Asian Stocks Advance After U.S. Reports Lift Earnings Outlook

December 26, 2011, 3:17 AM EST By Yoshiaki Nohara

Dec. 26 (Bloomberg) -- Asian stocks rose, extending last week’s gain, as orders for U.S. durable goods and home sales climbed, boosting confidence in the world’s biggest economy and the earnings outlook for Asia’s exporters.

Fanuc Corp., a maker of factory robots that gets 75 percent of its sales outside Japan, rose 2.9 percent in Tokyo. CSR Corp., a trainmaker, dropped 7.3 percent in Shanghai after a report China’s railway ministry will cut construction spending. Mitsubishi Corp., Japan’s biggest commodities trader by revenue, rose 1.7 percent after prices of raw materials and metals increased. Woongjin Energy Co. slipped 7 percent in Seoul after clients canceled orders for solar-energy equipment.

“America is holding up amid concern Europe’s problems would drag the world down,” said Koichi Kurose, chief economist in Tokyo at Resona Bank Ltd., which oversees the equivalent of $68 billion. “The U.S. economy will need policy backing to stand its ground. Moves in equities will be limited this week before investors start seeking a trend in the next year.”

The MSCI Asia Pacific Index gained 0.2 percent to 113.90 as of 4:20 p.m. in Tokyo, with eight out of the 10 industry groups advancing. The measure added 1.1 percent last week. The gauge has tumbled 17 percent this year amid concern Europe’s debt crisis will slow global economic growth.

Japan’s Nikkei 225 Stock Average rose 1 percent today after a public holiday on Dec. 23. Trading volume on the gauge was 51 percent below the 100-day average, according to data compiled by Bloomberg.

South Korea’s Kospi Index fell 0.6 percent, while China’s Shanghai Composite Index slipped 0.7 percent. Markets in Hong Kong, Australia and Singapore are shut today for holidays.

U.S. Data

The Standard & Poor’s 500 Index added 0.9 percent in New York on Dec. 23. as orders for durable goods rose in November by the most in four months and sales of new U.S. homes advanced last month to a seven-month high.

Stocks also gained after the U.S. Congress passed a two- month extension of a payroll tax cut. President Barack Obama signed the measure, and negotiators are making plans to start work on a longer-term deal.

‘Worst Avoided’

“There was a consensus that 2012 U.S. growth would fall,” said Naoki Murakami, chief economist at Monex Group Inc. in Tokyo. “The worst-case scenario has been avoided, and that’s a positive for stocks.”

Exporters to the U.S. advanced. Fanuc added 2.9 percent to 11,780 yen. Honda Motor Co., Japan’s second-largest carmaker by market value, rose 1.3 percent to 2,354 yen.

Stocks in the MSCI Asia Pacific Index were valued at 12.7 times estimated earnings on average as of Dec. 23, compared with 12.8 times for the S&P 500 and 10.5 times for the Stoxx Europe 600 index, according to data compiled by Bloomberg.

Utilities posted the biggest decline among the 10 industry groups in the Asia-Pacific gauge this year as Japanese power generators tumbled after meltdowns at Tokyo Electric Power Co.’s Fukushima Dai-Ichi plant.

Tepco, as the utility is known, lost 4.1 percent to 213 yen today after the Nikkei newspaper reported the company may seek several hundred billion yen in fresh aid to compensate nuclear disaster victims. Tepco received 890 billion yen ($11.4 billion) in state assistance last month.

Railway Stocks

CSR dropped 7.3 percent to 4.42 yuan after Xinhua News Agency said China’s railway ministry will reduce construction spending to 400 billion yuan ($63 billion) in 2012 from 469 billion yuan this year. China Railway Construction Corp. lost 1 percent to 3.99 yuan.

Mitsubishi Corp. climbed 1.7 percent to 1,539 yen after the Thomson Reuters/Jefferies CRB Index of raw materials added 0.1 percent on Dec. 23 and a gauge of prices for industrial metals advanced in London. Itochu Corp., a Japanese trading firm, rose 1.1 percent to 769 yen.

Woongjin Energy slipped 7 percent to 4,500 won after three clients canceled orders for solar-cell wafers because of the global economic slowdown and lower demand for alternative energy, according to regulatory filings.

