Hong Kong shares seen lower, trimming weekly gains
Hong
Kong shares were expected to start lower on Friday, trimming their
gains for the week after benchmark indexes failed to close above chart
resistance levels despite strong gains on Thursday. Riskier
sectors such as Chinese banks that saw strong gains on Thursday could be
put on the defensive as investors look to take some profits. The sector
has been dogged by worries about bad debts and squeezed interest rate
margins.
Weaker-than-expected readings on U.S. manufacturing,
housing and labour markets, and a spike in Spain's borrowing costs,
which intensified fears Madrid may eventually need a full-blown
sovereign bailout, are likely to weigh on markets. The China
Enterprises Index <.HSCE> of the top Chinese listings in Hong Kong
jumped 2.4 percent on Thursday, but failed to close above the 61.8
percent retracement of its rise from its October 2011 lows to February
2012 highs, at about 9,539.5.
Seoul shares likely to climb as U.S. earnings offset soft data
Seoul
shares look likely to extend gains on Friday, tracking global stocks as
robust corporate earnings offset weak U.S. economic data. Weaker-than-expected readings on U.S. manufacturing, housing and labour markets capped gains, however.
Spain's financial troubles also weighed on sentiment. Ten-year Spanish
bond yields rose above the critical 7 percent level widely viewed as
unsustainable, stoking fears that Madrid may eventually need a
full-blown sovereign bailout. "Despite some of the bad news,
there is still a little room for more gains, especially if foreign
investors start reverting to buying as their recent activity has hinted
they might do," said Lee Young-gon, an analyst at Hana Daetoo
Securities.
Nikkei likely range-bound as firm yen offsets U.S. earnings
Japan's
Nikkei share average is expected to trade in a range on Friday as a
firmer yen is likely to offset positive sentiment after U.S. stocks,
buoyed by corporate earnings, rose for the third straight day. Strategists said the Nikkei was likely to trade between 8,750 and 8,850,
after advancing 0.8 percent to 8,795.55 on Thursday to hold above its
5-day moving average at 8,744.28 but below its 25-day moving average at
8,820.07.
The positive factor (in the U.S. markets) is the
corporate earnings and the negative factor is the macro-economic data.
The Japanese market still lacks a catalyst," said Takashi Hiroki, chief
strategist at Monex Inc. The slowdown in the U.S. economy
persisted early in the third quarter as factory activity in the U.S.
Mid-Atlantic region contracted in July for a third straight month and
new claims for jobless aid surged last week.
The market is also
concerned over corporate earnings in Japan. Today's trading is likely
to be in a small range," Hiroki said. Japan's earnings season gets into
gear next week. The yen was last traded at 78.63 yen to the dollar, not far from a six-week high of 78.42 yen hit on Thursday. A stronger yen may mean lower translation profit for Japanese firms' overseas earnings.
Gold rebounds on oil rally, technical buying
Gold
rebounded on Thursday after two days of losses, lifted by a drop in the
dollar and an across-the-board commodities rally led by oil on
increasing geopolitical tensions in the Middle East. Data showing a
surge in U.S. new claims for jobless aid and weaker factory activity in
the U.S. Mid-Atlantic region improved the outlook for additional
economic stimulus from the Federal Reserve and boosted bullion's
investment appeal.
Bullion, a traditional inflation hedge, has
retreated from levels seen earlier this year due to a lack of
more-concrete measures by the U.S. central bank to stimulate a slowing
economy. This week, Fed Chairman Ben Bernanke again gave no hint of any
new round of asset buybacks, or quantitative easing (QE).
Spot gold <XAU=> was up 0.6 percent for the day at $1,581.41 an ounce by 3:11 p.m. EDT (1911 GMT). U.S.
gold futures <GCQ2> for August delivery settled up $9.60 at
$1,580.40 an ounce, with trading volume about 15 percent below its
30-day average, preliminary Reuters data showed.
Euro falls as Spain's bank woes, weak US data haunt
The
euro fell against the dollar on Thursday and touched a record low
against the Australian dollar and a 3-1/2-year trough versus sterling,
as weak U.S. data and fresh warnings from Germany about Spain's banking
troubles diminished risk appetite.
A slew of soft U.S. economic data
reinforced views that recovery in the world's largest economy has
stalled, prompting investors to pare back positions in higher-yielding
assets perceived as risky. Riskier currencies such as the
Australian and New Zealand dollars were still up on the day against the
dollar and euro, but off their peaks.
Comments from German Finance
Minister Wolfgang Schaeuble ahead of a German parliamentary vote on aid
for Spanish banks did not help the common currency. Schaeuble said
Spain's financial troubles are far from over and its government should
be ultimately responsible for European aid to its banks.
He also said that the mere perception of insolvency risk in Spain could cause contagion in the euro zone. Losses
in the euro, however, were capped by news that German Chancellor Angela
Merkel ultimately won a parliamentary vote on the euro zone rescue
package for Spanish banks despite growing unease in her center-right
coalition over the rising cost of Europe's debt crisis for German
taxpayers.The euro hit session lows at $1.2227 <EUR=> in the
wake of Schaeuble's comments and was last at $1.2270, down 0.1 percent
on the day.
Technology earnings boost Wall Street
U.S.
stocks rose on Thursday for a third straight day, with the S&P 500
at a 2-1/2 month high, as earnings from technology companies and
expectations for more monetary stimulus outweighed weak economic data.
So
far in this earnings season a majority of companies have beaten
analysts' lowered expectations. In the latest boost, IBM <IBM.N>
raised its full-year outlook, eBay’s <EBAY.O> profit beat
forecasts and Qualcomm <QCOM.O> said its expects a "strong
December quarter."
Weak manufacturing and employment data as well as
falling revenue at investment bank Morgan Stanley <MS.N>, which
sent its shares down more than 5 percent, capped gains in the wider
market. The S&P financial index <.GSPF> fell 1 percent.
Even
so, expectations that the Federal Reserve will soon step up stimulus
efforts have helped the market shake off bad news. Fed Chairman Ben
Bernanke said this week that the U.S. central bank would act if the
outlook worsened. The Dow Jones industrial average <.DJI>
gained 34.66 points, or 0.27 percent, to 12,943.36. The Standard &
Poor's 500 Index <.SPX> rose 3.73 points, or 0.27 percent, to
1,376.51. The Nasdaq Composite Index <.IXIC> added 23.30 points,
or 0.79 percent, to 2,965.90.
Oil Rises to Two-Month High on Rising Mideast Tension
Oil
advanced to the highest level in two months on rising concern that
instability in the Middle East will disrupt supplies from a region
responsible for about one- third of world production.
Prices gained
for a seventh day after Israeli Prime Minister Benjamin Netanyahu blamed
Lebanon’s Iranian-backed Hezbollah organization for yesterday’s
killing of Israeli tourists in Bulgaria and threatened a forceful
response. In Damascus, Syrian government forces battled rebels in
retaliation for a blast that killed three top anti-insurgency leaders.
Crude
for August delivery increased $2.79, or 3.1 percent, to settle at
$92.66 a barrel on the New York Mercantile Exchange. The price has risen
10 percent in seven days of gains, the longest such streak since Feb.
24. Prices are down 6.2 percent this year. Brent oil for September
advanced $2.64, or 2.5 percent, to settle at $107.80 a barrel on the
London-based ICE Futures Europe exchange.
Source : Reuters
