Thursday, July 21, 2011

EU Summit

Asian stock markets closed mostly higher on Thursday, as optimism mounted that European leaders would agree on a second round of aid for Greece during a summit due later in the global day. But the gains were modest, as investors awaited progress on U.S. debt talks and data from China showed a contraction in manufacturing for the first time in a year.
The euro rose against the dollar after German government spokesman Steffen Seibert said Germany and France had reached a common position for a bailout of Greek debt. Meanwhile, crude and copper prices eased on concerns that a slowing China may dampen demand for commodities.
The Japanese market held on to its Wednesday's gains, as investors focused on the EU and US talks for resolving their debt crises. The benchmark Nikkei average edged up marginally, while the broader Topix index slid 0.1 percent. Among exporters, Toyota Motors lost half a percent and Panasonic fell 2.7 percent as profit taking crept in following yesterday's gains.
Fast Retailing climbed 2.9 percent on a brokerage upgrade. Tokyo Electric Power soared 16 percent to Y590, its highest closing level since March 28, on reports of political progress over the utility's compensation for victims in connection with the accident at its Fukushima No. 1 nuclear power plant. Hard-drive parts maker TDK fell 2.2 percent after market leader Seagate Technology reported a 69 percent decline in fiscal fourth-quarter earnings.
On the economic front, Japan's exports fell 1.6 percent from a year earlier in June compared to expectations for a 4.1 percent decline, while imports rose 9.8 percent, netting a merchandise trade surplus of 70.7 billion yen for the month, the Ministry of Finance said. This compares to analyst expectations for a deficit of 149 billion yen following the downwardly revised 855.8 billion yen shortfall in May.
China's Shanghai Composite index ended down a percent, extending declines for the fourth straight session, as weak manufacturing data and inflation worries dragged down banking stocks. China's manufacturing sector contracted for the first time in a year in July, as production declined at the fastest rate since March 2009 and new export orders slowed, flash survey results from Markit Economics showed.
The HSBC China manufacturing Purchasing Managers' Index fell to a 28-month low of 48.9 in July from 50.1 in June, with a reading below 50 indicating contraction in manufacturing activity. According to the survey, input price inflation advanced during the month after falling to an eleven-month low in June, while output prices continued to increase, albeit at a slower pace. Investors are worried that inflation may rise further in July after climbing to a three-year high of 6.4 percent in June.
Hong Kong's Hang Seng index closed little changed with a negative bias, as investors remained concerned about debt issues on both sides of the Atlantic.
Australia's S&P/ASX 200 posted a modest 0.1 percent gain, as gains in energy and resource stocks were offset by weak reading on the Chinese economy. The broader All Ordinaries index closed 0.2 percent higher. Financial stocks closed mostly higher led by National Australia Bank, which ended up 1.3 percent. BHP Billiton rose 0.3 percent after reporting record production for four key commodities a day before, but rival Rio Tinto slipped 0.2 percent.
News Corp rose 1.6 percent after its chief executive Rupert Murdoch flew out of Britain ending a turbulent 11-day visit dominated by the fallout from the phone-hacking scandal. Newcrest Mining lost half a percent despite reporting a 16 percent rise in fourth-quarter gold production. Santos edged down 0.3 percent after the oil and gas firm reported an 8 percent rise in second-quarter production to 11.9 million barrels and maintained its production guidance.
South Koea's Kospi average closed half a percent lower, with shipbuilders leading the declines after Hyundai Heavy Industries reported a 17 percent fall in second-quarter net profit. Shares of the world's largest shipyard slumped 5.1 percent, Samsung Heavy Industries fell 2.9 percent and Daewoo Shipbuilding closed down 0.7 percent. LG Chem plunged 6.5 percent after the chemicals maker reported a 3.3 percent fall in second-quarter profit.
Technology shares drifted down, with chipmaker Hynix Semiconductor ending down 2.3 percent and Samsung Electronics losing 1.1 percent. Hynix reported a 34 percent fall in its second-quarter profit due to falling prices for memory chips. Hana Financial Group closed almost 2 percent higher after its second-quarter profit more than doubled from a year earlier on gains from selling its stake in a construction company and amid improved profit margins.
The New Zealand market rose for a third day, with KiwiSaver fund flows helping the market outperform other regional markets. The benchmark NZX-50 index closed 0.4 percent higher. NZX led the gainers, climbing 5 percent after a clean audit of its grain trading business. Kathmandu Holdings, the outdoor clothing and equipment retailer, climbed 3.3 percent, Telecom, the nation's biggest phone company, rose 1.8 percent, lender Australia & New Zealand Banking Group gained 1.2 percent and building materials manufacturer and distributor Fletcher Building edged up 0.4 percent.
Auckland International Airport rose 0.7 percent, shrugging off data that showed the number of short-term visitors to New Zealand dropped 10 percent last month. Rakon, the manufacturer of crystal oscillators used in GPS units and cellphones, fell over 2 percent, Vector, the Auckland electricity and gas distributor, lost 1.7 percent and whiteware manufacturer Fisher & Paykel Appliances Holdings closed down 1.6 percent.
Elsewhere, Indonesia's Jakarta Composite was up 0.4 percent, Malaysia's KLSE edged up 0.2 percent, Singapore's Straits Times was 0.4 percent higher and the Taiwan Weighted posted a modest 0.1 percent gain, while India's Sensex was down 0.3 percent.
U.S. stocks drifted lower overnight, as data showing an unexpected decrease in existing home sales and lingering concerns about the U.S. debt limit outweighed upbeat earnings news from Apple. After bouncing back and forth across the unchanged line, the Dow and the S&P 500 ended down about 0.1 percent each, while the Nasdaq slipped 0.4 percent.
Looking ahead, investors await earnings reports from Microsoft and Morgan Stanley after Intel reported adjusted earnings of 59 cents a share on sales of $13.1 billion for the second quarter, surpassing estimates.