--With assistance from Norie Kuboyama and Toshiro Hasegawa in Tokyo. Editors: Jim Powell, Jason Clenfield.

To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net

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Asian Stocks Drop as U.S. Jobs, Manufacturing Reports Disappoint

June 02, 2011, 6:57 AM EDT By Jonathan Burgos and Shani Raja

June 2 (Bloomberg) -- Asian stocks dropped for the first time in three days after U.S. manufacturing expanded at the weakest pace in more than a year and employers hired fewer workers than forecast, fueling concern the global economic recovery will slow.

Samsung Electronics Co., the Korean consumer-electronics company that gets 85 percent of its revenue from overseas, sank 3.1 percent in Seoul. Sony Corp., Japan’s largest exporter of consumer electronics, lost 1.7 percent in Tokyo. Toyota Motor Corp. and Honda Motor Co. led declines among Japanese carmakers as sales in the U.S. slumped. BHP Billiton Ltd., the world’s largest mining company and Australia’s No. 1 oil producer, retreated 2.2 percent after crude oil and metal futures dropped.

The MSCI Asia Pacific Index dropped 1.6 percent to 134.59 as of 7:37 p.m. in Tokyo, paring this week’s advance and set for its biggest drop since May 23. All of the 10 industry groups that make up the gauge declined. More than four stocks dropped for each that rose on the measure, which last week completed its longest streak of weekly losses in two years as concern deepened over Europe’s debt crisis and amid speculation a slowing global recovery will crimp earnings.

“The weak manufacturing and employment data coming on the back of soft data out of Europe and China and another downgrade for Greece have added to concerns about the strength of the global economy,” said Shane Oliver, head of investment strategy at AMP Capital Investors Ltd., which manages $98 billion in Sydney. “Investors are worried it will be something worse, which will be bad for Asian exporters. As a result the risk on- risk off, the roller coaster in global and regional markets continues and right now it’s back to risk off.”

Kan Vote

Japan’s Nikkei 225 Stock Average decreased 1.7 percent ahead of a no-confidence vote on Prime Minister Naoto Kan after the country’s markets closed. The motion was rejected by the lower house of parliament after Kan, who faces discontent over his handling of the March 11 earthquake disaster that triggered the world’s worst nuclear accident in 25 years, signaled he’ll resign once a solution to the nation’s post-quake crisis is in sight.

South Korea’s Kospi Index retreated 1.3 percent. Hong Kong’s Hang Seng Index slipped 1.6 percent, while China’s Shanghai Composite Index sank 1.4 percent. Australia’s S&P/ASX 200 Index dropped 2.3 percent, its steepest fall in a year.

Futures on the Standard & Poor’s 500 Index added 0.3 percent today. In New York, the index retreated 2.3 percent yesterday, its biggest decline since August, after the Institute for Supply Management’s factory index fell last month to its lowest level since September 2009.

Manufacturing, Jobs

Companies in the U.S. last month added jobs at the slowest pace since September. Employment grew by 38,000 in May, data from ADP Employer Services showed yesterday, missing a 175,000 median estimate of economists surveyed by Bloomberg.

Manufacturing growth from China, the U.S. and Europe slowed in May, adding to signs that momentum is weakening in a global economy facing headwinds from rising commodity costs and financial shocks. Greece’s risk of default was raised to 50 percent by Moody’s Investors Service as European officials rushed to put together the second bailout plan in two years to stave off renewed financial turmoil in the region.

“The global economy has hit a soft patch and more investors are shying away from risk assets.” said Mitsushige Akino, who oversees the equivalent of $600 million at Ichiyoshi Investment Management Co. in Tokyo.

Billabong International Ltd., the world’s largest surfwear maker, dropped 3.4 percent to A$6.20 in Sydney. Samsung Electronics, which gets about 22 percent of sales from America, dropped 3.1 percent to 883,000 won in Seoul. LG Electronics Inc., the world’s third-biggest maker of mobile phones, tumbled 4.4 percent to 94,200 won. Sony, the maker of PlayStation gaming consoles and Bravia televisions, lost 1.7 percent to 2,142 yen in Tokyo.

Auto Slump

Acer Inc., the world’s second-biggest supplier of notebook computers, slumped 7 percent to NT$51.90 in Taipei, its steepest drop since December 1997. The company said it will book an operating loss of $150 million because of an inventory write-off. It also plans to cut 300 jobs in Europe, the Middle East and Africa to reduce expenses.

