Asia markets rise on Wall St rally; China slumps
Asian shares edged higher Monday on the back of a strong Wall Street
rally, but Chinese stocks plunged to a new three-year low after growth
in the world's second-largest economy slowed.
Hong Kong's benchmark Hang Seng index closed up 0.15 percent, or
28.71 points, at 19,121.34, while Sydney finished 0.56 percent, or 22.9
points, higher at 4,105.1, with resource stocks leading the way.
But the Shanghai Composite Index slumped 1.74 percent, or 37.94
points, to 2,147.96, its lowest level since March 2009.
Tokyo was closed for a public holiday.
Official data released Friday showed the Chinese economy expanded 7.6
percent in the second quarter year-on-year, its slowest pace for more
than three years as it was hit by ripples from the eurozone debt crisis
and slow US recovery.
Chinese Premier Wen Jiabao warned Sunday that while there was “a lot
of dynamism and momentum for economic growth”, China's “economic rebound
is not yet stable and economic hardship may continue for a period of
time”.
In the depths of the global financial crisis at the start of 2009
China's economy grew at a rate of 6.6 percent.
Beijing's full-year growth target is 7.5 percent.
“Sentiment is severely battered by a string of negative news,” Zhang
Gang, an analyst at Central China Securities, told Dow Jones Newswires.
“In their latest remarks, neither Premier Wen Jiabao or Vice Premier
Li Keqiang has revealed details about how the governments will boost
growth.” But elsewhere, stocks were lifted after US markets broke a
six-day losing streak on Friday following better-than-expected figures
from banking giant JP Morgan Chase, which announced a $5 billion
second-quarter profit even after accounting for $4.4 billion in trading
losses. The Dow closed up 1.62 percent, or 203.82 points, at 12,777.09,
the S&P 500 rose 1.65 percent and the tech-rich Nasdaq 1.48 percent.
Despite the evidence of slowing Chinese growth, Justin Harper, market
strategist for IG Markets Singapore, told AFP: “The Chinese GDP data...
came better than expected.”
JP Morgan's figures, he added, sparked hopes of “a better than
expected earnings season across the board for the big banks”.
Traders were also looking to US Congressional testimony from Federal
Reserve chairman Ben Bernanke on Tuesday and Wednesday for any hint on a
third round of quantitative easing, DBS Group Research said in a report.
“As far as the market is concerned, it is a question of 'not if, but
when' the Fed will move towards a third round of quantitative easing
measures or QE3,” the report said.
"European shares opened weaker on Monday, with London's FTSE 100
index down 0.18 percent, the DAX 30 in Frankfurt 0.09 percent lower, and
Paris' CAC 40 off 0.17 percent.
The US is China's biggest trading partner and on currency markets the
dollar advanced against the euro, with the single currency fetching
$1.2222 in afternoon Asian trade compared to $1.2248 in New York on
Friday.
The euro also slipped against the yen, buying 96.63 yen from 97.08
yen, while the US dollar traded at 79.04 yen from 79.17 yen.
Oil was lower after Saudi Arabia and the United Arab Emirates opened
crude pipelines bypassing the Strait of Hormuz, which Iran has
repeatedly threatened to close as it rows with the West over its nuclear
programme, easing supply concerns.
New York's main contract, light sweet crude for August delivery, shed
43 cents to $86.67 a barrel in the afternoon, while Brent North Sea
crude for delivery in August was down $1.06 to $101.34.
Gold was worth $1,586.22 an ounce at 0825 GMT, compared with
$1,583.22 on Friday.
In other markets: -- Seoul was up 0.27 percent, or 4.90 points, at
1,817.79.
Taipei fell 0.20 percent, or 14.23 points, to 7,090.04.
Taiwan Semiconductor Manufacturing Co closed 0.40 percent lower at
Tw$75.5 while Hon Hai Precision added 0.57 percent at Tw$87.5.
Manila rose 1.60 percent, or 83.47 points, to 5,277.99.
Philippine Long Distance Telephone Co. added 2.4 percent to 2,766
pesos and Metropolitan Bank and Trust Co. rose 3.5 percent to 98.30
pesos.
AFP |