Asian stocks off 2-month highs on US earnings
Asian stocks retreated from two-month highs and the euro was hit by a bout of profit-taking on Thursday, felled by a disappointing slate of earnings from Wall Street heavyweights.
January 20, 2011 / 10:28 IST
Asian stocks retreated from two-month highs and the euro was hit by a bout of profit-taking on Thursday, felled by a disappointing slate of earnings from Wall Street heavyweights.
The S&P 500 suffered its biggest decline in nearly two months as disappointing results from Goldman Sachs and Wells Fargo put a damper on the rally. The MSCI index of Asia and Pacific shares excluding Japan fell 0.7%, weighed down by sectors such as technology and materials down by 1.3 and 1.5% respectively.Materials was hit by a selloff in commodities such as oil which added to its previous day's losses and a 2.8% plunge in US corn futures on Wednesday.The dismal earnings combined with weak US housing data knocked 1% off the US index on Wednesday and allowed investors to book some profits into a rally which has seen the market rise by nearly 10% since the start of December.The selloff spilled into Asian markets such as the benchmark Nikkei and Australia's S&P/ASX 200 index, though traders said a sharp drop might whet the appetite of bargain hunters."We're also seeing slight signs of overheating in the market, after the Nikkei gained for three consecutive sessions, but bargain hunters will be active today and overall sentiment remains strong," said Hiroichi Nishi, general manager at Nikko Cordial Securities.The drop in US stocks gave a lift to US treasuries which consolidated gains in Asia, following an overnight recovery, when investors bought to unwind rate-locking trades amid hefty corporate issuances. The 10-year yield settled at 3.35%, down from 3.47% at the start of the year.The euro ran into some profit taking, after having extended its rally to an eight-week high above USD 1.35 overnight, bringing a key technical level in focus. The release of Chinese inflation and growth data was also awaited, though figures leaked by Hong Kong media on Wednesday showed consumer prices rose 4.6% in the year to December, slowing from a 5.1% pace in November. Such an outcome could help lessen the urgency for further immediate tightening measures by China and should be positive for risk appetite and the Aussie in particular.A survey of around 500 economists across the world showed China again topping the economic expansion charts this year, as well as promising signs that the United States' economic revival will gain traction this year. Elsewhere, the yuan edged closer to a record high after the central bank fixed the mid-point at its highest level since a landmark revaluation in 2005 even as Chinese President Hu Jintao was visiting Washington. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
