Published: Friday July 30, 2010 MYT 7:17:00 AM
Updated: Friday July 30, 2010 MYT 12:34:33 PM

Stocks: Asia down Friday; overnight US down, Europe up(update)

TOKYO: Asian markets fell in early trade Friday, overlooking strong earnings from some of the region's biggest companies as Japanese shares tumbled on dour economic figures and a strong yen.

Global electronics giant Samsung reported an 83 percent surge in quarterly profit as sales of panels for flat screen TVs and computer chips boomed.

That followed a flood of earnings reports Thursday from Japanese consumer electronics companies and car makers, nearly of all which showed earnings recovering strongly as demand recovers from the global slump and deep cost cuts take effect.

But new figures from Japan offered a sobering reminder that the recovery in the world's No. 2 economy remains fragile: The jobless rate rose, deflation deepened, and industrial production fell unexpectedly.

The Nikkei 225 stock average dropped 145.84 points, or 1.5 percent, to 9,550.18 as it headed for a second straight day of decline.

Strong profits at Sony Corp. and Nissan Motor Co. could not offset government figures showing industrial production fell an unexpected 1.5 percent in June from the previous month, while consumer prices fell for a 16th straight month.

Sentiment also flagged as the dollar fell back under the 87-yen level.

A strong yen, which reduces the value of profits brought back from overseas, is a major concern for Japanese exporters this year.

South Korea's Kospi declined 0.7 percent to 1,757.37.

S&P/ASX 200 in Australia fell 0.6 percent to 4,494.40.

China's Shanghai Composite Index was down 0.8 percent to 2,626.89.

Benchmarks in Taiwan, Singapore and Indonesia also retreated.

In New York on Thursday, the Dow Jones industrial average ended down 0.3 percent to 10,467.16.

The Dow has fallen 70 points over its last two session, but is still up 7.1 percent for July.

Several companies reported strong earnings, including Southwest Airlines Co., ExxonMobil Corp., but many in the market were put off by a jobs report showing many in the U.S. are still unemployed.

The Labor Department said initial claims for unemployment benefits dropped by a modest 11,000 to 457,000 last week, and investors were disappointed at the small drop.

The broader Standard & Poor's 500 index fell 4.60, or 0.4 percent, to 1,101.53, while the tech-heavy Nasdaq composite index fell 12.87, or 0.6 percent,to 2,251.69.

In currencies, the dollar fell to 86.29 yen from 86.72 yen late Thursday. The euro dropped slightly to $1.3053 from $1.3076.

Benchmark crude for September delivery was down 24 cents at $78.12 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.37 to settle at $78.36 on Thursday. - AP

Earlier report

US stocks fall, Europe up, Asia mixed

NEW YORK: Stocks ended an erratic day with a modest loss Thursday as investors tried to reconcile another batch of conflicting economic signals.

The Dow Jones industrial average closed down 30 points after falling as much as 110 and rising 87 during the course of the day.

The other big market indexes also closed slightly lower.

Thursday's trading fit with the market's months-long pattern. Investors are torn between upbeat earnings news from companies and reports that point to an uncertain recovery.

That indecision was clear as stocks rose on strong earnings at Southwest Airlines Co., ExxonMobil Corp. and other companies, then fell on disappointment over a slight drop in first-time claims for unemployment benefits.

Traders were also uneasy ahead of the first reading on U.S. gross domestic product for the April-June quarter, to be released Friday.

"This is a market that is trying to ascertain how deep the downturn is going to be and it is a market that's future-looking," said Quincy Krosby, a market strategist with Prudential Financial.

"It's looking at numbers five to six months from now, trying to get a portrait of the economy and where earnings are going to be. Until it gets clarity on that it's going to be a choppy market."

There was little to help traders get that clarity Thursday.

The Labor Department said initial claims for unemployment benefits dropped by a modest 11,000 to 457,000 last week.

That's slightly better than the 459,000 forecast by economists polled by Thomson Reuters, but investors were disappointed because the drop was so small.

"They saw it was more of the same," said Bryan Jordan, director of financial markets analysis at Nationwide Investments. "This is an unusually stagnant labor market."

