Asian stocks were mixed yesterday Tuesday August 16, despite impressive gains at the start of the week and a positive lead from Wall Street.
In Tokyo, stocks closed up 0.23 percent, lifted by a continued rally on Wall Street. The Nikkei 225 Index added 21.02 points to close at 9,107.43.
Despite two days of gains, the outlook for the Tokyo bourse remains uncertain, with investors still fretting over a painfully strong yen.
Japanese shares remained attractive, with about 65 percent of the Tokyo market’s first section shares trading under book value, said Hiroichi Nishi, general manager at SMBC Nikko Securities.
Google’s announcement brightened sentiment, but worries about the US economic outlook remained, Nishi said.
In Shanghai, shares closed down 0.71 percent, with banks and property developers leading the decline amid renewed worries over local government debt. The Shanghai Composite Index ended down 18.60 points.
“Big caps, such as banks for instance, aren’t likely to make substantial gains because of ongoing issues about massive local government debt,” Zhang Xiang, an analyst from Guodu Securities, told Dow Jones Newswires.
Stocks in Sydney fell 0.86 percent as investors took a breather after a strong rally following last week’s volatile trading. At the close, the benchmark S&P/ASX 200 was 35.6 points lower at 4,247.3.
Seoul added a whopping 4.83 percent, or 86.56 points, to 1,879.87, after a public holiday on Monday.
US stocks rallied on Monday, erasing last week’s losses, after a raft of big merger and acquisition announcements spurred buying momentum.
The Dow Jones Industrial Average leaped 213.88 points (1.90 percent) to finish at 11,482.90. The broader S&P 500 was up 25.68 points (2.18 percent) at 1,204.49.
HONG KONG: Stocks slipped 0.24 percent yesterday after profit-takers moved in and as trade became cautious ahead of a key eurozone meet.
The benchmark Hang Seng Index lost 48.02 points to 20,212.08. It had rocketed 3.26 percent on Monday.
“Investors remain cautious ahead of a summit later between Germany and France… for now, I’m treating the market’s gains as a technical rebound after the recent selloff,” said Ben Kwong, chief operating officer at KGI Asia.
SINGAPORE: Major Southeast Asian stock markets retreated yesterday, giving up early gains as stagnant growth in Germany triggered risk aversion and prompted late selling in regional big-caps and financial stocks.
In Singapore, the Straits Times Index fell 1.45 percent, or 41.67 points, to close at 2,832.73.
Cyclical stocks, which normally drop rapidly when growth slows, erased early gains to fall, with Keppel Corp sliding 2.4 percent
KUALA LUMPUR: Share prices on Bursa Malaysia rebound ed in morning trade before slipping into consolidation yesterday. Advancing counters overwhelmed declining counters by 411 to 393.
The FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) fell from its intra-day high of 1,510.54 to its intra-day low of 1,497.33 yesterday. It closed at 1,498.24, giving a day-on-day loss of 1.50 points, or 0.10 percent.
In other Asian markets yesterday:
* Taipei fell 0.27 percent, or 20.80 points, to 7,798.59.
* Manila added 0.92 percent, or 40.07 points, to 4,372.70.
* Jakarta lost 0.17 percent, or 6.74 points, to 3,953.27.
* Bangkok fell 0.86 percent, or 9.30 points, to 1,077.02.
* Mumbai eased 0.65 percent, its third day of losses, with the Sensex index falling 108.69 points to 16,730.94, a 14-month-low.
VIETNAM: The VN Index ended with a slight gain of 0.56 percent to 386.48 pts. The total trading volume reached 17.9 million shares, up 13 percent in volume from the previous trading session.
The HNX Index also bounced 0.08 percent with a trading volume of 16 million units, equalling to the volume of the previous trading session.
euro OPE: European stocks tumbled yesterday after news of a sharp economic slowdown in Germany and Spain, and ahead of crisis talks between French President Nicolas Sarkozy and German Chancellor Angela Merkel.
Frankfurt’s DAX 30 slumped 2.71 percent to 5,859.07 and the Paris CAC 40 dropped 2.24 percent to 3,166.60, while London’s FTSE 100 slid 1.46 percent to 5,272.97 points.
Elsewhere, Madrid declined by 1.82 percent and Milan shed 2.48 percent in morning trade.
“European equities are trading lower this morning following a disappointing German GDP number, which showed that Europe’s largest economy grew at a slower pace than expected in the second quarter,” said analysts at Dolmen Stockbrokers in Dublin.
AMERICA: Worries about Europe’s economic and debt problems sent stocks Tuesday to their first loss in four days.
The major indexes bounced up and down in another volatile day. The Dow Jones industrial average fell more than 120 points in the first half hour of trading after a report showed that Germany’s economy stalled last quarter and dragged down growth for Europe.
The Dow recovered and had a slight advance at midday, but resumed its drop after the leaders of France and Germany tried to calm worries about Europe’s debt problems by pushing for long-term political solutions. Investors were hoping for immediate financial measures like the introduction of a single bond jointly backed by the eurozone’s members. The Dow fell as many as 190 points in the early afternoon before again recovering.
