Asian stocks rose yesterday Tuesday July 26 although trade was cautious as investors focused on Washington where lawmakers are struggling to hammer out a deal to avert a catastrophic US default.
The dollar touched a four-month low against the yen in early Tokyo trade after an address to the nation by President Barack Obama failed to indicate any progress on a debt agreement.
Tokyo’s Nikkei Index 225 Index ended 0.47 percent, or 47.71 points, higher at 10,097.72 as the yen’s strength pared gains made on the back of a batch of upbeat earnings reports on Monday as well as optimism over other results due this week.
Solid corporate earnings helped buoy the Nikkei, while gains in many other Asian bourses heartened investor sentiment.
In Shanghai, the composite index was up 0.53 percent, or 14.28 points, at 2,703.03.
“Sentiment stabilised a bit after Monday’s tumble, but the possibility the market could resume its downward trend remains,” China Minzu Securities analyst Wang Xiaojun told Dow Jones Newswires.
Seoul gained 0.85 percent, or 18.22 points, to 2,168.70 and Sydney ended 0.95 percent or 42.9 points higher at 4,573.3.
However, in Mumbai, shares fell 1.87 percent as investors and business leaders were spooked by a higher-than-expected 50 basis points increase in interest rates by the Reserve Bank of India as it tries to tame near double-digit inflation.
The benchmark 30-share Sensex index fell 353.07 points to 18,518.22, snapping two straight days of gains.
SHK Financial analysts Daniel So said: “The current situation is similar to early last week before the passage of the Greek bailout package.
“Investors are taking a wait-and-see stance before a likely solution (to the US debt issue),” he told Dow Jones Newswires.
HONG KONG: Stocks rose 1.25 percent yesterday with traders confident US lawmakers will agree on a budget deal that will avoid a default, while hopes were high for strong earnings results.
The benchmark Hang Seng Index added 278.79 points to 22,572.08.
“I think the (US debt) talks could be resolved by the August 2 deadline, but trading sentiment remains a bit weak,” said Linus Yip, strategist at First Shanghai.
SINGAPORE: Stocks in Singapore edged up to three-month highs yesterday with major Southeast Asian stock markets mostly stronger as investors bought financial stocks and big caps at the start of the reporting season but caution prevailed, with the US debt ceiling negotiations still in deadlock.
The Straits Times Index rose 0.47 percent, or 15.02 points, to 3,186.57.
CapitaLand was 0.34 percent up at S$2.93 and DBS gained 0.47 percent to S$15.10.
KUALA LUMPUR: Tracking regional stock markets, the FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) staged a technical rebound yesterday. Advancing counters edged out declining counters by 374 to 334.
The FBM KLCI rebounded from a day low of 1,554.58 to a day high of 1,561.91. It closed at 1,561.77, a day-on-day gain of 2.17 points, or 0.14 percent.
In other markets:
* Taipei gained 1.28 percent, or 110.73 points, to 8,794.24.
* Manila fell 0.33 percent, or 14.63 points, to 4,465.87.
* Jakarta rose 1.12 percent, or 45.68 points, to 4,132.77.
* Bangkok fell 0.53 percent, or 5.95 points, to 1,121.63.
VIETNAM: The VN Index of Hochiminh Stock Exchange (STC) slightly increased by 0.03 point or 0.01 percent to 409.39 points while HNX Index dropped 0.32 point or 0.46 percent to 69.91 points.
EUROPE: European equities fell yesterday in cautious trading amid a flurry of company results, with investors focused on a struggle in Washington over averting a US default.
Stock market investors shunned equities as they sought to lessen their risk exposure amid lingering concern over the growing US debt situation, dealers said.
London’s FTSE 100 index dropped 0.17 percent to 5,915.08 points in midday deals, as official data showed the British economy grew by just 0.2 percent in the second quarter of 2011, in line with expectations.
Frankfurt’s DAX 30 declined 0.23 percent to 7,327.33 points and in Paris the CAC 40 index shed 0.82 percent to 3,781.60 points and the Stoxx 50 index of leading eurozone companies lost 0.44 percent to 2,730.47.
AMERICA: A White House threat to veto legislation that would avert a debt default pushed stocks lower Tuesday.
Major indexes were already down for the day when the White House said it would object to a Republican plan in the House of Representatives that calls for raising the debt limit by $1 trillion. The plan would require the debt issue to be voted on again next year, something President Barack Obama does not want.
The stalemate over raising the country’s borrowing limit has rattled investors. If an agreement is not reached by Aug. 2, the U.S. won’t have enough cash to pay all its bills and could default on its debt.
Analysts say a U.S. default would have a devastating effect on financial markets. The U.S. would likely lose its triple-A credit rating, causing interest rates to soar. Stocks could plunge.
Paul Zemsky, chief investment officer of multi-asset strategies at ING Investment Management, said a default could also cause Americans to lose confidence in the economy, causing them to put off major purchases such as buying cars and homes.
“Anything that shakes confidence right now is just bad for the economy,” Zemsky said. “And this is just a big confidence-shaker.”
The Dow Jones industrial average fell 91.50 points, or 0.7 percent, to 12,501.30. The Dow was already down 40 points in afternoon trading and lost another 50 after the White House threatened to veto the House legislation. It was the Dow’s third straight day of losses.
The Standard & Poor’s 500 index fell 5.49 points, or 0.4 percent, to 1,331.94. Eight of the 10 company groups that make up the index fell. Only the technology and telecommunications sectors rose.
The Nasdaq composite fell 2.84, or 0.1 percent, to 2,839.96. Technology companies rose after Broadcom Corp. raised its revenue forecast for the third quarter on improving demand for its chips. Broadcom rose 9.4 percent, and rivals Advanced Micro Devices Inc. and Texas Instruments Inc. each edged up less than 1 percent.
Almost half of the Dow’s decline came from 3M Co. The stock fell 5.4 percent, the most of the 30 companies that make up the Dow average. The industrial giant, which makes Scotch tape, medical equipment and many other products, said the disaster in Japan and sinking demand for LCD televisions hurt its results. The company makes a kind of film that is used in producing the flat-screen TVs. Since it makes so many kinds of products, investors often see 3M’s results as an indicator of how the whole U.S. manufacturing industry is doing.
About two stocks fell for every one that rose on the New York Stock Exchange. Volume was light at 3.7 billion shares.
Benchmark Currency Rates USD EUR JPY GBP CHF CAD AUD HKD HKD 7.7903 11.3021 0.0999 12.7908 9.7197 8.2539 8.5318 - AUD 0.9131 1.3247 0.0117 1.4992 1.1392 0.9674 - 0.1172 CAD 0.9438 1.3693 0.0121 1.5497 1.1776 - 1.0337 0.1212 CHF 0.8015 1.1628 0.0103 1.3160 - 0.8492 0.8778 0.1029 GBP 0.6091 0.8836 0.0078 - 0.7599 0.6453 0.6670 0.0782 JPY 77.9893 113.146 - 128.049 97.3042 82.6307 85.4123 10.011 EUR 0.6893 - 0.0088 1.1317 0.8600 0.7303 0.7549 0.0885 USD - 1.4508 0.0128 1.6419 1.2477 1.0595 1.0952 0.1284 Bloomberg