analyst at ETX Capital trading group.

AMERICA: A new sign of recovery in the housing market and strong corporate earnings sent stocks higher for a second day.

The Dow Jones industrial average rose 103.16 points, or 0.8 percent, to 12,908.70 on Wednesday, a strong showing for what has been a mediocre July so far. The index has risen only four times in the last 12 trading days.

“The market expects bad news, so when it doesn’t get it, it rises,” said John Manley, chief equity strategist at Wells Fargo Advantage Funds. “Earnings haven’t been disastrous for the quarter.”

A big gain by Intel after it posted a strong earnings report drove up technology stocks, especially other chip makers. Those companies, plus industrials, were responsible for much of the market’s gains. The Nasdaq composite climbed 32.56 points, or 1.1 percent, to 2,942.60.

The Standard & Poor’s 500 index rose 9.11 points, or 0.7 percent, to 1,372.78. Amphenol jumped nearly 15 percent, the most in the index, after the maker of electronic cables and connectors reported second-quarter earnings that were higher than analysts were expecting. Its stock rose $7.58 to $58.94.

For several weeks, big companies have talked down prospects for big jumps in earnings, and Wall Street analysts have slashed their forecasts in response. At the start of the earnings season last week, they said earnings for companies in the S&P 500 would likely fall 2 percent, according to S&P Capital IQ.

Of the 65 companies in the S&P 500 to report earnings so far, 43 have beat estimates, or 66 percent, according to S&P Capital IQ. That is slightly higher than the 62 percent long-term average.

Among the gainers Wednesday was Intel, which rose 83 cents, or 3 percent, at $26.21. Investors also piled into Vivus Inc., pushing its stock up nearly 10 percent, after the drug maker announced approval from regulators to sell a new weight-loss pill. Doctors consider the pill, Qsymia, the most effective of a new generation of anti-obesity drugs. The company plans to start selling it by the end of the year.

Madison Square Garden’s stock lost 1 percent after the owner of the New York Knicks NBA team confirmed that it was losing star player Jeremy Lin to the Houston Rockets. The Knicks said they wouldn’t match a three-year, $25 million offer for the player. MSG’s stock fell 36 cents to $35.45.

So far this year, the Dow is up 5.7 percent, but has mostly fallen this month. Thanks to Wednesday’s gain, it’s back in the black for July, but barely – up 0.2 percent.

After the market closed, a few companies reporting second-quarter results added to the somewhat positive earnings picture.

Ebay said net income more than doubled, and its stock jumped 6 percent in after-hours trading. IBM, a tech bellwether, reported earnings rose 6 percent, beating analyst estimates. Its stock rose 3 percent in extended trading.

Yum Brands, the owner of Taco Bell, KFC and Pizza Hut, fell 2 percent after it reported a rare profit decline in its key China market.

In addition to housing news, the Federal Reserve said Wednesday that its survey of the economy across the country showed modest expansion in June and early July, but that growth and hiring slowed in several regions.

In his second day of testimony before Congress, Federal Reserve Chairman Ben Bernanke did not signal any new stimulus is imminent, though he did say the Fed was looking at “ways to address the weakness in the economy should more action be needed to promote a sustained recovery in the labor market.”

Treasury prices rose slightly as demand for low-risk assets remained strong. The yield on the benchmark 10-year Treasury note was flat at 1.50 percent. Germany auctioned $6.14 billion in two-year treasury notes Wednesday with an average interest rate, or yield, of minus 0.06 percent.

Three stocks rose for every one that fell on the New York Stock Exchange. Volume was average at 3.6 billion shares.

Benchmark Currency Rates

	USD	EUR	JPY	GBP	CHF	CAD	AUD	HKD
USD	–	1.2286	0.0127	1.5654	1.0230	0.9904	1.0370	0.1289
EUR	0.8140	–	0.0103	1.2742	0.8327	0.8061	0.8442	0.1049
JPY	78.6500	96.6300	–	123.1350	80.4650	77.9030	81.5790	10.1410
GBP	0.6388	0.7848	0.0081	–	0.6535	0.6327	0.6626	0.0824
CHF	0.9776	1.2011	0.0124	1.5302	–	0.9684	1.0139	0.1260
CAD	1.0096	1.2405	0.0128	1.5806	1.0328	–	1.0472	0.1302
AUD	0.9643	1.1847	0.0123	1.5094	0.9864	0.9551	–	0.1243
HKD	7.7564	9.5295	0.0986	12.1419	7.9350	7.6822	8.0440	–

 

Category: FinanceAsia