At the close, the Dow was down 76.97, or 0.7 percent, to 11,405.93. It was the first time in seven trading days that the Dow rose or fell by less than 100 points. The Standard & Poor’s 500 index fell 11.73, or 1 percent, to 1,192.76. The Nasdaq composite fell 31.75, or 1.2 percent, to 2,523.45.
“The real question the market is trying to answer is: Are we going to have another recession or not?” said John Burke, head of Burke Financial Strategies with $200 million in assets under management. “Today, the answer is maybe yes, because it doesn’t look like Europe has figured out a solution to its debt.”
A proposal for a Europe-wide tax on financial transactions also hurt stocks, said Nick Kalivas, vice president at broker MF Global. “It’s another slap in the face to the banking system” and would cut into profits and limit trading, he said. “The path toward economic growth still looks pretty uncertain.”
The day’s trading showed how critical economic developments about Europe have become to US investors. But Tuesday’s losses were moderate and pointed to some stability in the market after the selling that sent the S&P 500 down 17 percent from July 21 to last Wednesday.
In the US, economic reports Tuesday were mixed: Housing remains weak, but factory output rose last month at its fastest pace since an earthquake in Japan disrupted global manufacturing in March.
“Investors don’t know which way to go here,” said Paul Brigandi, senior vice president of Direxion Funds, which has about $7 billion in assets under management.
On one side, he said buying looks attractive because stocks are cheaper after the recent plunge.And more US companies on Tuesday joined the stream of those that have reported earnings above analysts’ expectations. But on the other side, selling looks appealing because of worries about the global economy and debt problems in the United States and Europe.
Prices for gold and Treasurys rose as money moved into investments considered safer. Oil fell on worries that a weaker economy will mean less demand for energy.
Fitch Ratings said Tuesday it will keep its credit rating on the United States at the top grade. Two of the three major credit-rating agencies now have stood by their AAA grade of US debt. Standard & Poor’s downgraded the US on August 5. That sent stocks on a volatile slide last week.
Europe’s economy and debt troubles have been among global investors’ main concerns over the last year and a half. On Tuesday, the European Union reported that economic growth in the 17 countries that use the euro slowed to 0.2 percent between April and June from 0.8 percent the previous quarter. Germany’s growth fell to 0.1 percent from 1.3 percent.
That will make it even tougher for Spain and other countries to raise revenue. Some European countries have borrowed so much that they may need help repaying debt.
French President Nicolas Sarkozy and German Chancellor Angela Merkel called for a “new economic government” for Europe and said all countries that use the euro should have mandatory balanced budgets and better coordination of economic policy. They also pledged to harmonise their corporate taxes to show they are “marching in lockstep” to protect the euro.
In the US, the government reported that homebuilders are still stuck in their years-long slump. They broke ground on new homes at an annual rate of 604,000 last month, according to the Commerce Department. That’s down from 613,000 in June. In 2005, before the housing bubble burst, housing starts were typically above 2 million.
Manufacturing may be recovering. The Federal Reserve said industrial production rose 0.9 percent last month on a pickup at auto factories, utilities and mines. Manufacturing was one of the strongest industries after the recession ended in 2009, but its growth has slowed this year.
The yield on the 10-year Treasury note fell to 2.22 percent from 2.31 percent late Monday as investors moved into things considered safer. A bond’s yield falls when its price rises. The 10-year yield fell to a record low of 2.03 percent last week.
Gold rose $27 per ounce to settle at $1,785. Last week, it rose above $1,800 for the first time.
Nearly three stocks fell for every one that rose on the New York Stock Exchange. Trading volume at 4.5 billion was close to its average over the last year of 4.3 billion.
The Dow rose 213 points Monday after a series of acquisitions led by Google’s $12.5 billion purchase of Motorola Mobility. Its rise of 763 points over three days was the Dow’s biggest since November 2008, during the depths of the financial crisis.
Benchmark Currency Rates USD EUR JPY GBP CHF CAD AUD HKD HKD 7.7921 11.1911 0.1015 12.8001 9.7977 7.9259 8.1488 - AUD 0.9562 1.3734 0.0125 1.5708 1.2024 0.9727 - 0.1227 CAD 0.9831 1.4120 0.0128 1.6150 1.2362 - 1.0281 0.1262 CHF 0.7953 1.1422 0.0104 1.3064 - 0.8090 0.8317 0.1021 GBP 0.6088 0.8743 0.0079 - 0.7654 0.6192 0.6366 0.0781 JPY 76.7680 110.255 - 126.107 96.5271 78.0861 80.2817 9.8520 EUR 0.6963 - 0.0091 1.1438 0.8755 0.7082 0.7281 0.0894 USD - 1.4362 0.0130 1.6427 1.2574 1.0172 1.0458 0.1283 Bloomberg