Carmakers declined as industry-wide U.S. auto sales fell to 1.06 million cars and light trucks last month from 1.1 million a year earlier, according to a report from Autodata Corp., of Woodcliff Lake, New Jersey. Toyota and Honda, the automakers hardest hit by Japan’s record earthquake, led U.S. sales declines among Asian-based car manufacturers in May as supplies of some models ran low, the report showed.

Toyota, the world’s biggest carmaker, decreased 3.3 percent to 3,270 yen. Honda, which gets about 44 percent of sales from North America, dropped 2.4 percent to 3,045 yen. Nissan Motor Co., Japan’s No. 3 automaker by market value, sank 3.2 percent to 781 yen.

Oil, Metals

A gauge of raw material producers led the drop among the 10 industry groups in the MSCI Asia Pacific Index. BHP dropped 2.2 percent to A$43.55 in Sydney. Rio Tinto Group, the world’s second-biggest mining company by sales, fell 1.8 percent to A$80.10. Jiangxi Copper Co., China’s No. 1 producer of the metal, slipped 3 percent to HK$25.65 in Hong Kong. Cnooc Ltd., the nation’s largest offshore oil producer, dipped 2.2 percent to HK$18.96.

Crude oil for June delivery declined 2.4 percent to settle at $100.29 a barrel in New York yesterday, the biggest drop in a single-session since May 11. The London Metal Exchange Index of prices for six metals including copper and aluminum lost 1 percent.

The MSCI Asia Pacific Index slid 0.6 percent this year through yesterday, compared with gains of 4.5 percent by the S&P 500 and 0.9 percent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark were valued at 13.8 times estimated earnings on average, compared with 13.3 times for the S&P 500 and 11.2 times for the Stoxx 600.

--With assistance from Norie Kuboyama and Satoshi Kawano in Tokyo. Editors: John McCluskey.

To contact the reporters on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net; To contact the reporters on this story: Shani Raja in Sydney at sraja4@bloomberg.net.

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net.

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U.S. Stocks Decline on Economic Reports, Greece Aid Concerns

May 26, 2011, 12:24 PM EDT By Rita Nazareth

May 26 (Bloomberg) -- U.S. stocks declined for the fourth time in five days as reports showed the economy expanded at a slower rate than forecast and jobless claims unexpectedly rose, while concern grew about Europe’s debt crisis.

Dow Chemical Co., the largest U.S. chemical maker, slumped 1.4 percent, pacing declines in raw material producers as commodities fell on concern about lower demand. Walgreen Co. dropped 1.6 percent after Goldman Sachs Group Inc. cut the largest U.S. drugstore chain from its “conviction buy” list. Big Lots Inc. declined 2 percent as the discount retailer forecast earnings that fell short of analysts’ estimates.

The Standard & Poor’s 500 Index lost 0.1 percent to 1,318.57 at 12 p.m. in New York. The Dow Jones Industrial Average fell 37.92 points, or 0.3 percent, to 12,356.74. Both benchmark gauges yesterday snapped a three-day drop.

“We’ve leveled off and softened somewhat,” said Mark Luschini, chief investment strategist at Philadelphia-based Janney Montgomery Scott LLC, which manages $53 billion. “We’ve begun to see more moderating growth. We’re not seeing a significant deterioration or acceleration in economic data. Unless we see get some resolve to the European situation, unless we get some settlement with regards to our fiscal issues here, I don’t see any imminent catalysts to power up equity prices.”

Europe Crisis

The S&P 500 fell 3.2 percent from an almost three-year high on April 29 through yesterday amid concern about Europe’s debt crisis and weaker-than-forecast economic data. Still, the benchmark gauge rose 5 percent from the end of 2010 through yesterday on government stimulus measures and higher-than- forecast corporate profits.

The U.S. economy grew at a 1.8 percent annual rate in the first quarter, less than forecast, reflecting a smaller gain in consumer spending than previously calculated. The revised rise in gross domestic product was the same as estimated last month and compared with a 3.1 percent gain in the prior quarter, Commerce Department figures showed. The median forecast of economists surveyed by Bloomberg News called for a 2.2 percent increase.

