Asian Stocks Decline as Euro Weakens on Growth, Europe Concern

January 02, 2012, 2:42 AM EST By Shiyin Chen and Saeromi Shin

Jan. 2 (Bloomberg) -- Asian stocks declined on the first trading day of 2012, while the South Korean won and the euro weakened on concern that the global economic recovery will be hampered as Europe’s debt crisis enters a new year.

The MSCI Asia Pacific excluding Japan Index slipped 0.4 percent as of 3:08 p.m. in Singapore. Euro Stoxx 50 Index futures retreated 0.4 percent. Financial markets from Japan to the U.K. and the U.S. are closed for a holiday. The won fell 0.3 percent to 1,155.86 per dollar and the euro decreased 0.1 percent to $1.2941. Silver advanced as much as 0.2 percent to $27.8875 per ounce, set for a third day of gains.

Indexes of stocks and commodities had the worst yearly returns since the financial crisis in 2008. South Korea said yesterday export growth will slow this year and Singapore’s government said its economy grew less than previously forecast in 2011. Data today may confirm European manufacturing shrank for a fifth straight month, as regional leaders return to work from the Christmas holidays seeking to buy time to rescue the single currency from fragmentation.

“With many markets closed, it’s hard to make one-way bets especially in the absence of strong leads,” said Lim Chang Gue, a fund manager in Seoul at Samsung Asset Management Co., which oversees about $28 billion. “There’s the ongoing crisis in Europe, and global demand will continue to be generally weak this year. The thing is how much China could provide buffers, but it’s still unclear.”

More than three shares retreated for every one that rose on MSCI’s Asia Pacific ex-Japan Index. Taiwan’s Taiex Index sank 1.7 percent, Indonesia’s Jakarta Composite index dipped 0.3 percent and the BSE India Sensitive Index slid 0.5 percent, a fifth day of losses.

Korea, Singapore

South Korea’s export growth will probably slow to 6.7 percent this year from 19.6 percent in 2011, the Ministry of Knowledge Economy said yesterday. Finance Minister Bahk Jae Wan said the economic outlook will be more uncertain and difficult in 2012 and called for a strengthening of contingency plans to prevent contagion from Europe’s debt crisis.

Separately, Singapore’s Prime Minister Lee Hsien Loong said the island’s gross domestic product rose 4.8 percent in 2011, compared with the government’s earlier forecast of a 5 percent increase, and said the economy will expand 1 percent to 3 percent in 2012. Indonesia said exports grew 8.3 percent in November from a year earlier, slowing from an increase of 16.7 percent the previous month.

Data yesterday showed China’s purchasing managers’ index climbed to 50.3 in December from 49 in November, beating all forecasts in a Bloomberg News survey of 15 economists. A gauge of euro-region manufacturing was 46.9 in December from 46.4 the previous month, according to economists surveyed by Bloomberg News before Markit Economics releases the data today. A reading below 50 indicates contraction.

Europe’s Debt

The euro weakened against 11 of its 16 most actively traded peers. The currency weakened for a second year in 2011 and fell on Dec. 30 below 100 yen for the first time since June 2001. Some 157 billion euros ($203 billion) in debt will mature in the 17-member euro area in the first three months of 2012, according to UBS AG. By the end of that period, leaders have pledged to draft a stricter rulebook for controlling government spending. German Chancellor Angela Merkel and French President Nicolas Sarkozy will meet in Berlin Jan. 9 to work out details.

The Dollar Index, which tracks the U.S. currency against those of six major trading partners, rose 0.1 percent, the first increase in three days. It climbed 1.5 percent in 2011. Treasuries gained 9.78 percent last year, the most since 2008, as investors sought the relative safety of U.S. debt.

‘Wary’ Investors

“Investors are demanding dollars as they are wary of the ongoing European debt crisis,” said Ha Jun Woo, a Seoul-based currency dealer at Daegu Bank in Seoul.

The Institute for Supply Management’s factory index climbed to a six-month high of 53.4 in December, while spending on construction projects advanced 0.4 percent in November, the fourth straight monthly gain, economists surveyed by Bloomberg projected ahead of U.S. reports tomorrow. Payrolls climbed by 150,000 workers after rising 120,000 in November, according to the median forecast of 62 economists in a Bloomberg News survey before Labor Department data on Jan. 6.

--With assistance from Jiyeun Lee in Seoul. Editors: Richard Dobson, Ovais Subhani

To contact the reporters on this story: Shiyin Chen in Singapore at schen37@bloomberg.net; Saeromi Shin in Seoul at sshin15@bloomberg.net

To contact the editor responsible for this story: Richard Dobson at rdobson4@bloomberg.net

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Asian Stocks Decline in Holiday Trade as BOJ Warns of Downside

December 27, 2011, 2:40 AM EST By Yoshiaki Nohara

Dec. 27 (Bloomberg) -- Asian stocks fell amid slow holiday trading, with the regional benchmark headed for its worst year since 2008, as the Bank of Japan warned of downside risks to the economy and South Korean consumer confidence slid.

