Asian Market Snapshot: Stocks Fall as Investor Sentiment Weakened on Concern over U.S. Recovery

After Asian markets closed yesterday the Federal Reserve Board reported a largely flat U.S. industrial output for the month of June. The index was up 0.1% m/m due to a 2.7% gain in the production of utilities. Manufacturing production however fell 0.4% m/m, driven by a 0.7% decline in the manufacturing of non-durables. (See RGE CI: U.S. Industrial Production Softens).  Data released today in the U.S. showed CPI ex food and energy up 0.9% y/y in June. Google’s Q2 earnings also dented investor sentiment. The company reported an EPS ex-extraordinary items of US$ 6.45 below analysts’ estimate of US$ 6.52.

The MSCI Asia Pacific index fell 0.7% to 117 while the MSCI Asia Apex 50 declined 0.61% to 727.18.

In Japan, stocks tumbled as astronger yen dragged Japanese exporters lower. The NIKKEI 225 fell 2.86% to 9,686, ending the week 2.4% lower.Sony, with 22% exposure to the U.S., dropped 5% whileFanuc lost 4.9%.

In Hong Kong, the Hang Seng was flat closing the week down 0.6%.Agbank rose 2.2% for its first day in Hong Kong better than its Shanghai debut.

In mainland China, stocks closed flat as a technical rally in coal and steel companies offset Agbank’s weak performance. The Shanghai Composite was flat for the day closing the week down 1.9%.Property stocks also advanced with Poly Real Estate up 0.3% and Cinda Real Estate up 2.7%.

In India, stocks rose as Tata Consultancy posted strong Q1 results.The BSE Sensex 30 gained 0.3% to close the week up 0.7%.Tata Consultancy shares rose 6.3% after the company reported a 20% jump in profit to US$ 394 million, beating analysts’ estimate.

In Australia, stocks fellwith the S&P/ASX 200 down 0.45% for the day but up 0.6% for the week. 

In Seoul stocks fell on concerns over Q2 corporate earnings. The KRX 100 declined 0.78% to close the week up 0.89%.     

The yen surged 1.09% against the dollar to a two week high of 87.16 on investors’ flight to safe-haven.All other major Asian currencies weakened as investors sold risky assets. The Aussie dollar fell 0.39% to end the weak up 0.5% while the Kiwi declined 0.76%, closing the week up 1.1%.

The 10-year Japanese Government Bonds (JGBs) fell with the yield up 0.46 bps to 1.095%.Sovereign CDS spreads across the region continued to widen except for Australian CDS spread (down 0.1 bp).

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