More Americans unexpectedly filed applications for unemployment benefits last week, a sign the labor market is struggling to gain momentum. Jobless claims increased by 10,000 to 424,000, Labor Department figures showed. The median estimate of economists was for a drop to 404,000.

Aid Payment

Stocks extended declines after Luxembourg’s Jean-Claude Juncker, who leads the group of euro-area finance ministers, said the International Monetary Fund may not release its portion of a 12 billion-euro ($17 billion) aid payment to Greece next month.

“There are specific IMF rules and one of those rules says that IMF can only take action when the refinancing guarantee is given over 12 months,” Juncker said today at a conference in Luxembourg. “I don’t think that the troika will come to the conclusion that this is given,” he said.

A gauge of raw material shares in the S&P 500 fell 0.4 percent. The Thomson Reuters/Jefferies CRB Index of 19 raw materials slumped 0.4 percent. Dow Chemical slid 1.4 percent $35.68.

Walgreen slumped 1.6 percent to $43.44. The stock is still a “buy” at Goldman Sachs.

Big Lots Slump

Big Lots declined 2 percent to $31.70. The discount retailer forecast second-quarter earnings of 38 cents to 48 cents a share, falling short of the average analyst estimate of 52 cents, according to Bloomberg data.

Computer Sciences Corp. lost 15 percent, the most in the S&P 500, to $37.59. The provider of computer services to companies and U.S. government agencies said profit for fiscal 2012 will be as much as $4.80 a share. Analysts projected $5.07, according to the average of estimates compiled by Bloomberg.

Goldman Sachs Group Inc. lowered its year-end forecast for the Standard & Poor’s 500 Index to 1,450 from 1,500 and reduced its 2012 earnings projection, citing weakening economic estimates. S&P 500 companies will post combined profit of $104 a share next year, compared with Goldman Sachs’s prior estimate of $106, according to David Kostin, the New York-based equity strategist. He maintained his 2011 earnings forecast for the S&P 500 of $96 a share.

“Our adjustments reflect a combination of developments including recently lowered GDP growth estimates by our economists in the U.S. and Asia and a significant increase in our Brent oil price forecast,” Kostin wrote today in a note to clients.

Microsoft Rallies

Microsoft Corp. rose the most in the Dow, adding 2.7 percent to $24.85. Shares of the world’s biggest software maker are “statistically” cheap, Mario Gabelli, chairman of Gamco Investors Inc., said in an interview on Bloomberg TV. Separately, Greenlight Capital Inc. President David Einhorn called for Microsoft’s board to replace Chief Executive Officer Steve Ballmer, saying the company suffers from “Charlie Brown management.”

Tiffany & Co. increased 9.5 percent to $76.66, the biggest gain in the S&P 500 Index. The world’s second-largest luxury jewelry retailer posted first-quarter profit that beat analysts’ estimates and raised its full-year forecast as sales did better in Japan than expected after the earthquake.

NetApp Inc. rose 7.4 percent to $55.54. The data-management company forecast adjusted earnings of as much as 57 cents a share for the first quarter, compared with the average estimate of analysts surveyed by Bloomberg of 50 cents a share.

Dividend Payers Outperform

Companies in the S&P 500 that raised dividends for at least 25 years are beating the benchmark gauge, reversing a trend started in August when the Federal Reserve signaled additional economic stimulus.

The S&P 500 Dividend Aristocrats Index is again beating the S&P 500 after an almost six-month period of underperformance. Since the middle of February, the index of dividend payers rose 3.1 percent through yesterday and the S&P 500 fell 0.9 percent. The ratio between the two gauges rebounded to 0.41 from a one- year low of 0.39 on Feb. 14. It had fallen from a record of 0.42 on Aug. 26 through mid-February. During that period, the “aristocrats” surged 18 percent as a group, trailing a 27 percent gain for the S&P 500.

“Once the Fed signaled QE2, we had a resumption of the risk rally,” said Russ Koesterich, the San Francisco-based global chief investment strategist for the IShares unit of BlackRock Inc., which oversees $3.65 trillion as the world’s largest asset manager. “Now that we’re coming to an end of QE2 and there’s concern about a slower pace of economic growth, investors are turning more defensive. These more stable, higher- dividend paying companies are the beneficiaries of that.”

