News Column

Asian Stocks Erase Early Gains

July 17, 2014

BEIJING (Alliance News) - Asian stocks erased early gains to end mostly lower on Thursday as concerns that the Federal Reserve may have to begin raising interest rates sooner offset positive US earnings and economic news. The US and EU have slapped fresh sanctions on Russia over the tense situation in Ukraine, further dampening investor sentiment.

Japanese shares gave up earlier gains, weighed down by a strengthening yen. The Nikkei average rose to 15,465.74 earlier in the day before reversing direction to end down 0.06% at 15,370.26. The broader Topix index ended on a flat note. Steelmakers Nippon Steel & Sumitomo Metal Corp and Nisshin Steel lost 1-2%, brokerages Nomura Holdings and Daiwa Securities Group fell about a percent each and shipping line Nippon Yusen K.K. shed 1.4%, while Sharp Corp rose 1.6% on a brokerage upgrade.

Fuji Heavy Industries ended marginally lower on a Nikkei report the company saw its operating profit climb 15% in the April - June quarter. Sumitomo Electric Industries added 1.2% after raising its profit forecast. Mobile carrier KDDI closed 0.1% lower after rising in the morning on news it tied up with trading house Sumitomo for a deal to invest about USD2 billion in developing wireless networks in Myanmar. Oil and metals group JX Holdings rose 0.6% on a report it will build hydrogen stations for fuel-cell vehicles.

Chinese shares fell, dragged down by automakers and property developers ahead of home price data due on Friday. The benchmark Shanghai Composite index dropped 0.57% to 2,055.59. Hong Kong shares ended on a flat note, with the benchmark Hang Seng index closing down 0.01% at 23,520.87.

Australian shares ended marginally higher after paring early gains. The benchmark index S&P/ASX 200 and the broader All Ordinaries index both closed up about 0.1% each, with miners pacing the gainers, as iron ore prices held near a seven-week high on expectations of firmer demand and increased bets of a market recovery. BHP Billiton, the world's largest miner, rose 0.8% and rival Rio Tinto advanced 1.3%, while Fortescue Metals Group, Iluka Resources and Arrium jumped 2-6%.

In the banking space, NAB edged up marginally and ANZ rose 0.2%, but Westpac lost 0.7% and Commonwealth slid 0.2%. Woodside Petroleum gained 0.6% after reporting a double-digit rise in second-quarter production and sales. AGL Energy tumbled 5.5% after the company said the repeal of the carbon tax could reduce its full-year 2015 earnings before interest and tax by approximately USD186 million.

On the economic front, Australian business confidence eased in the second quarter of this year, but remained at relatively resilient levels post-budget, survey results from the National Australia Bank showed. The index fell slightly to 6 from 7 in the previous quarter, registering its second consecutive fall from the election driven high of 2013.

Separately, the Conference Board's leading economic index for Australia added 0.2% in May, the US think tank revealed, following the downwardly revised 0.2% contraction in April. The coincident index held steady after a 0.22% gain in the previous month.

Seoul shares gained ground after Finance Minister Choi Kyung Hwan said an economic recovery in Asia's fourth-largest economy is fragile, fueling hopes for a rate cut. The benchmark Kospi average rose 0.37% to 2,020.90, its highest level in the year. The Korean won strengthened against the greenback, snapping its two-day losing streak.

In economic news, producer prices in South Korea were unchanged in June from the previous month, the Bank of Korea reported - following a similar reading in May.

New Zealand shares ended little changed with a negative bias, as investors offloaded growth stocks to invest in high-yield dividend stocks. The benchmark NZX-50 index slipped 0.04% to 5,112.39. Xero tumbled 4.7% to its lowest level since October, A2 Milk Company dropped 1.5% and Diligent Board Members Services shed 1.2%, while energy stocks MightyRiverPower and Genesis Energy both closed up more than a percent each.

Kathmandu Holdings rallied 2.7% to a month high as the results of a survey by ANZ Bank and Roy Morgan Bank showed confidence among New Zealand consumers increased for the second consecutive month in July. The headline index rose to 132.7 from 131.9 in June after hitting a six-month low in May.

Elsewhere, Indonesia's Jakarta Composite index was losing 1.3%, the Taiwan Weighted average dropped 0.8%, Malaysia's KLSE Composite was down 0.2% and Singapore's Straits Times index was moving down 0.1%, while India's Sensex was marginally higher after two days of strong gains.

Singapore's non-oil domestic exports decreased more than expected in June, though at a slower rate than in May, a report from the country's International Enterprise showed.

US stocks rose overnight, with sentiment underpinned by better-than-expected Chinese economic data, upbeat earnings from Intel and merger-and-acquisition news. On the economic front, solid manufacturing and housing data stoked fears of an early interest rate hike even as Fed Chair Janet Yellen's comments on the second day of testimony mirrored those she delivered the previous day. The Dow rose half a percent, the tech-heavy Nasdaq added 0.2% and the S&P 500 gained 0.4%.

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Source: Alliance News

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