Inside Financial Markets

Asian Stocks Fall as Topix Declines on Earnings; Gasoline Rises

asian markets1Asian Stocks Fall as Topix Declines on Earnings; Gasoline Rises

Asian stocks fell, with the regional benchmark index trimming a fifth weekly advance, as Japanese shares dropped amid disappointing earnings. The yen and South Korea’s won climbed, while gasoline rebounded.

The MSCI Asia Pacific Index dropped 0.5 percent to 135.50 as of 12:33 p.m. in Tokyo, reducing its climb in the week to 0.4 percent. Japan’s Topix index headed for its biggest drop since mid-June. The yen advanced a second day against the dollar, while the won rose 0.5 percent. Standard & Poor’s 500 Index futures added 0.1 percent. Gasoline futures climbed 0.7 percent, snapping a two-day loss. Gold added 0.4 percent.

Samsung Electronics Co. (005930), the largest smartphone maker, posted disappointing profits and Advantest Corp. (6857) had a wider-than-estimated loss. Of companies on MSCI’s Asian gauge that have reported results this month, 58 percent exceeded profit estimates and 52 percent missed revenue forecasts. China’s industry ministry ordered more than 1,400 companies in 19 industries to cut production capacity this year. Federal Reserve policy makers meet next week, and the U.S. will report on economic growth and employment.

“Considering profit margins are pretty elevated and valuations are fair, there isn’t a tremendous upside to the equity market now unless you get earnings coming through,” Chad Padowitz, the Melbourne-based chief investment officer at Wingate Asset Management, said by phone in Sydney. “There’s not a massive amount of risk appetite out there.”

Topix, Kospi

MSCI’s regional index was poised for a five-week gain, the longest such winning streak since January, and is up 4.8 percent on the year. Toyota Motor Corp., a Japanese carmaker that gets 31 percent of its revenue in North America, declined 2.5 percent as the yen rose. Advantest slumped 9.8 percent after posting a 3.6 billion yen ($36 million) quarterly loss.

The Topix slid 2.7 percent. Japanese consumer prices rose the most since 2008 in June, data today showed, signaling the second-largest Asian economy may be emerging from deflation.

The Kospi gauge in Seoul was up 0.1 percent, while Australia’s S&P/ASX 200 Index gained 0.4 percent.

Samsung lost 0.67percent after posting net income of 7.58 trillion won ($6.8 billion) for last quarter, versus an average analyst estimate of 8.02 trillion won.

Posco, a South Korean company that’s Asia’s fourth-biggest steelmaker by output, had a 51 percent drop in second-quarter profit yesterday, missing estimates. Japan’s Nissan Motor Co. posted a 14 percent increase in second-quarter net income yesterday, while Korea’s Hyundai Motor Co.’s profit fell for a third-straight quarter.

Yen Rallies

Hong Kong’s Hang Seng Index rose 0.1 percent, while the Shanghai Composite Index slid 0.8 percent. China, which reports industrial profit data tomorrow, directed more than 1,400 companies in industries from steelmaking to papermaking to cut excess capacity by year-end, according to a statement posted on the Ministry of Industry and Information Technology’s website yesterday.

The yen climbed 0.5 percent at 98.84 per dollar, poised for a 1.8 percent advance in the week. The won strengthened to 1,110.60 per dollar, up 1 percent this week.

Global stocks have been see-sawing as investors examine U.S. economic data to try and gauge when the Federal Reserve will start to curb its $85 billion-a-month in bond buying. Annual gross domestic product in the U.S. probably grew 1 percent between April and June, from an expansion of 1.8 percent in the previous three months, according to the median estimate in a Bloomberg News survey of economists. Nonfarm payrolls likely expanded by 184,000, another poll showed.

Fed Purchases

The Fed will start trimming purchases in September, according 50 percent of economists surveyed by Bloomberg. Fed Chairman Ben S. Bernanke said last week it is “way too early to make any judgment” as to whether policy makers will start tapering purchases that month. The central bank has said economic data will determine the timing and pace of any reduction in the quantitative easing program.

Data in the U.S. yesterday showed bookings for durable goods meant to last at least three years rose 4.2 percent, three times the median forecast of economists. Another report showed claims for jobless benefits rose by 7,000 to 343,000 in the period ended July 20.

Yields on 10-year Treasuries were little changed at 2.58 percent, after dropping two basis points, or 0.02 percentage point, yesterday.

Gold rose to $1,338.72 an ounce and is up 3.3 percent in the week. Russia and Kazakhstan expanded their gold reserves for a ninth-straight month in June as purchases slowed amid a price slump.

West Texas Intermediate crude was steady at $105.49 a barrel in New York. Crude is down 2.4 percent this week, set for the first five-day drop this month. Gasoline futures rallied from a two-week low, trading at $3.037 a gallon.

The cost of insuring corporate and sovereign bonds against non-payment in Australia rose, according to traders of credit-default swaps. The Markit iTraxx Japan index fell 0.5 basis points to 98.5 basis points as of 9:28 a.m. in Tokyo, according to Citigroup Inc. prices. The gauge is set to fall for the first time in three days, according to CMA.


Sanie Khan

Sanie Khan holds a deep knowledge of the financial markets in Pakistan. Based in Karachi, he has over 20 years of hands-on management experience in financial technologies and managing operations in the financial sector. He was the General Manager at the Pakistan Stock Exchange (PSX) for 17 years. He along-with senior members of Exchange

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Inside Financial Markets was a joint publication of Pakistan Stock Exchange (PSX)and Society of Technical Analysts Pakistan (STAP)