The Dow fell 30.72, or 0.3 percent, to 10,467.16.

Although the Dow has fallen 70 points over the past two days, it is up 7.1 percent for July with one trading day to go.

A big chunk of the July gain came in just four days that ended Tuesday, as the average rose 420 points in response to strong earnings.

On Wednesday, however, the Federal Reserve's assessment of the economy region by region reaffirmed for investors the fact that the recovery has slowed.

Stocks fell and they continued their slide amid Thursday's uncertainty.

The Standard & Poor's 500 index fell 4.60, or 0.4 percent, to 1,101.53.

The Nasdaq composite index fell 12.87, or 0.6 percent,to 2,251.69.

Rising stocks were narrowly ahead of losers on the New York Stock Exchange.

Consolidated volume, which includes shares traded on other exchanges, was light at 4.7 billion shares, up from Wednesday's 4.1 billion.

Many investors sat out the day because of the market's inability to settle on a direction.

Bond prices were mixed.

The yield on the 10-year Treasury note, which moves opposite its price, was 2.99 percent, unchanged from late Wednesday.

The 10-year yield helps set interest rates on mortgages and other consumer loans.

Traders will look next to Friday's GDP report for a sense of how the recovery is doing.

Economists surveyed by Thomson Reuters are forecasting that the GDP, the broadest measure of the economy, slowed in the second quarter to an annual rate of 2.5 percent as the government cut back on stimulus programs.

That would be down from the first quarter's 2.7 percent.

European stock markets mostly rose Thursday while Asian markets were mixed

In Europethere was another batch of positive earnings and further evidence that Europe's economy is recovering faster than previously expected.

The euro broke out of its recent tight trading range to breach the $1.31 mark for the first time since early May.

In Europe, the FTSE 100 index of leading British shares was up 36.83 points, or 0.7 percent to 5,356.51.

Germany's DAX rose 42.19 points, or 0.7 percent, to 6,221.13.

The CAC-40 was 23.28 points, or 0.6 percent, higher at 3,693.64.

In Europe, stocks have managed to clamber higher Thursday after an exceptionally busy morning of earnings releases.

Pharmaceuticals companies AstraZeneca PLC, drugs and materials company Bayer AG and telecommunications companies BT PLC and France Telecom SA particularly impressed analysts.

"While the jury is still out on how much upside there is left from current levels, today's positive earnings...have helped inject a little enthusiasm back into trading," said Anthony Grech, head of research at IG Index.

Continuing evidence of a step-up in the pace of economic growth in Europe also helped stocks rally.

Germany, Europe's largest economy, is seemingly doing particularly well - figures Thursday showed the number of unemployed fell on a seasonally adjusted basis for the 13th month running.

Figures from the European Commission also showed that economic conditions across the eurozone improved further.

Its economic sentiment indicator (ESI) rose to 101.3 points in July from 99 in June. Most analysts were not expecting much of a change.

The combination of solid earnings and economic news helped the euro rise up $1.3106, its highest level since May 4 - by mid afternoon London time, the euro was up 0.8 percent at $1.3090.

However, the main catalyst behind the latest euro advance was Wednesday's fairly pessimistic economic assessment from Fed, which came after the Commerce Department reported that orders for big-ticket items, known as durable goods, unexpectedly fell in June for the second month running.

The generally weak economic newsflow out of the United States over the past few weeks has caused concerns that the world's largest economy is not recovering from recession as easily as imagined and that the Fed will not be raising interest rates anytime soon.

That's important for the currency because rising interest rate expectations were one of the reasons why the dollar enjoyed a return to favor in the first few months of the year.

Earlier in Asia, Japan's Nikkei 225 stock average fell 0.6 percent to 9,696.02 as investors locked in profits following a 2.7 percent jump the previous day.

South Korea's Kospi eased 0.2 percent to 1,770.88.

Hong Kong's Hang Seng index was steady at 21,093.82.

Australia's S&P/ASX 200 dropped 0.1 percent to 4,524.1 on weakness in banks.

Benchmarks in China, Taiwan, Indonesia and Singapore rose. - AP

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