Asia Tracks U.S. Decline

Ivaylo
06 Jun, 2006
New York City

In Japan, the Nikkei 225 Index fell 1.81%, as trading exporters led decliners. The market was being affected by U.S. weakness and it was already on weaker ground after a fund scandal, so sentiment was bearish. In Hong Kong, the Hang Seng Index eased 0.27%. Property shares, which constitute a large component of the Hang Seng, declined on interest-rate concerns. Indexes in Australia, Malaysia, Indonesia and Singapore also finished lower.

[R]7:30AM Asian stocks track U.S. decline.[/R]
Asian markets closed lower. In Japan, the Nikkei 225 Index fell 1.81% to 15384.86, its lowest close since January 23. Trading exporters led declines. Electronics maker NEC was down 2.27%, Kyocera lost 2.43% and Konica Minolta shed 4.64%. Auto stocks also fell, as Nissan Motor declined 1.93% and Mitsubishi Motor dived 2.9%. In Hong Kong, the Hang Seng Index shed 0.27% to close at 15973.11. Property stocks, constituting a large component of the Hang Seng, declined on interest-rate concerns. The Hong Kong dollar is tied to the U.S. currency, and local interest rates follow those set by the Fed. Property stocks will keep underperforming until the U.S. interest rate cycle kicks in reverse. IPOs kept looming large in Hong Kong, with Shanghai-based developer Shui On Land launching a nearly $1 billion offering to help finance six projects in the mainland. Benchmarks in Australia, Malaysia, Indonesia and Singapore also declined. Taiwan regained some lost ground after being off 3.51% on Monday, while stocks in Shanghai remained flat. Markets in South Korea were closed for a holiday.

[R]6:30AM European shares fell broadly across the region.[/R]
European markets fell by mid morning. The FTSE Eurofirst had shed 12.9 points or 1% to 1,305.91, while the German Dax declined 40.8 points or 1% to 5,580.83 and the French CAC 40 dropped 66.4 points or 1.4% to 4,849.68. The takeover struggle for BAA saw another turn as Goldman Sachs announced it was prepared to offer 955.25p after market talk prompted the UK airport operator had been up to a revised 950.25p takeover offer from Grupo Ferrovial of Spain. Both bids include the BAA dividend of 15.25p. Ryanair shed 1.9% after the budget airline announced it anticipated profits growth of 5 to 10% this year if oil prices stayed close to $70 a barrel. Axa, the French insurance company, said it had reached an agreement to sell its Axa Re business to Stone Point Capital, the US private equity group. Axa dropped 1.2%. Novartis reported that it would pay up to $507m in milestone payments to the US biopharmaceuticals company Human Genome Sciences to acquire rights to Albuferon, a treatment being developed for chronic hepatitis C infections. Novartis declined 0.5%.

Light, sweet crude oil for July delivery dropped 20 cents to $72.40 a barrel and July Brent crude on London''s ICE Futures exchange declined 29 cents to $71.08 per barrel. Gold traded at $633.50 an ounce on Tuesday, down $10 an ounce from Monday''s close of $643.50. The dollar gained against the other major currencies. The euro dropped to $1.2906 from $1.2909, after it rose on Monday to its highest level since May 15. The greenback advanced to buy 112.39 Japanese yen from 112.16 the day before, while the British pound fell to $1.8720 from 1.8724 in New York.

[R]5:00AM Precious metals advanced on dollar, oil and Iran.[/R]
August gold rose $7.70 to $648.70 an ounce on NYME. July silver gained 21 cents to $12.295 an ounce and July platinum advanced $13.60 to $1,258.50 an ounce. September palladium climbed $5.65 to $364 an ounce. The benchmark July copper contract ended 1.45 cents up at $3.6010 per pound.

The July crude contract ended 27 cents higher at $72.60 a barrel after rising as high as $73.84 in overnight trading. July gasoline rose 3.33 cents to $2.1642 a gallon. On the New York Board of Trade, July Arabica coffee closed 2.80 cents down at 98.45 cents a pound while September shed 2.80 cents to $1.0125 a pound. Futures on raw sugar in foreign ports for July finished up 0.18 cent at 15.39 cents a pound while October advanced 0.18 cent to 15.73 cents a pound.