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Asian markets mixed, euro down as rally fades

July 2, 2012

HONG KONG: Asian markets were mixed today and the euro slipped as a rally sparked by last week’s eurozone deal fizzled out, with weak manufacturing data from China also weighing on investors.

Oil prices also fell as doubts crept in about implementing the deal struck at a key EU summit last week aimed at stemming the long-running eurozone debt crisis.

After rising in early trade, Tokyo edged down 0.04%, or 3.30 points, to close at 9,003.48, while Seoul closed down 0.13%, or 2.36 points, at 1,851.65.

Shanghai was flat, edging down 0.03% in afternoon trade, but Sydney was up 0.94%, or 38.4 points, to close at 4,133. Hong Kong was closed for a public holiday.

“The European Summit concluded without agreement on the long-term details (fiscal union etc), but did offer relief for Spain and Italy with direct bank funding” from the eurozone bailout fund, the National Australia Bank said in a note.

It added the agreement was “positive, but there are questions about how long this takes to establish”.

European leaders agreed to use emergency funds to support ailing banks directly and to ease pressure on governments’ debt burdens through bond purchases. They also agreed on $150 billion in fresh funds to boost growth.

Fresh bad news from China tempered investors’ enthusiasm today, with two surveys showing that manufacturing activity fell in the world’s second-biggest economy.

Official data released Sunday showed manufacturing activity fell to a seven-month low in June.

The official purchasing managers’ index (PMI) slipped to 50.2 last month from 50.4 in May, industry group the China Federation of Logistics and Purchasing said.

Today, the rival HSBC PMI, which focuses more on small- and medium-sized companies, showed manufacturing activity contracting for the eighth consecutive month in June.

The bank’s index fell to 48.2 in June from 48.4 in May, according to an HSBC statement. Its preliminary reading for June was 48.1.

The PMI data is “not horrible, but it isn’t showing a rebound,” Gigi Chan, manager of Threadneedle’s US$100 million China Opportunities Fund in Singapore, told Dow Jones Newswires.

“Some people had hoped that some of the stimulus might have kicked in.”

Last Friday, world stock markets, the euro and oil all jumped after the EU summit in Brussels.

Asian markets posted gains of between 1.0% and 2.0%, and European markets rose even more sharply, with Milan rocketing 6.6%, and Madrid and Athens both surging 5.7%.

In the US the Dow jumped 2.2% and the Nasdaq 3.0%.

On currency markets in afternoon Asian trade, the euro eased to US$1.2624 and 100.52 yen from US$1.2654 and 101.02 yen in New York late last Friday. The dollar was quoted at 79.55 yen.

On oil markets, crude slipped on the weak data from China, the world’s biggest energy consumer, and profit-taking after last Friday’s rises.

New York’s main contract, light sweet crude for August delivery, fell US$1.18 to US$83.78 a barrel in the afternoon and Brent North Sea crude for delivery in August shed US$1.45 to US$96.35.

Gold rose to US$1,592.41 an ounce at 0730 GMT, compared with US$1,579.62 an ounce late last Friday.

On other markets:

  • Taipei rose 0.67%, or 48.88 points, to 7,345.16. Taiwan Semiconductor Manufacturing Co gained 2.46% to Tw$83.3 while Fubon Financial Holding ended 1.85% higher at Tw$30.35.
  • Wellington rose 1.19%, or 40.33 points, to 3,440.16. Telecom Corp gained 2.5% to NZ$2.45, Fletcher Building was up 3.2% at NZ$6.06 and Chorus was steady at NZ$3.14.



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