Profit-Taking Weighs Tokyo Down

Ivaylo
11 Jul, 2006
New York City

Major Asian stocks settled lower Tuesday, as investors moved to the sidelines after a mixed session in New York and growing uneasiness about interest rates ahead of the policy meeting of the Bank of Japan which starts Thursday. The lack of willingness to push markets higher, before the policy meeting of the Bank of Japan, ends Friday alongside the impulse to gain from retail traders after a dramatic rebound Monday caused the broader market fall amid weak trading volumes.

[R]7:30AM Asian investors indulge in profit-taking ahead of bank’s meeting.[/R]
Asian markets finished lower on Tuesday. Japan’s Nikkei 225 Stock Average shed 0.5% to 15473.82. Nomura Holdings, brokerage house, shed 2.6% on reports of intensifying competition in the online retail-trading sector. Internet-brokerage firm Kabu.com plummeted 5.2%. Industrial shares were generally down, with Sumitomo Metals losing 0.21%. Mitsubishi Heavy Industries declined 1.2%. Among techs, computer maker Fujitsu pulled back 1.9%, while Toshiba Corp slipped as much as 2.8%.

In Hong Kong, the Hang Seng Index also shed 0.7% to 16490.13. Shares of PCCW slipped after the company's chairman, Richard Li, reported he would sell his controlling stake in the company to a Hong Kong financier, instead of pursuing a more lucrative but difficult deal to sell the company's core assets to a foreign bidder. Hong Kong's major fixed-line phone operator ended 8.1% lower.

South Korea Composite Stock Price Index, or Kospi, bucked the trend, advancing 0.1% to 1300.44. Chip makers led the broader Kospi gain with a stable second-half outlook. Samsung Electronics advanced 0.3% and Hynix Semiconductor added 2.6%. LG.Philips LCD, which reversed to a second-quarter loss, advanced 2.6% on bargain-hunting following its recent fall.

Elsewhere around the region, Taiwan’s Weighted Price Index of the Taiwan Stock Exchange shed 0.6% to 6639.13., shares listed in China, Shanghai and New Zealand gained slightly. Australia and Singapore finished lower.

[R]6:30AM European stocks fall weighed down by technology sector.[/R]
European markets traded lower by mid-morning. The U.K. FTSE 100 index declined 0.2% at 5,885, the German DAX Xetra 30 index lost 0.6% at 5,673 and the French CAC-40 index slipped 0.3% at 4,968. Lucent Technologies Inc. reported that revenue for the quarter ended in June will be about $300 million less than analysts expected, with earnings per share also below estimates. France’s Alcatel which recently agreed to buy Lucent for $13.45 billion, declined 4.2% in European trading.

Engine and mobile-phone maker Safran plunged 7.2% after it said that its operating margin is set to drop in 2006. Rolls Royce, a rival to Safran for engine making, shed 1.2%. Nokia, which competes against Safran in producing mobile phones, lost 1.5%. Reinsurance company Swiss Re advanced 0.5% announcing that it intends to cut up to 2,000 positions worldwide operations by the end of 2007.

Oil prices fell for a fourth day Tuesday as concerns about North Korea's missile tests and Iran's nuclear program eased. Light, sweet crude for August delivery fell 22 cents to $73.39 a barrel. August Brent at London's ICE Futures exchange, which expires at the end of this week, was down 24 cents at $72.65 per barrel.

Gold rebounded on Tuesday as buying interest from investors appeared at lower levels, but traders said the market lacked impetus to break free from the current range. Gold struck a low of $621 an ounce on profit taking from last week's one-month high of $637, but later climbed to $628.70. It was at $627.50/629.00 by 0942 GMT, against $624.00/625.50 in New York late on Monday.

The euro was down slightly against the dollar on Tuesday, and still off the mark it hit last week on the expectations of higher interest rates and disapponting U.S. economic figures. The euro bought $1.2725 in morning European trading, down from $1.2732 in New York late Monday. The British pound slipped to $1.8404 from $1.8407. The dollar also advanced to 114.17 Japanese yen from 114.10 yen.

[R]5:00AM Stronger dollar and weaker oil prices push gold futures down.[/R]
At the NYME, the most-traded August gold ended $8.70 lower at $626.10 a troy ounce on Monday. The contract got as low as $621.90. September silver closed at $11.110 an ounce, down 29.5 cents. October platinum finished $13 lower at $1,230.70 an ounce while September palladium settled down $5.45 at $323.70 an ounce. The September copper contract advanced 3.50 cents to end at $3.5825 per pound.

The front-month August crude-oil contract in New York, which set a record high of $75.78 on Friday, dropped 48 cents to close at $73.61 a barrel. August natural gas gained 8.5 cents to end at $5.608 a million British thermal units. On the New York Board of Trade, July Arabica coffee futures settled up 0.70 cent at 99.10 cents a pound. Futures on raw sugar in foreign ports for October ended down 0.41 cent at 16.46 cents a pound.