By Chao Deng
Asian stocks traded mostly lower Wednesday, pulling back after
several consecutive sessions of gains, following disappointing
earnings results from U.S. tech and industrial heavyweights.
Japan's Nikkei Stock Average closed down 1.2% at 20593.6 and
Australia's S&P ASX 200 declined 1.6% to 5614.6, snapping
six-day winning streaks for both. Hong Kong's Hang Seng Index
finished down 1% at 25282.62.
Tsuyoshi Nomaguchi, a senior strategist at Daiwa Securities,
said Apple Inc.'s weak iPhone revenue outlook and International
Business Machines Corp.'s earnings miss will weigh on Japanese
technology shares, while the market as a whole is in line for a
routine round of profit-taking.
"The sensitivity to earnings will only grow after the Bank of
Japan lowered its GDP forecast, meaning business results are going
to have to really impress in order to maintain investor interest,"
he said.
Industrial behemoth United Technologies Corp. posted weak
numbers and Microsoft Corp. reported a $3.2 billion quarterly
loss.
China markets were a rare bright spot. The Shanghai Composite
Index closed 0.2% higher at 4026.04, its fifth consecutive session
of gains. The smaller Shenzhen Composite closed 1% higher at
2287.98.
In Hong Kong, MNI's China Business Sentiment Indicator for July
fell to a three-month low.
"The sharp drop in July could be due to a dent in short-term
sentiment in the wake of the equity market selloff in the late June
and early July, " Nomura analysts said, although they noted that
the index tends to be more volatile than official manufacturing
numbers.
The Chinese government has continued on its path of monetary
easing to support the economy and investors expect that will buoy
the market, although its rebound from a heavy selloff has been
uneven. The Shanghai Composite remains off 23% from its
seven-plus-year high on June 12 and authorities are expected to
continue their tightening efforts on margin trading, which could
push the market down.
China's central bank has injected additional capital into two of
the nation's policy banks to help them better support a weakening
economy, according to a Tuesday report in Caixin, a local business
magazine.
The People's Bank of China has injected $48 billion into China
Development Bank and $45 billion into the Export-Import Bank of
China, according to the report. China's Ministry of Finance has
injected $16 billion into the Agricultural Development Bank of
China, another government-run policy bank, the report said.
"No Asian country is doing as much as China on the economic
reform front, which the authorities are doing while maintaining
economic growth and cleaning up the excesses of the 2009-10 credit
boom," ING analysts said in a report. "Stay positive on
A-shares."
The U.S. dollar was recently down 0.1% against the yen at
Yen123.75.
Spot gold drifted lower in Asian trade to $1,092.90 an ounce,
below the $1,100 mark where many miners break even. Crude oil
futures also declined on bearish U.S. supply data, with Brent down
65 cents at $56.39 a barrel.
A strengthening dollar has sent commodities from oil to copper
tumbling, by making the dollar-priced raw materials more expensive
for buyers using foreign currencies.
"There's this general macro fear that U.S. interest rates are
about to rise, therefore we'll have a stronger dollar. That's
problematic for [emerging markets] and commodities," said Ilya
Feygin, managing director at New York-based WallachBeth
Capital.
"Equities related to metals have been decimated," he said. "To
me that suggests people are getting out indiscriminately" and that
"it will present an opportunity to go the other way."
Bradford Frischkorn and Gregor Stuart Hunter contributed to this
article.
Write to Chao Deng at Chao.Deng@wsj.com
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