Asian Stocks Sink on Earnings Concern as Commodity Shares Drop

  • Materials companies lead all 10 industry groups lower
  • Philippine shares post first weekly advance in a month

Asian stocks fell, with the regional benchmark index heading for a one-month low, as a drop in oil dragged down commodity shares and earnings from Inpex Corp. to Mitsubishi Materials Corp. disappointed investors.

The MSCI Asia Pacific Index slid 1.3 percent to 125.95 as of 4:06 p.m. in Hong Kong, poised for the lowest close since April 7 and a third week of losses. Bullish momentum in equities from a February low faltered over the past month, as signs of weakness in the global economy and disappointing corporate earnings heightened concerns over whether central bank officials will be able to effectively boost growth.

“After the rally in March and April, things are still looking a little bit uncertain,” Oliver Lee, investment director at Old Mutual Global Investors (Asia Pacific) Ltd., said. “There’s not much conviction in the market. The market is still being driven by central bank sentiment and currency movements. The earnings season in Japan hasn’t been great.”

Of the companies on Japan’s Topix index that have reported earnings since the beginning of April, about 62 percent missed analyst estimates for profit, according to data compiled by Bloomberg. Energy explorer Inpex slumped 4.2 percent after forecasting operating profit that fell short of expectations. Yokohama Rubber Co. tumbled 8.9 percent after reporting first-quarter net income plunged.

The Topix sank 1.3 percent. South Korea’s Kospi index slipped 0.5 percent. Australia’s S&P/ASX 200 Index dropped 0.6 percent. New Zealand’s S&P/NZX 50 Index lost 0.1 percent. The FTSE Bursa Malaysia KLCI Index sank 1.5 percent amid speculation of foreign selling. Taiwan’s Taiex index declined 0.7 percent. Singapore’s Straits Times Index fell 0.8 percent. Hong Kong’s Hang Seng Index slid 1 percent. India’s S&P BSE Sensex lost 1.3 percent.

China Slump

Chinese stocks capped a fourth week of declines, the longest stretch in two years, as metal prices dropped and the yuan weakened amid concern the government will hold off from new stimulus even as growth falters. The Shanghai Composite Index slipped 0.3 percent, bringing the weekly loss to 3 percent. The Hang Seng China Enterprises Index of mainland shares traded in Hong Kong fell 1.3 percent Friday.

China’s benchmark stock gauge has slumped 20 percent this year. The most recent data showed March’s pick up in economic indicators didn’t carry over to April, with manufacturing gauges and trade figures missing predictions, while a high-profile warning by the People’s Daily about the nation’s high levels of debt have damped hopes for more easing.

Philippine Rally

The Philippine Stock Exchange Index jumped 1.5 percent, taking its weekly advance to 6.4 percent, following last Monday’s elections. Presumptive Philippine President Rodrigo Duterte will continue the macroeconomic policies of the outgoing administration of Benigno Aquino, according to an eight-point economic agenda released on Thursday that also prioritized tax reform, education and infrastructure spending, and fighting corruption.

Mitsubishi Materials tumbled 11 percent in Tokyo after forecasting operating profit that fell short of expectations. Singapore Airlines Ltd. tumbled 5.2 percent after Southeast Asia’s biggest carrier reported profit that lagged behind analyst estimates as losses from fuel-hedging countered gains from carrying more passengers. Noble Group Ltd. sank 8.3 percent after Asia’s largest commodities trader posted a 62 percent drop in first-quarter profit.

Futures on the S&P 500 Index 0.5 percent. The U.S. equity benchmark measure closed little changed in Thursday as a selloff in Apple Inc. was offset by gains in Monsanto Co.

Apple fell to a 22-month low after a report fueled speculation iPhone sales continue to slump. Monsanto jumped 8.4 percent as people familiar with the matter said Bayer AG is exploring a potential bid for its U.S. competitor.

West Texas Intermediate crude fell as much as 1.4 percent in Friday trading after climbing 1 percent in New York on Thursday.

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