News Column

Asian Stocks Fall On China Data

August 5, 2014

CANBERA (Alliance News) - Asian stocks fell broadly on Tuesday as investors weighed company earnings and weak Chinese data. Ongoing concerns about the situation in Ukraine and the Middle East as well as fears over the health of the European banking sector following the bailout of Portugal'sBanco Espirito Santo also kept investors nervous.

Chinese shares fell from nearly eight-month highs hit on Monday after data from Markit Economics showed the country's services sector growth fell to its weakest level since records began, reflecting the impact of a continued slowdown in the property market. Its services PMI for China came in at the 50 mark in July, down from 53.1 in June and marking its lowest reading since November 2005. The composite index fell to 51.6 from 52.4 in the previous month. The benchmark Shanghai Composite index fell 0.15% to 2,219.95 after climbing 1.7% yesterday.

Hong Kong'sHang Seng index rose 0.2% to 24,648.26, led by gains in index heavyweights HSBC Holdings and Tencent. Hong Kong's private sector activity expanded in July as output improved, a survey by Markit Economics and HSBC Bank showed. The HSBC PMI for the private sector rose marginally to 50.4, its highest reading in five months, from 50.1 in June.

Japanese shares fell for a fourth day on concerns over China's economy. The benchmark Nikkei average fell 154 points or a percent to 15,320.31, its lowest level since July 24. Honda Motors slipped 0.8%. The automaker reported a 23% slump in July China vehicle sales. Isuzu Motors rallied 3.2% after the company reported a 23% decline in net profit for the June quarter.

Toyota Motor ended marginally higher before reporting its results after market hours. The company reported a better-than-expected 5% increase in quarterly profit, as vehicle sales grew in North America and Europe. In economic releases, the services sector in Japan moved to expansion in July with a score of 50.4, up from 49.0 in June, the latest survey from Markit Economics revealed. The composite index climbed to 50.2 from 50.0 in the previous month.

Australian shares fell for the third straight session as investors waited for more cues from the ongoing earnings season. The benchmark S&P/ASX 200 index slid 0.4% to finish at 5,518.6, a 2-1/2 week low. The big four banks fell between 0.2% and 0.6% after the Reserve Bank of Australia left its key interest rate at a historic-low level of 2.50% as widely expected by economists.

The rate has been at the current level since August 2013. The monetary policy board assessed that current policy settings are appropriately configured to support sustainable growth in demand and inflation outcomes consistent with the target.

In the mining sector, BHP Billiton dropped 0.8%, Rio Tinto eased 0.2% and Fortescue Metals Group shed 0.8%. Gold stocks bore the brunt of the selling after gold prices slipped overnight on fears of a sooner-than-expected increase in US interest rates. Newcrest declined 1.5% and Beadell Resources slumped 4.8%.

Downer EDI tumbled 4.2% as the engineer group warned of a tough year ahead, citing very difficult mining markets. Transurban Group fell 0.9% even as the toll road operator reported a sharp 44.5% jump in full-year net profit. Cochlear shares soared 10.3% after the bionic ear maker reported a smaller-than-expected 29% fall in full-year profit.

On the economic front, Australia saw a seasonally adjusted merchandise trade deficit of AUD1.683 billion in June, official data showed, beating expectations for a shortfall of AUD2.0 billion following the downwardly revised AUD2.043 billion deficit in May. Exports were flat from the previous month, while imports eased 1.0%.

Australia's performance of service index continued to contract in July, but at a slower pace, while the ANZ-Roy Morgan Consumer Confidence fell a modest 1.0% to 115.0 in the week ended August 3, separate reports showed.

Seoul shares fell notably as weak Chinese data prompted investors to lock in some profits following a recent rally. The benchmark Kospi average fell 0.68% to 2,066.26. Market heavyweight Samsung Electronics ended little changed after rallying 2% the day before, while Hyundai Motor eased 0.6% and its affiliate Kia Motors tumbled 1.6%.

New Zealand shares rebounded from a four-month low as investors hunted for high dividend-yielding stocks. The benchmark NZX-50 index rose 0.26% to 5,104.16. Resin manufacturer Nuplex, national carrier Air New Zealand and online auction site Trade Me all rose more than 2% each, while Gentrack shares extended declines to end down 0.9% at a record low below its initial public offering price.

India's Sensex was moving up 0.2% after the Reserve Bank of India kept its policy rates unchanged while cutting statutory liquidity ratio (SLR) by 50 basis points to 22%. Indonesia's Jakarta Composite index was declining 0.4% as data showed the country's growth rate hit a five-year low in the second quarter. Elsewhere, the Taiwan Weighted average fell 2%, while Singapore's Straits Times was up 0.2%.

US stocks rebounded from two days of losses on Monday, as Berkshire Hathaway's results and a bank bailout in Europe gave investors a reason to buy stocks. Nonetheless, trading activity remained somewhat subdued amid the absence of any major US economic data. The Dow rose half a percent, while the tech-heavy Nasdaq and the S&P 500 gained about 0.7% each.

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Source: Alliance News

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