RTTNews - Asian markets ended weaker on Wednesday following late sell-off in Wall Street, on concerns about global economy. Drop in core machinery orders in Japan and continued drop in crude oil prices also dampened sentiment ahead of the earnings season in the U.S, which kicks off today with the release of results of Alcoa.
In the U.S., stocks ended in negative territory following a sharp decline in commodity prices in a late reaction to the acknowledgment by Vice President Joe Biden in an interview on Sunday that the Obama administration misread the economy. The uncovering of yet another Ponzi scheme by the SEC involving Dallas businessmen to the tune of $485 million also unsettled the investors.
Moderately strong demand for the Treasury's auction of $35 billion worth of three-year notes earlier in the day had little impact on trader sentiment, as they preferred to lock-in gains in a late sell-off and moved to the sidelines amid expectations for yet another stimulus package from the U.S Government. Technology, energy and oil stocks took the beating amid concerns about slackening demand and bleak future. The dollar continues to weaken against the Japanese Yen, while it strengthened against the euro and the pound.
The Dow fell 161.27 points or 1.9% to 8,164, the Nasdaq closed down 41.23 points or 2.3% at 1,746, and the S&P 500 dropped by 17.69 points, or 2% at 881.
The Nikkei 225 Average opened sharply lower at 9,549 compared to its previous close of 9,648 taking cues from Wall Street where a late-day sell-off dragged the indices into negative territory. Unexpected drop in core production orders for May and strengthening of the local currency against the greenback also impacted trading ahead of the earnings season in the U.S. The index ended the day in the red with a loss of 227.04 points, or 2.35% at 9,421. The broader Topix Index of all first section issues issues fell 20.59 points, or 2.3%, to 889.
On the economic front, the Cabinet Office revealed that core machinery orders declined 3.0% in May compared to April, marking the third straight decline and signaling a continued slowdown in business activity as companies curtail capital spending. Another report revealed that the country recorded an overall trade surplus of 1.302 trillion yen in May.
Light sweet crude oil price for August delivery ended at $62.12, representing a loss of $0.81 a barrel in Asian trading, after having shed about $1.13 a barrel in the previous session to $62.93 a barrel on concerns about weak demand.
Exporters declined following a stronger local currency. Honda Motor declined 4.02%, Canon Inc fell 1.42%, and Konica Minolta lost 2.71%.
Banking stocks declined following data showing slower growth rate in lending operations. Mitsubishi UFJ lost 3.40%, Mizuho Financial fell 1.85%, Bank of Yokohama slumped 5.27%, Resona Holdings slipped 1.17% and Sumitomo Mitsui declined 4.20%.
Among metal stocks, Pacific Metals Co., declined 3.33%, Nippon Light Metal Co lost 4.04%, and Sumitomo Metal Mining fell 2.88%.
In Australia, the All Ordinaries Index opened unchanged from its previous close at 3,768 and drifted into negative territory following weak cues from Wall Street where traders sold-off in late trading amid economic concerns. However, positive news from China on iron ore prices as well as economic reports helped stage a rally led by miners and banks. The index almost recovered all of its losses and ended with a minor loss of 1.80 points, or 0.05% at 3,766. The benchmark S&P/ASX 200 Index, albeit following a similar trend, just managed to squeeze in to positive territory and ended with a gain of 1 point, or 0.03% at 3,768.
On the economic front, survey results released by the Westpac Bank and Melbourne Institute revealed that Consumer sentiment in the country increased by 9.3 percent in July compared to June. The July index reading advanced to a seasonally adjusted 109.4, its highest level since December 2007. The Australian Bureau of Statistics revealed that number of loans issued for new housing increased in May by 2.2% over April. The Bureau said loan approvals to build houses was up a seasonally adjusted 8.0% on month in May, approvals to purchase newly built homes were up 2.9%, and the number of approvals to purchase existing houses was up 1.5%.
Mining stocks advanced following news in a Chinese Website which revealed that China scaled down its demand for cut in iron prices to 33% as against its earlier demand for a deeper 45% cut. Rio Tinto gained 1.80%, Fortescue Metals added 2.60%, Macarthur Coal advanced 5.16%, and Minara Resources surged 6.12%. BHP Billiton, however, ended in negative territory with a loss of 0.34%.
Financial stocks advanced on hopes of recovery following positive economic data. ANZ Bank jumped 2.62%, Commonwealth Bank Australia added 0.73%, National Australia Bank gained 1.93% and Westpac Banking edged up 0.10%.
Qantas Airways declined 2.37% following report that demand for premium seats in its flights has declined considerably in comparison with coach class seats due to slowdown in the global economy.
Gold stocks declined on lower bullion prices. Lihir Gold lost 1.05%, Newcrest Mining fell 1.96% and Sino Gold declined 1.82%.
Oil stocks declined following downward slide in crude oil prices in international market. Woodside Petroleum edged down 0.67%, Santos lost 1.97% and Oil Search fell 2.23%.
In Hong Kong, the Hang Seng Index opened sharply lower at 17,653 compared to its previous close at 17,862, mirroring the sell-off in late rally on Wall Street on concerns about economy. The index continued to move southward during morning session. However, bargain hunting at lower levels helped the index trim the losses partly as traders exercised caution ahead of earnings season n the U.S. The index finally ended the session in negative territory with a loss of 141.20 points, or 0.79%, at 17,721.
China Resources advanced 5.37%. Among telecom stocks, China Unicom gained 5.07% and Tencent Holdings added 2.91%.
Resource stocks continue to move southward on concerns about demand. Coal-miner China Shenhua declined 0.90%, Aluminum Corp of China, or CHALCO, lost 0.71%, PetroChina fell 2.33%, and CNOOC shed 1.44%.
Property stocks also ended weaker. Sino Land edged down 0.76%, Wharf Holdings eslipped 0.17%, SHK Properties lost 1.50% and New World Development slumped 4.50%.
In South Korea, the benchmark KOSPI Index ended in the negative territory amid lackluster trading characterized by thin volumes, as traders exercised caution ahead of earnings season in the U.S. Foreign institutional investors sold off stocks and locked in gains from recent rally amid bleak outlook about recovery The market opened slightly lower at 1,425 compared to previous close at 1,434 on weak cues from Wall Street. The index drifted lower on weak commodity prices and global cues. However bargain hunting in late trading helped trim the losses to some extent. The index ended with a loss of 3.18 points or 0.22% at 1,431.
Steel major POSCO lost 1.18% and Hyundai Steel fell 2.44%. Among the financials, Hana Financial Group declined 3.42%, Woori Finance fell 0.87%, Shinhan Financial Group lost 1.50% and KB Financial Group edged down 0.56%.
Technology stocks ended in positive territory after Samsung Electronics projected better-than-earnings guidance for the second quarter. The stock advanced 0.77%. Among others in the group, LG Electronics gained 1.54% and LG Display edged up 0.39%.
Hyundai Motor gained 2.76% after unveiling its first hybrid car in the market. Kia Motors advanced 3.96%.
In India, the stock market ended in the negative territory on global cues over economic recovery.
The BSE Sensex finished at 13,769, down 401.30 points, or 2.83% from its previous close and the Nifty Index slumped 123.25 points, or 2.93% points, to close at 4,079.
Among other major markets in the region, China's Shanghai Composite Index ended in negative territory with a loss of 8.68 points, or 0.28% to close at 3,081, Singapore's Strait Times Index glost 12.49 points, or 0.79% to 2.260, and Taiwan's Weighted Index fell 47.08 points, or 0.70% to close at 6,668.
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