Tokyo Slumps Ahead Of Rates Hike

Ivaylo
12 Jul, 2006
New York City

Asian markets were divided into winning and losing camps Wednesday, with gains in the Japanese yen dragging down the Nikkei Average. South Korea followed Japan lead, while Hong Kong Hang Seng Index reversed early loses to end in positive territories. Shares in Shanghai and Taiwan also settled lower.

[R]7:00AM Asian markets end mostly lower.[/R]
Asian markets ended mostly lower on Wednesday. The Nikkei 225 Average in Tokyo ended lower 1.45% at 15,249.32. Data from the Bank of Japan released Wednesday showed Japan's domestic corporate goods prices rose 3.3% in June from a year earlier, marking the 28th consecutive monthly increase. Honda Motor led decliners among Japanese automotives, falling 2.5%. Shares of Toyota Motor traded down 1.3%, while Nissan Motor retreated 1.4%.

Hong Kong's Hang Seng Index reversed early loses to close 0.19% up at 16,522.21. The China Enterprises Index, which tracks Hong Kong-listed shares of companies incorporated on the mainland, advanced 0.38% at 6,826.65. The index had traded flat for much of the day. Hong Kong's flagship carrier Cathay Pacific Airways which recently won expanded landing rights in China, was up 0.36%.

In Seoul, the Korea Composite Stock Price Index, or Kospi, closed down 0.3% at 1296.69. Telecom shares ended weaker on expectations of poor second-quarter results after companies were fined in late June for offering illegal subsidies to attract customers and increased expenses for marketing, analysts said. SK Telecom, South Korea wireless operator, ended down 1.5% and KT Freetel lost 3.9%.

[R]6:30AM Europe extends early gains by mi-morning.[/R]
European markets were higher by mid-morning. The U.K. FTSE 100 index gained 0.4% at 5,882, the German DAX Xetra increased 0.9% at 5,663 and the French CAC-40 index rose 0.6% at 4,945. U.K. retailer and business services group GUS advanced 1.2% after it said that same-store sales in the three months ending June 30 at its Argos retail division advanced 7%. Luxury goods supplier Burberry Group increased 1.3% reporting that underlying revenue climbed 12% in its first quarter.

Alcatel which fell 5.9% on Tuesday after soon-to-be-acquired Lucent Technologies warned of a revenue shortfall, inched up 0.3%. U.K. oil company BP fell 0.2%, despite rises for most of the energy sector with oil trading above $74 a barrel, after it reportedly is planning to take a $1 billion stake in Russian oil company Rosneft. Switzerland’s Roche rose 1.1% after majority-owned Genentech reported an 80% profit rise and lifted its fiscal-year earnings guidance.

Oil prices stood firm at above $74 a barrel, raising gold's attactiveness as a hedge against inflation. Gold traded on Wednesday near five-week highs, supported by firm oil prices and nervousness following bomb attacks which killed more than 180 people in India's financial hub of Mumbai. Gold was quoted at $642.00/643.00 an ounce by 0958 GMT, against $642.10/644.10 late in New York. The dollar was trading at 114.37 yen in Tokyo midafternoon, up 0.26 yen from late Tuesday in New York. The euro fell to $1.2768 from $1.2771.

[R]5:00AM Mumbai bombings sent gold prices higher.[/R]
The most-traded August gold ended $17 higher at $643.10 a troy ounce at the NYME on Tuesday. The contract reached a five week high of $643.90 an ounce earlier Tuesday. The most-traded September silver contract raced to a session high of $11.60 an ounce. The contract later ended at $11.55 an ounce, up 44 cents on the day. October platinum finished up $23.30 at $1,254 an ounce. The most-traded September copper contract advanced 5.25 cents to settle at $3.6350 per pound.

August crude oil contract advanced 55 cents to $74.16 a barrel. August heating oil contract gained 4.61 cents to $2.0106 a gallon. August gasoline was 1.78 cents higher at $2.1925 a gallon. On the New York Board of Trade, July Arabica coffee futures settled down 0.75 cent at 98.35 cents a pound. Futures on raw sugar in foreign ports for October settled up 0.11 cent at 16.57 cents a pound.