Asian Stocks Fall Second Day on Earnings Before U.S. Data

Asia’s benchmark stock index fell for a second day as investors weighed corporate earnings and awaited U.S. economic data that may shed light on when the Federal Reserve will taper stimulus.

Canon Inc. (7751), the world’s No. 1 camera maker, tumbled 5.4 percent in Tokyo after cutting its sales and profit forecast. Komatsu Ltd., Japan’s largest construction machinery maker, dropped 2.4 percent after U.S. bellwether Caterpillar Inc. lowered its earnings estimate. Chinese rail shares rose in Hong Kong as Premier Li Keqiang said the nation will speed railway construction.

The MSCI Asia Pacific Index lost 0.8 percent to 135.84 as of 6:45 p.m. in Tokyo, with all 10 industry groups on the measure falling. More than two stocks slid for each that rose.

“U.S. data right now is good, but whether it’s good enough for the Fed to stop buying assets, the market will still need to see,” said Linus Yip, chief strategist at First Shanghai Securities in Hong Kong. “Investors are chasing some stocks that benefit from China’s policies, but since some of their share prices shot up, there may be some profit taking.”

The MSCI measure gained 5.9 percent this year through yesterday with consumer discretionary shares rising the most and energy shares falling the most. The index traded at 13.4 times estimated earnings as of yesterday, compared with 15.3 times for the Standard & Poor’s 500 Index and 13.5 times for the Stoxx Europe 600 Index.

Regional Gauges

Japan’s Topix index slipped 1.4 percent and the Nikkei 225 Stock Average lost 1.1 percent. South Korea’s Kospi Index lost 0.1 percent even as data showed the nation’s economy grew the most in more than two years. Australia’s S&P/ASX 200 Index was little changed. New Zealand’s NZX 50 Index dropped 0.5 percent after the central bank kept its key interest rate at 2.5 percent today.

Hong Kong’s Hang Seng Index dropped 0.3 percent and China’s Shanghai Composite slid 0.6 percent. Taiwan’s Taiex Index fell 0.4 percent, while Singapore’s Straits Times Index declined 1.2 percent, the most in three weeks.

Futures of the Standard & Poor’s 500 Index fell 0.6 percent today. The measure slid 0.4 percent in New York yesterday as investors weighed earnings reports from Caterpillar and Apple Inc. A report showed sales of new U.S. homes rose more than forecast in June to the highest level in five years.

U.S. Jobs

The number of people in the U.S. continuing to claim jobless benefits fell by 89,000 in the week to July 13, according to a Bloomberg survey of economists before data due today.

Fed Chairman Ben S. Bernanke has said asset purchases that have stoked bond and equity gains may be trimmed this year should economic risks subside.

Canon fell 5.4 percent to 3,245 yen in Tokyo, the second-biggest loss on the Nikkei 225, after saying yesterday that net income will probably be 260 billion yen ($2.6 billion) in 2013, cutting its April projection of 290 billion yen by 10 percent. Canon faces slowing demand for compact and high-end cameras with interchangeable lenses.

Komatsu dropped 2.4 percent to 2,330 yen after Caterpillar said earnings in 2013 will be about $6.50 a share on sales of $56 billion to $58 billion. That’s lower than analysts’ estimates and down from the company’s April projection of about $7 a share on revenue of $57 billion to $61 billion. Hitachi Construction Machinery Co. fell 2.3 percent to 2,137 yen.

“We are a little bit disappointed in Asian growth, not only in earnings, but also in revenue particularly, and so people are reassessing that at this stage.,” said Tim Schroeders, a portfolio manager who helps manage $1 billion in equities at Pengana Capital Ltd. in Melbourne.

Earnings Analysis

Of the 73 companies in the Asia-Pacific gauge that have posted quarterly results and for which Bloomberg has estimates, 59 percent beat projections while 41 percent missed them, the data show.

Chinese rail shares gained after Premier Li said China will speed railway construction, especially in central and western regions. The State Council yesterday also approved tax breaks for small companies and reduced fees for exporters, according to a statement after a meeting led by Li.

China Railway Group Ltd., the country’s No. 2 train-line builder, added 1.8 percent to HK$4.26. CSR Corp., the country’s biggest maker of rolling stock, gained 2.4 percent to HK$5.45.

Kao Corp., Japan’s biggest maker of toiletries, had the largest two-day slump in more than two years after more than 2,000 consumers reported skin blotches from using some of its whitening products. Kao dropped 3.4 percent to 3,120 yen after sliding 6.2 percent yesterday.

To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net; Kana Nishizawa in Hong Kong at knishizawa5@bloomberg.net

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net

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