RTTNews - Asian markets are trading weak on Wednesday with investors indulging in some heavy selling on renewed concerns over the state of global economy. Notwithstanding some modest buying in select stocks, most of the markets in the region are seen struggling in the red since trading commenced this morning.
With economic reports from across the globe not turning out to be any encouraging and with earnings reports due soon, participants appear wary of picking up stocks today.
The Australian market is off its morning lows now, thanks to some positive news on the consumer confidence front. Still, the market is seen languishing in the red with several energy, materials, healthcare, industrials and utilities stocks exhibiting weakness.
The Australian benchmark S&P/ASX, which had slipped to around 3,710 earlier in the day, is currently down by 36 points at, 3731. The All Ordinaries index is trading at 3,729.5, down 38.3 points from its previous close.
Consumer confidence surged in July, hitting its highest level in about 18 months, as Australians stayed optimistic about the outlook for the domestic economy. The Westpac-Melbourne Institute index of consumer sentiment rose a seasonally adjusted 9.3% in the month to 109.4. The reading showed optimists out-numbered pessimists quite decisively, for the first time since December 2007. The index saw the second-largest monthly rise since 1974, when the survey began.
In another report, the number of finance commitments on owner-occupied houses in Australia rose 2.2% in May, seasonally adjusted, to 63,855. The data released by the Australian Bureau of Statistics said total housing finance by value rose by a seasonally adjusted 2.3% in May to A$22.678 billion.
Materials stocks BHP Billiton, Rio Tinto, Newcrest Mining, Fortescue Metals, Orica, Lihir Gold and Bluescope Steel are all trading with notable losses. Energy stocks Woodside Petroleum, Santos and Origin Energy are also trading weak.
In the banking space, ANZ Bank is up by 1.5% and National Australia Bank is gaining 1.3%. Westpac Banking Corporation and Commonwealth Bank of Australia are trading lower by 0.6% and 1% respectively. Diversified financials stock Macquarie Group is down with a 2% loss.
Evestra has signed a three-year A$280 million facility with a syndicate of five banks. The funds will be used to repay other debts and support capital spending. The firm engaged in natural gas distribution says it has also made a new arrangement with ANZ Banking to convert an undrawn working capital facility, worth A$50 million for a year, into a three-year A$75 million facility. The stock is currently down by over 2%.
In the currency market, the Australian dollar opened lower as investors turned away from riskier assets once again. In early trading this morning, the currency was quoting at US$0.7890/93, down from Tuesday's close of US$0.7958/63. The Aussie is currently trading at 0.7868 to the U.S. dollar.
The Japanese market is extending its slide to a sixth successive session today with economic concerns and a surging yen taking a toll of several front line stocks. A sharp drop in Japanese core machinery orders is also weighing in to a notable extent.
The Nikkei, which opened more than a percent down at 9,548.81, was down by 175.87 points or 1.82% at 9,471.92 at the end of the morning session.
According to a release from the Cabinet Office, Japanese core machinery orders fell a seasonally adjusted 3% month-over-month to 668.2 billion yen in May, its third straight monthly decline and the lowest figure since comparable data became available in April 1984.
Orders by the manufacturing industry grew 5.4%, while those by non-manufacturers slid 6.9%. On a year-on-year basis, core machinery orders, which exclude those for ships and from electric power companies, tumbled 38.3%. The Cabinet Office maintained its overall assessment that, The pace of decline is moderating.
According to the preliminary report on balance of payments released by the Japanese Ministry of Finance, the country's current account surplus plunged 34.3% year-on-year to 1.302 trillion yen in May. The figure declined for the 15th consecutive month with a sharp decline in exports of auto, semiconductor and electronics parts contributing to the sharp fall.
The balance of goods and services fell 52.2% to a 232.8 billion yen surplus, while the trade balance slipped 22.1% to a 387.3 billion yen surplus.The value of imports dipped 42.2% to 3.76 trillion yen, while that of exports dropped 43.9% to 3.37 trillion yen. The services balance posted a 154.5 billion yen deficit. Meanwhile, the income balance surplus fell 24.5% to 1.18 trillion yen.
Automobile stocks Toyota Motor, Hondo Motor, Suzuki Motor, Mazda Motor, Nissan Motor and Hino Motors are trading lower by 2% - 5%.
In the banking space, Sumitomo Mitsui Financial, Mitsubishi UFJ Financial Group, Bank of Yokohama, Shizuoka Bank, Chiba Bank, Resona Holdings, Mizuho Trust & Banking and Mizuho Financial Group are all trading sharply down, losing between 2% - 6% from their previous closing prices.
According to reports, Japan's three megabanking groups are reining in their overseas lending, particularly in Europe and the U.S., amid an increase in non-performing loans owing to the global economic slowdown. The combined overseas loan balance of Mitsubishi UFJ Financial Group Inc., Mizuho Financial Group Inc. and Sumitomo Mitsui Financial Group Inc. totaled 31.8 trillion yen as of March 31, a decline of 2.6 trillion yen, or 8%, from the end of last September.
Non-ferrous metals are down in the red. Shares of SUMCO Corp., Sumitomo Metal Mining, Sumitomo Electric Industries, Fujikura, Mitsubishi Materials, Toyo Seikan Kaisha, Toho Zinc and Mitsui Mining and Smelting Co. are down with sharp losses.
Shares of wholesaler Mitsui & Co have rebounded after a weak start. The stock is up sharply on the back of reports that the company is planning to import large quantities of lithium from Canada. The demand for the rate metal which is used in batteries for electric and hybrid vehicles is expected to surge and the move by Mitsui is likely to help boost its earnings in forthcoming quarters. The stock is currently trading up by over 2%.
With worries about swine flu pushing down pork prices in China, shares of Japanese meat packer Yonekyu Corp. Corp. plunged sharply this morning. The company had said on Tuesday evening that its pretax profit will likely rise just 14% year on year to 5.2 billion yen for the current year through February, compared to an earlier projection of a 6.5 billion yen profit. The stock was down by around 10% at the end of the morning session.
The Korean markets is also trading sharply lower now with stocks across various sectors wilting under selling pressure. The KOSPI is currently down by around 12 points or 0.84% at 1,422.
Automobile stocks bucked the trend for a while before losing ground. Technology stocks Hynix Semiconductor, Samsung Electronics and LG Electronics are trading in the red with sharp losses.
Oil, steel, airlines and shipbuilding stocks are also exhibiting weakness. Bank stocks exhibited a mixed trend earlier in the day. However, with the mood turning quite negative, most of the stocks in the sector are seen trading lower at present.
Among other markets in the Asia-Pacific region, Hong Kong, Shanghai and Singapore are down sharply with their benchmarks losing 1.4% - 1.75%. New Zealand's NZX 50 is down by around 0.5% while Taiwan's benchmark is trading lower by 0.7%. On Tuesday, markets across the region had ended on a mixed note.
On Wall Street, stocks declined sharply with investors taking some profits amid a lack of significant economic data. Traders also preferred to tread a cautious route ahead of the earnings reporting season and the release of employment, international trade and consumer sentiment reports.
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, while the S&P 500 dropped by 17.69 or 2% to 881.
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