Concerns over the economic impact of swine flu triggered a sell-off on Wall Street on Monday and most Asian markets took cues and slipped into the red in early trading today. However, shrugging off early setbacks, the Asian markets rebounded into positive zone with participants going on bargain hunting at lower levels. Still, the mood is not significantly positive right now with the possible impact of swine flu on the U.S. economy weighing in to a notable extent.
The benchmark indices of Hong Kong and Japan are trading firm. While the Hang Seng is up 50.12 points, the Nikkei 225 is trading 38.51 points up.
The Australian benchmark S&P/ASX 200 and the New Zealand index NZX 50 are also trading firm with sharp gains. The Australian index is trading 36 points up while the New Zealand benchmark is up 21 points. KOSPI, the Korean index, is down marginally. The Singaporean Straits Times and the Shanghai Composite index are also trading in the red with marginal losses.
Consumer staples, energy, financials, healthcare, industrials, materials and utilities stocks are trading firm in the Australian stock market.
In the Japanese market, Shares of Chugai Pharmaceutical Co. which produces influenza treatments, moved up sharply in early trading with fears of a swine flu pandemic sparking some strong buying in the drug stock. Takeda Pharmaceutical, Daiichi Sankyo and Dainippon Sumitomo Pharma also moved up sharply.
Construction, food and textiles stocks are trading mixed. Chemicals are mostly trading weak. Steel, machinery, real estate, shipbuilding and automobile stocks are also trading weak. In the banking space, Shizuoka Bank, Chiba Bank, Chuo Mitsui Trust Holdings and Mitsubishi UFJ Financial Group Inc are trading marginally higher.
The economy will bottom out later this year if the supplementary budget clears the Diet, says Fujio Mitarai, chairman of the Japan Business Federation, or Nippon Keidanren, indicating that the Japanese economy has emerged from the worst period.
In South Korea, automobile, oil, bank and technology stocks are trading mixed. Shares of Airliners and shipbuilders are trading weak.
Concerns over the economic impact of the swine flu kept Wall Street in negative terrain for the major part of the session on Monday. Healthcare stocks were seen attracting buyers.
While Hugh Johnson, chief investment officer for Johnson Illington Advisors told RTTNews that traders used the swine flu scare as an excuse to take some money off the table, he warned that a full blown epidemic could lead to a 10 to 15 percent correction. Although the flu does seem to be spreading, many doctors agree that the swine flu is no more panic worthy than any other breakout of the human flu during flu season.
President Barack Obama said Monday that the spreading swine flu is something that should raise the country's state of alert but should not be seen as a cause for alarm.
On the corporate front, Verizon reported first-quarter net income of $0.58 per share, compared to $0.57 per share in the year-ago period. Excluding special items, net income attributable to Verizon was $0.63 per share, compared to $0.61 per share in same quarter last year. On average, analysts expected the company to report earnings of $0.59 per share.
Whirlpool Corp. reported first quarter earnings of $0.91 per share, compared to $1.22 per share in the prior-year quarter. The company reported net sales of $3.57 billion, down from $4.61 billion in the year-ago period.
General Motors announced plans to restructure its operations in order to avoid the pitfalls of bankruptcy and the stock gained as much as 20%, its biggest single-session advance in more than a month. The company announced that it will cut 21,000 hourly jobs and reduce its U.S. dealer count by 42 percent by the end of 2010 under a revised viability plan. The company also plans to phase out its Pontiac brand and focus on its four core brands in the U.S.
Qualcomm announced it has entered into a settlement and multi-year patent agreement with Broadcom, which will result in the dismissal with prejudice of all litigation between the companies.
Stock markets across the Asia-Pacific region closed mostly lower on Monday amid concerns about the impact of the swine flu outbreak. The Japanese market bucked the downtrend, however, with the Nikkei 255 Index edging up 0.2 percent.
Major European markets closed mixed. While the French CAC 40 Index closed down slightly, the U.K.'s FTSE 100 Index and the German DAX Index posted gains of 0.3 percent and 0.4 percent, respectively.
Trading on Tuesday could be impacted by the release of the S&P/Case-Shiller Composite Housing Index. Additionally, the Conference Board's consumer confidence index is also expected to be released.
On the earnings front, Pfizer, Office Depot, U.S. Steel and Bristol-Myers Squibb will report on Tuesday.
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