--Editors: Joanna Ossinger, Michael Regan

To contact the reporter on this story: Rita Nazareth in New York at rnazareth@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net

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U.S. Stocks Retreat as Housing, LEI Reports Temper Optimism

May 19, 2011, 1:25 PM EDT By Rita Nazareth

May 19 (Bloomberg) -- U.S. stocks rose, sending the Standard & Poor’s 500 Index higher a second straight day, as initial jobless claims fell more than forecast and higher-than- estimated earnings bolstered optimism.

PetSmart Inc., a pet-store chain, and Dollar Tree Inc., a discount retailer, added at least 7.1 percent after reporting earnings that beat estimates. Intel Corp., KLA-Tencor Corp. and Applied Materials Inc. slumped more than 1.5 percent as Goldman Sachs Group Inc. cut their ratings, citing increased competition from tablet computers and excess supply.

The S&P 500 rose 0.1 percent to 1,342.38 at 1 p.m. in New York. The index yesterday posted the biggest gain in three weeks. The Dow Jones Industrial Average advanced 33.15 points, or 0.3 percent, to 12,593.33 today.

“The rally will accelerate,” said Philip Orlando, the New York-based chief equity market strategist at Federated Investors Inc., which oversees $358.2 billion. “We had an excellent jobless claims number, which tells me that we’re going to see a solid jobs report. The Fed has indicated that it will be vigilant and watching the pace of jobs recovery. I don’t believe we’ll see a QE3. Still, we’ll continue with easy policy.”

The S&P 500 yesterday snapped a three-day drop amid higher- than-estimated earnings and as the Federal Reserve signaled continued low interest rates. The index rose 6.6 percent in 2011 through yesterday as profits at 72 percent of the 450 companies that reported results since April 11 beat the average analyst projection, according to data compiled by Bloomberg.

Jobless Claims

Stock futures extended gains before the open of regular trading as a government report showed that fewer Americans than forecast filed applications for unemployment benefits last week, making it more likely that the surge in April was caused by temporary events rather than a deterioration in the labor market.

Jobless claims declined by 29,000 to 409,000 in the week ended May 14, Labor Department figures showed today in Washington. The median estimate of economists in a Bloomberg News survey called for a drop to 420,000. The number of applications were the lowest in a month.

Stocks briefly turned lower after a report showed that sales of existing homes unexpectedly declined in April, indicating the industry is struggling to gain traction as the economy expands. Separate figures showed that manufacturing in the Philadelphia unexpectedly grew in May at the slowest pace in seven months, a sign the world’s largest economy may get less of a boost from the industry that led it out of the recession.

Earnings Season

PetSmart added 7.1 percent to $45.50. The pet-store chain said profit in the first-quarter was 61 cents a share, exceeding the average analyst estimate of 55 cents.

Dollar Tree gained 3.8 percent to $63.66. The discount retailer reported first-quarter profit of 82 cents a share. On average, the analysts surveyed by Bloomberg estimated earnings of 75 cents.

Intel slumped 1.8 percent to $23.45. Goldman Sachs lowered its rating on the world’s largest chipmaker, to “sell” from “neutral” yesterday. The bank said its analysis shows that processors out-shipped PCs by about 10 percent in the first quarter. It said Intel’s longer-term threat is from tablets such as Apple Inc.’s iPad, which run on ARM-based chips, eating into the PC market.

Chip Orders

Goldman Sachs downgraded KLA to “sell” from “neutral,” citing its vulnerability to weakness at Intel. Applied Materials was cut to “neutral” from “buy” because of lower 2012 capital spending by chip makers. The bank said orders for semiconductors are likely to decline in the next six quarters.

KLA dropped 4.1 percent to $41.08, while Applied Materials slid 1.5 percent to $14.28.

LinkedIn Corp., the first major U.S. social-media company to sell shares to the public, rallied 133 percent to $104.85 in its trading debut. The company raised $352.8 million in an initial public offering after pricing its shares at $45 each, at the top end of the range. At the IPO price, the company has a market value of $4.25 billion, or 11.3 times projected annual sales. That compares with 13.8 for Facebook Inc. and 8.3 for Salesforce.com Inc.

--Editors: Joanna Ossinger, Michael Regan

To contact the reporter on this story: Rita Nazareth in New York at rnazareth@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net

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