Asian markets shrug off disappointing eurozone meet
HONG KONG—The euro recovered from an early wobble in Asian trade Wednesday as forex markets shrugged off a eurozone meeting that failed to land a killer blow in the battle to restore debt confidence.
Shares were mixed, with local concerns largely trumping global uncertainties in Sydney and Seoul, while Tokyo kept its eyes on the main world news.
Asia’s biggest bourse closed down 0.55 percent, or 50.17 points, at 9,057.26. Sydney added 1.32 percent, or 56.6 points, to 4,303.9 with confidence high on corporate earnings coming in mostly in line with expectations.
Seoul built on its thumping near-five percent gains of Tuesday, up 0.68 percent, or 12.80 points, to 1,892.67.
Hong Kong closed 0.38 percent, or 76.95 points, higher, losing some of the gains it had made earlier in the day to finish the session at 20,289.03, while Shanghai ended 0.26 percent, or 6.91 points, lower at 2,601.26.
“Concerns about a slowdown in both Europe and in the United States continue to be at the core of investors’ minds,” Yutaka Miura, a senior technical analyst at Mizuho Securities, told Dow Jones Newswires.
Wall Street closed down overnight as the Dow Jones Industrial Average ended its three-day rally, dropping 76.97 points (0.67 percent) to finish at 11,405.93.
French President Nicolas Sarkozy and German Chancellor Angela Merkel vowed late Tuesday to give the eurozone bloc a “true economic government,” but experts said their pledges were not enough to defuse the region’s debt crisis.
Speaking after the talks in Paris, the leaders said they would propose an EU-wide tax on financial transactions and seek to create a eurozone governing body headed by European Union president Herman van Rompuy.
But the pair disappointed many by not backing the idea of issuing “eurobonds” to pool the debts of the 17 eurozone members, and by insisting the bloc’s existing 440-billion-euro ($634 billion) bailout fund was “sufficient.”
Instead, the leaders said member states would be held to a tougher fiscal standard and new cross-border controls put in place.
Europe’s main bourses dropped at the start of trading on Wednesday.
Frankfurt’s DAX 30 index shed 1.41 percent to 5,910.50 points, London’s FTSE 100 fell 0.78 percent to 5,315.81 points and the Paris CAC 40 lost 0.58 percent to 3,212.23.
“This will inevitably raise the appeal of safe-haven currencies like the Japanese yen and Swiss franc,” Kuroiwa said.
The Swiss unit eased in afternoon trade, moving to 1.1522 per euro from 1.1434 in New York and 0.7998 francs per dollar against 0.7935.
The dollar changed hands at 76.68 yen early Wednesday against 76.75 yen in New York and 76.74 yen in Tokyo Tuesday.
“The French-German meeting did not provide any clear solutions, and this has incited more euro selling,” said Nobuyoshi Kuroiwa, senior deputy general manager at Hachijuni Bank’s forex team in Tokyo.
The single currency initially dipped to $1.4352 in early Tokyo trade, compared with $1.4406 in New York overnight, before rebounding to $1.4405 in the afternoon.
The euro fetched 110.49 yen against 110.67 yen in New York late Tuesday and 110.41 yen in Tokyo the previous day.
Apart from the eurozone summit, US investors were also disappointed by the news that Germany saw only 0.1 percent growth in the second quarter and the eurozone’s output expanded a meagre 0.2 percent.
Analysts said governments were now in the worst of both worlds, trying to cut debt by slashing spending and raising taxes, a double squeeze that kills growth and further complicates efforts to stabilise public finances.
After the close in Sydney, Britain-based brewer SABMiller launched a hostile takeover bid for Australian beer giant Foster’s worth around Aus$9.5 billion (US$10.0 billion) after an initial approach was rejected in June.
SABMiller, the maker of beers Grolsch and Miller Lite, said its renewed offer was unchanged at Aus$4.90 per Foster’s share. The maker of Foster’s Lager had yet to respond to the hostile bid but in June said the offer “significantly undervalues” the company.
Gold closed at $1,791-$1,792 an ounce in Hong Kong, up on its Tuesday close of $1,779.50-$1,780.50. It had opened at $1,785 -$1,786.
Oil was higher, but traders said sentiment was subdued after the disappointing eurozone meeting.
New York’s main contract, West Texas Intermediate light sweet crude for September delivery, was up 70 cents to $87.35 a barrel, while Brent North Sea crude for October rose 45 cents to $109.58.
In other markets:
— Manila closed 0.68 percent, or 32.43 points, lower at 4,340.27.
Top-traded “A” shares of Lepanto Consolidated Mining fell 4 percent to 1.44 pesos, while Energy Development ended 1.50 percent down to 5.91 pesos.
Philippine Long Distance Telephone inched up 0.35 percent to 2,308 pesos.
— Wellington closed up 0.50 percent, or 16.36 points, at 3,290.10 on robust domestic company results.
Fletcher Building, which announced a 4 percent rise in annual net profit, gained 1.7 percent to NZ$7.86, Telecom Corp. lifted 1 percent to NZ$2.65 and Air New Zealand was up 0.9 percent to NZ$1.11.
— Taiwan lost 0.73 percent, or 56.83 points, to 7,741.76.
TSMC shed 0.3 percent at Tw$65.8 while Hon Hai was 0.13 percent lower to Tw$74.1.
— Kuala Lumpur ended up 0.32 percent, or 4.83 points, at 1,503.07.
Shipping firm MISC climbed 1.7 percent at 7.10 ringgit while gaming giant Genting rose 1.7 percent to 3.62 while plantations giant IOI Corp slid 1.3 percent at 4.66 ringgit.
— Singapore fell 0.15 percent, or 4.20 points, to close at 2,828.53.
Singapore Airlines tumbled 0.81 percent to Sg$11.06 and property developer CapitaLand gained 0.79 percent to Sg$2.54.
— Bangkok rose 1.53 percent, or 16.49 points, to close at 1,093.51.
Banpu added 2 baht to 680, and PTT Plc jumped 9 baht to 332.
— India’s Sensex index rose 0.72 percent on Wednesday, snapping three days of losses and closing up 127.31 points to 16,857.9.
Buying in index heavyweights improved, led by software and banking stocks.
India’s largest software outsourcer TCS rose 3.45 percent or 33.6 rupees to 1,007.65 while private sector HDFC Bank gained 2.52 percent to 468.
— Jakarta was closed for a public holiday.
