Asian shares down; Apple results weigh, eyes on China data

TOKYO, Jan 24 — Asian shares fell today as investors were cautious ahead of manufacturing data from China, while a sharp slide in Apple Inc shares following its earnings report also capped demand.

The MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.2 per cent. The pan-Asian index’s technology sector led the decline with a 0.6 per cent slip.

US and European stocks rose yesterday on solid earnings from IBM and Google, but Apple, the world’s largest technology company, reported quarterly revenue that slightly missed Wall Street expectations as sales of its flagship iPhone came in below target, sending its shares down more than 10 per cent in after-hours trading.

Apple’s component suppliers such as Japan’s Murata Manufacturing Co Ltd and South Korea’s LG Display fell 1.4 per cent and 2.4 per cent respectively.

Asian markets were also focused on the HSBC China PMI data due at 0145 GMT. Confirmation of a recovery in manufacturing growth in China is likely to improve risk appetite and support wide-ranging markets, from commodities to currencies linked to commodities.

“By most measures, the Chinese economy is on a positive path, and there is no reason to believe that the momentum being seen recently is ready to reverse,” said Neal Gilbert, market strategist at GFT Forex, in a note to clients.

“Watch for a continuation of improvement for this value today with a result above last month’s result of 51.5.”

Australian shares were choppy ahead of the data from China, Australia’s largest export market. South Korean shares slipped 0.6 per cent.

The benchmark Nikkei average opened down 0.4 per cent after falling to a three-week closing low on Tuesday, as investors booked profits from the market’s recent rally that was driven by a weak yen.

Yen buying slowed, although the currency remained steady after the Bank of Japan’s latest policy easing steps on Tuesday failed to provide immediate stimulus as expected by some investors.

The BOJ pledged to achieve a 2 per cent inflation target and promised to start open-ended asset buying from 2014.

The dollar eased 0.1 per cent to 88.53 yen while the euro was down 0.2 per cent to 117.77 yen.

The yen is still down 12 per cent from its mid-November levels, when markets began pricing in strong monetary accommodation from the BOJ.

Many market players believe the yen’s weakness will persist due to widespread expectations the BOJ will continue pursuing aggressive monetary easing policies to beat the country’s stubborn deflation.

“The BOJ decision probably isn’t a big deal in a sense that the new BOJ regime after (Governor Masaaki) Shirakawa is expected to do everything and anything available, so after profit taking, it’s a good opportunity to re-enter the ‘Abe trade’ because it’s all about expectations,” said Shogo Fujita, chief Japanese bond strategist at Bank of America in Tokyo.

The “Abe trade” refers to investors betting on a weakening yen and rising Japanese equities on perception Prime Minister Shinzo Abe will pursue aggressive fiscal and monetary policies to pull Japan out of deflation and economic stagnation.

Data today confirming a deteriorating Japanese trade balance also encouraged yen selling, traders said. Japan logged a record annual trade deficit in 2012.

Earlier today, South Korea said its economy grew 0.4 per cent in the fourth quarter of 2012 on a quarterly basis. But it fell short of around 0.8 per cent growth that the Bank of Korea had projected as recently as in October, underscoring a delayed global recovery due to persistent uncertainties hobbling the major economies.

The International Monetary Fund said yesterday an unexpectedly stubborn euro zone recession and weakness in Japan would weigh on global economic growth this year before a rebound in 2014.

US crude futures dropped 1.5 per cent yesterday after a key oil pipeline reduced the volume flowing through it, raising concerns inventories at the Midwest delivery point for the contract might swell further. But Brent crude rose on supportive economic data. US crude was up 0.3 per cent at $95.53 a barrel early today. — Reuters


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