News Column

Asian Stocks Mixed As Ukraine Worries Keep Investors Nervous

July 18, 2014

CANBERA (Alliance News) - Asian stocks turned in a mixed performance on Friday as geopolitical worries sapped investors' appetite for risk. Fears of further turmoil rattled investors after a Malaysian airliner carrying 295 people crashed in eastern Ukraine and Israel announced a ground offensive into Gaza, pushing crude prices sharply higher overnight. Investors also pondered how fresh sanctions targeting Russia will impact the global economy.

Japanese shares fell sharply, with the benchmark Nikkei average falling about a % to 15,215.71, a one-week low, while the broader Topix index slid 0.8%. Among the prominent decliners, Nippon Soda, NKSJ Holdings, Okuma Corp and Yamaha Corp fell 2-4%. The safe-haven yen held overnight gains against the dollar and rose to a five-month high against the euro, pressuring exporter shares.

Hitachi lost a %, Mazda Motor declined 1.4%, Mitsubishi Motors retreated 1.9% and Sharp Corp lost 2.1%. Heavyweight Fast Retailing dropped 1.6%, Fanuc shed 0.8% and SoftBank Corp eased 0.3%.

In economic news, members of the Bank of Japan's monetary policy board were content with the pace of the country's economic recovery despite downside risks stemming from the pace of the economic recovery in the US and debt concerns in Europe, minutes from the bank's June 12-13 meeting revealed. The central bank acknowledged the subsequent decline in demand following the front-loaded increase prior to the consumption tax hike.

Chinese shares erased early losses to end in positive territory. The benchmark Shanghai Composite rose 0.17% to 2,059.07, snapping a two-day losing streak. Property developers rose, with China Vanke and Poly Real Estate Group climbing more than 3% each, on speculation curbs will be relaxed after official data showed average new home prices in China's 55 major cities fell in June from the previous month.

New home prices in Hangzhou fell the most, by 1.7%, followed by home prices declines in Luoyang, Changchun, Xiangyang and Guilin. Prices in major cities like Shanghai and Shenzhen dropped by 0.7% and 0.4%, respectively.

Hong Kong'sHang Seng index dropped 0.28% to 23,454.79 after Chinese Premier Li Keqiang reiterated that his country is looking for qualitative growth. Growth rate higher or lower than 7.5% in 2014 would be acceptable as long as it creates jobs and boosts incomes, state-run Xinhua News Agency quoted Li Keqiang as saying at an economic symposium on Thursday. Li said the government will stick with targeted macro-control policies and permit the market to play a bigger role.

Australian shares rose modestly, led by gains in the banking sector. The benchmark S&P/ASX 200 index erased early losses to finish up 0.2% at 5,531.6. Commonwealth edged up marginally, while NAB, ANZ and Westpac closed up between 0.5% and 0.8%. Miners fell broadly, with BHP Billiton down 0.4%, Rio Tinto declining 0.7% and Fortescue Metals Group falling 1.5%. Newcrest Mining rallied 3.2% after a sharp jump in gold prices overnight.

Energy giant Santos shed 0.4% despite the company reporting increases in second-quarter production, sales and revenue. Woodside Petroleum rose 0.8%, Origin Energy added 0.4% and Caltex Australia advanced 0.2%. Asciano jumped 3.8% as the ports and rail operator confirmed it is in talks with third parties to sell a non-controlling interest in its terminal and logistics business.

Seoul shares retreated as continued tensions in Ukraine sparked a bout of global risk aversion. The benchmark Kospi average fell to as low as 2,006.01 before recouping most of its loss to end down 0.07% at 2,019.42.

New Zealand stocks fell marginally, joining a global sell-off on geopolitical worries. The benchmark NZX-50 index slipped 0.07% to 5,108.93. Growth stocks Xero and Pacific Edge fell about 4% each and milk marketing firm A2 Milk Company tumbled 3%, while high dividend yielding stocks such as Goodman Property Trust, Meridian Energy and Telecom Corp rose between 0.4% and 0.9% on defensive buying. Gold miner OceanaGold soared 9.4% as increased risk aversion drove demand for safe-haven assets such as gold and bonds.

Elsewhere, Malaysia's KLSE Composite index was down half a % and Taiwan's Weighted average edged down marginally, while the benchmark indexes in Singapore, Indonesia and India were up between 0.1% and 0.3%.

US stocks fell sharply overnight as investors fled riskier assets amid fresh geopolitical worries. Traders also digested mixed economic reports, with housing starts and building permits unexpectedly falling in June while manufacturing activity in the Philadelphia area came in better than expected. The Dow fell 0.9%, the tech-heavy Nasdaq dropped 1.4% and the S&P 500 shed 1.2%.

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Source: Alliance News

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