Asian Stocks Head for Third Day of Losses on ECB, China
Asian stocks fell for a third day as after the European Central Bank failed to deliver immediate action to stem the debt crisis and after China’s central bank affirmed current policies. Sharp (6753) Corp. led technology shares lower after it forecast a wider loss.
Commonwealth Bank of Australia and Mitsubishi UFJ Financial Group Inc. (8306) paced declines among lenders after surging bond yields in Spain and Italy stoked concern Europe’s debt crisis may hamper the global financial system. Sharp, Japan’s largest maker of liquid-crystal displays, plunged 28 percent after widening its full-year loss forecast. ResMed Inc., the world’s second-biggest maker of machines to regulate breathing for people with sleep disorders, jumped 9.3 percent in Sydney after earnings beat analyst estimates.
The MSCI Asia Pacific Index fell 0.8 percent to 117.12 as of 8:08 p.m. in Tokyo, poised to drop a third day. More than three stocks declined for each that rose. The measure has gained 1 percent this week. Investors are awaiting U.S. jobs data today, which may give clues to prospects for further easing from the Federal Reserve.
“The trouble in Europe is nothing immediately takes place,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion under management. “It’s true to say China has scope to do more both in terms of monetary policy and fiscal policy, but it’s not doing much. On one hand, China doesn’t feel as pressured as the Fed and ECB.”
The MSCI Asia Pacific Index fell 8.5 percent from this year’s high on Feb. 29 through yesterday amid concern policy makers won’t do enough to counter Europe’s debt crisis and slowing economic growth in the U.S. and China. The regional benchmark traded at 12 times estimated earnings, compared with 13.3 for the Standard & Poor’s 500 Index and 11.1 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
Hong Kong’s Hang Seng Index dropped 0.1 percent. The Shanghai Composite Index rose 1 percent and Singapore’s Straits Times Index gained 0.5 percent.
Futures on the S&P 500 (SPXL1) rose 1 percent today. The gauge fell 0.7 percent in New York yesterday after ECB President Mario Draghi demanded euro-zone governments turn to existing rescue funds before the central banks intervenes.
Yields on Spain’s 10-year government bonds surged 43 basis points to 7.17 percent yesterday. Comparable yields in Italy jumped 40 basis points to 6.33 percent.
Banks accounted for 19 percent of the decline on the MSCI Asia Pacific Index. Commonwealth Bank of Australia (CBA) fell 1.1 percent to A$55.98, while Mitsubishi UFJ dropped 1.3 percent to 370 yen in Tokyo.
China will conduct policy fine-tuning at an appropriate time and consumer inflation may rebound after August, the People’s Bank of China said in a quarterly monetary-policy report on its website yesterday. China’s non-manufacturing industries expanded at a slower pace in July, the government reported.
“A slowdown in growth has been relatively controlled and it’s in line with what policy makers wanted,” said AMP Capital’s Oliver. “That explains why they are moving in a very slow, deliberate way rather than the shock-and-awe approach they used in 2008.”
The Fed’s Aug. 1 pledge to provide additional support for the economy disappointed investors anticipating a more definitive sign of further monetary easing. A government report today may show U.S. payrolls increased by 100,000 workers in July, following an 80,000 gain in June, according to the median estimate of economists surveyed by Bloomberg News. The unemployment rate is projected to hold at 8.2 percent.
About 55 percent of the 293 companies on the Asian benchmark index that reported earnings since July and for which Bloomberg had estimates failed to meet expectations. Earnings per share at companies on the index are expected to grow 21 percent this fiscal year.
Sharp forecast an annual loss of 250 billion yen ($3.2 billion) yesterday as demand for its Aquos TVs slumped, while Sony Corp. (6758), Japan’s No. 1 exporter of consumer electronics, reduced its full-year net income forecast by a third to 20 billion yen. Sharp also announced its first job cuts since the 1950s.
Sharp plunged 28 percent to 192 yen, the biggest drop since 1974. Sony fell 7 percent to 897 yen. Hon Hai Precision Industry Co. lost 3.8 percent to NT$81.60 and Foxconn Technology Co. declined 7 percent to NT$100 in Taipei. The two companies announced in March plans to buy stakes in Sharp.
Among stocks that rose, ResMed soared 9.3 percent to A$3.30 in Sydney. Fourth-quarter net income jumped 31 percent to $76.8 million in the three months ended June 30 from a year earlier. That compares with the $68.6 million average of eight analysts estimates compiled by Bloomberg.
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