Asian stocks opened mostly lower Wednesday, pulling back after
several consecutive sessions of gains, amid disappointing results
from technology and industrial heavyweights in the U.S.
Japan's Nikkei Stock Average was off 1% at 20627.3, while
Australia's S&P ASX 200 declined 0.9% to 5657.4, both indexes
sliding after a six-day winning streak.
Tsuyoshi Nomaguchi, a senior strategist at Daiwa Securities,
said Apple Inc.'s weak iPhone revenue outlook and International
Business Machine Corp.'s earnings miss will weigh on Japan's
technology shares, while the market as a whole is in line for a
routine round of profit-taking.
"The sensitivity to earnings will only grow after the Bank of
Japan lowered its GDP forecast, meaning business results are going
to have to really impress in order to maintain investor interest,"
he said.
Industrial behemoth United Technologies Corp. and Microsoft
Corp. also reported weak numbers.
In China, the Shanghai Composite Index lost 0.5% to 3996.43,
breaking four consecutive sessions of gains. Tuesday's rally had
pushed the smaller Shenzhen Composite back into a bull market,
defined as a rise of more than 20% from a recent low.
The Shenzhen market was last flat at 2266.61. The Hang Seng
Index was down 0.5% at 25401.79
The Chinese government has continued on its path of monetary
easing to support the economy and investors expect that to buoy the
market, although its rebound from a heavy selloff the past month
has been uneven. The Shanghai Composite remains off 23% from its
seven-plus-year high on June 12, and authorities are expected to
continue their tightening efforts on margin trading, which could
push down the market.
China's central bank has injected additional capital into two of
the nation's policy banks to help them better support a weakening
economy, according to a Tuesday report by Caixin, a local business
magazine.
The People's Bank of China has injected $48 billion into China
Development Bank and $45 billion into the Export-Import Bank of
China, according to the report. China's Ministry of Finance has
injected 100 billion yuan ($16 billion) into the Agricultural
Development Bank of China, another government-run policy bank, the
report said.
"No Asian country is doing as much as China on the economic
reform front, which the authorities are doing while maintaining
economic growth and cleaning up the excesses of the 2009-10 credit
boom," ING analysts said in a report. "Stay positive on
A-shares."
Overnight, all three Wall Street indexes decreased and the U.S.
dollar declined against its peers as investors cashed out after a
period of sharp gains in the currency. The dollar was recently down
0.1% against the yen at Yen123.776.
Spot gold drifted lower in early Asian trade to $1,095.60 an
ounce, below the $1,100 mark where many miners break even. Crude
oil futures also declined on bearish U.S. supply data, with Brent
down 45 cents to $56.59 a barrel.
A strengthening dollar has sent commodities from oil to copper
tumbling, by making the dollar-priced raw materials more expensive
for buyers using foreign currencies.
"There's this general macro fear that U.S. interest rates are
about to rise, therefore we'll have a stronger dollar. That's
problematic for [emerging markets] and commodities," said Ilya
Feygin, managing director at New York-based WallachBeth Capital
"Equities related to metals have been decimated," he said. "To
me that suggests people are getting out indiscriminately" and that
"it will present an opportunity to go the other way."
Last week, Federal Reserve Chairwoman Janet Yellen said the U.S.
central bank is on a path to raise interest rates this year as long
as the current economic recovery continues apace. The comments
buoyed the U.S. currency, helping the WSJ Dollar Index notch a more
than 1% gain from July 10 to July 20.
--Bradford Frischkorn contributed to this article.
Write to Chao Deng at Chao.Deng@wsj.com
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