Nissan Motor Co., Japan’s third-largest carmaker by market value, fell 1.7 percent. Anhui Conch Cement led losses among Chinese industrial companies after a report profit growth slowed in the sector. Samsung Electro-Mechanics Co. fell 6.8 percent in Seoul after saying it will sell its stake in a light-emitting diode business for less than investors expected. Nishimatsu Construction Co. led gains among Japanese construction firms after a report the country will build three bullet train lines.

The MSCI Asia Pacific Index fell 0.3 percent to 113.59 as of 4:09 p.m. in Tokyo, with more than two stocks falling for each that rose. The measure is headed for an 18 percent loss this year, its biggest annual decline since 2008. Markets in Australia, New Zealand and Hong Kong are closed today.

“Economic uncertainty is deepening around the world, which is showing up in some Japanese statistics on exports and production,” said Hitoshi Asaoka, a Tokyo-based senior strategist at Mizuho Trust & Banking Co. “Investors find it hard to move near year-end.”

Japan’s Nikkei 225 Stock Average lost 0.5 percent after minutes from a central bank meeting last month showed a few board members said Europe’s sovereign-debt crisis and the yen’s rise pose increasing risks to economic growth. Trading volume on the gauge was more than 59 percent below the 100-day average, according to data compiled by Bloomberg.

‘No Catalyst’

“There’s no outstanding catalyst to buy stocks,” said Fumiyuki Nakanishi, a strategist at Tokyo-based SMBC Friend Securities Co. “Trading energy plunged in the Tokyo market yesterday. Today as well, we can’t expect foreign investors to buy shares as the overseas markets are closed.”

Nissan lost 1.7 percent to 684 yen. Sharp Corp., Japan’s largest maker of flat-panel displays, slid 1.4 percent to 711 yen.

South Korea’s Kospi Index fell 0.8 percent after consumer sentiment slipped. The gauge dropped as much as 2.3 percent after a mistaken order was apparently placed, according to La Sung Chae, an official at the market trading analysis team of Korea Exchange Inc. Shares also fell amid unsubstantiated rumors concerning the health of the new leader of North Korea and the nation’s relations with China, the official said.

Shanghai Stocks

The Shanghai Composite Index dropped 1.1 percent. Shares of mainland industrial companies fell after a report that profit growth declined to 24.4 percent in the first 11 months of the year from 25.3 percent in the 10 months through October.

Anhui Conch Cement slid 2.4 percent to 15.11 yuan. Sany Heavy Industry Co. fell 1.9 percent to 11.94 yuan.

Samsung Electro-Mechanics retreated 6.8 percent to 80,700 won in Seoul. The maker of electronic parts will sell its stake in an LED venture to Samsung Electronics Co. for 283 billion won ($244 million), according to a regulatory filing. The value of the deal is lower than expected, Woori Investment & Securities Co. said in a report today. Samsung Electronics gained 0.7 percent to 1.07 million won.

Japanese construction companies advanced after the Nikkei newspaper said the nation will start work on three bullet train lines, citing Transportation Minister Takeshi Maeda. Nishimatsu added 3.2 percent to 129 yen. Matsui Construction Co. rose 3 percent to 307 yen.

Stocks in the MSCI Asia Pacific Index are valued at 12.7 times estimated earnings on average, compared with 12.8 times for the S&P 500 and 10.5 times for the Stoxx 600. Utilities have lost 27 percent this year, the worst among the 10 industry groups on the Asian benchmark gauge, as Japanese power generators tumbled after a nuclear crisis at Tokyo Electric Power Co.’s Fukushima Dai-Ichi plant.

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

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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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 Decline to One-Month Low as Hewlett-Packard Tumbles

May 17, 2011, 2:56 PM EDT By Rita Nazareth

May 17 (Bloomberg) -- U.S. stocks retreated, sending benchmark indexes to one-month lows, as a reduced forecast at Hewlett-Packard Co. and an unexpected decline in housing starts damped optimism about the economy.

Hewlett-Packard, the biggest personal-computer maker, tumbled 7.2 percent after also missing analysts’ profit projections as consumers shunned PCs. D.R. Horton Inc. and KB Home fell at least 1.8 percent, pacing declines in homebuilders. Caterpillar Inc. and 3M Co. slumped more than 1.8 percent after figures from the Federal Reserve showed that industrial production in the U.S. unexpectedly stalled in April.

The Standard & Poor’s 500 Index declined 0.4 percent to 1,324.94 at 2:32 p.m. in New York, falling for a third straight trading day. The Dow Jones Industrial Average retreated 100.58 points, or 0.8 percent, to 12,447.79.

“There’s just not a whole lot to drive the stock market higher right now,” said Richard Sichel, who oversees $1.6 billion as chief investment officer at Philadelphia Trust Co. “The housing improvement has been pushed down the road. Some big companies are cutting forecasts. The European debt crisis is in everyone’s minds. We were off for a good start this year. I see some pause as investors turn a bit more defensive.”

Economic Surprise

The S&P 500 has extended a two-week decline amid investors’ concern that Greece may have to restructure its debt and as economic data missed forecasts. Citigroup Inc.’s U.S. Economic Surprise Index, which gauges the rate at which data is exceeding or trailing economists’ estimates, turned negative in May and is at its lowest level since August. The index had climbed to a record in March.

Still, analysts have raised full-year earnings estimates in the S&P 500 index by 2.2 percent since April as more than two thirds of companies that reported earnings beat projections.

Stock futures turned lower today after government data showed that work began in April on 523,000 houses at an annual pace, down 11 percent from the prior month and less than the 569,000 median forecast of economists surveyed by Bloomberg News. Figures from the Commerce Department also showed that building permits, a sign of future construction, decreased.

Output at factories, mines and utilities was unchanged after a 0.7 percent gain in March, figures from the Federal Reserve showed, led by a drop in auto production after parts supplies were disrupted by the earthquake and tsunami in Japan.

Failed to Restore

European finance ministers for the first time floated the idea of talks with bondholders over extending Greece’s debt- repayment schedule, saying that last year’s 110 billion-euro ($156 billion) rescue has failed to restore the country to financial health. Europe would consider “reprofiling” Greek bond maturities as part of a package including stepped-up sales of state assets and deeper spending cuts, Luxembourg Prime Minister Jean-Claude Juncker said late yesterday.

The probability of Greece defaulting or restructuring its debt has increased since the arrest of International Monetary Fund head Dominique Strauss-Kahn, Pacific Investment Management Co.’s Mohamed El-Erian said.

“Don’t underestimate how important Dominique Strauss-Kahn was in coordinating action” among European nations, El-Erian, the chief executive officer of Pimco, said in a Bloomberg Television interview on “In the Loop” with Betty Liu. “It’s the worst possible time to lose your general. You need the IMF to coordinate this global healing.”

Hewlett-Packard Tumbles

Hewlett-Packard tumbled 7.2 percent to $36.92. Full-year sales will be $129 billion to $130 billion and earnings excluding some items will be at least $5 a share, Palo Alto, California-based Hewlett-Packard said. Analysts estimated sales of $130.3 billion and earnings of $5.24, the average projections in a Bloomberg survey.

The predictions came a day after Bloomberg News reported Chief Executive Officer Leo Apotheker had sent a downbeat memo warning his staff of “another tough quarter” in the period through July. Hurt by competition from tablet computers such as Apple Inc.’s iPad and falling profitability at its services unit, Hewlett-Packard may need to reduce jobs to lower expenses.

“They probably have to do some cost cutting,” said Kulbinder Garcha, an analyst at Credit Suisse Group AG in New York. “They’ll have to drive for further efficiency. Can they do that easily? No, it’ll probably take some time.”

Homebuilders Slump

A gauge of homebuilders in S&P indexes fell 1 percent as 11 of its 12 stocks retreated. D.R. Horton, the second-largest U.S. homebuilder by revenue, declined 1.8 percent to $11.46. KB Home slumped 2.1 percent to $10.93.

Industries most-tied to economic growth led the declines in the S&P 500. The Morgan Stanley Cyclical Index of 30 stocks dropped 1.5 percent.

Caterpillar, the world’s largest maker of construction equipment, slid 3.4 percent to $102.46. 3M, the maker of products including Scotch tape and Post-it Notes, fell 1.9 percent to $93.66.

JPMorgan Chase & Co. rose 2.2 percent to $43.81. Chief Executive Officer Jamie Dimon said banks are starting to lend again. Dimon also said four businesses may add more than $500 million each to profit during the next five to seven years: commercial banking, commodities, private-client services and international expansion.

“We have enormous growth opportunities both in the U.S. and overseas,” Dimon said at the New York-based company’s annual shareholders’ meeting in Columbus, Ohio. He said the bank plans to open 20 international branches next year for wealthy customers and corporations with investments overseas.

Home Depot Inc. added 1.4 percent to $37.50. The largest U.S. home-improvement retailer said first-quarter profit rose 12 percent, meeting analysts’ estimates, as operating expenses fell faster than sales. Home Depot cut expenses including payroll and advertising in the quarter, countering a slight drop in revenue.

--Editors: Jeff Sutherland, 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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