World stocks struggle over Le Pen, N Korea
World stocks struggle over Le Pen, N Korea
LONDON, Apr 20: World stocks eked out small gains on Thursday as investor’s resisted risky bets ahead of the first round of the French presidential election over the weekend, report Reuters, AFP.
Asian markets mostly rose Thursday following broad losses the previous two days but they struggled to maintain early momentum as analysts warned caution was prevailing on geopolitical worries and fading hopes for Donald Trump’s stimulus drive.
Energy firms were among the main laggards, tracking losses in their US counterparts, after a surprise jump in US petroleum inventories sent oil prices skidding almost four percent Wednesday.
Hong Kong stocks ended comfortably higher Thursday after a three-day sell-off but investors remain on edge over geopolitical concerns and worries about the future of Donald Trump’s huge stimulus programme.
The Hang Seng Index ended 0.97 percent, or 231.10 points, higher at 24056.98.
The benchmark Shanghai Composite Index was flat, inching up 1.41 points to 3,172.10 and the Shenzhen Composite Index, which tracks stocks on China’s second exchange, eased 0.19 percent, or 3.68 points, to 1,928.78.
Sydney put on 0.3 percent by close, Seoul jumped 0.5 percent and Singapore 0.1 percent.
But Tokyo ended marginally lower, after spending most of the day in positive territory, with a tumble in market heavyweight Japan Post acting as a millstone.
The Japanese currency has been gaining in recent weeks as fears about a US-North Korea clash had jittery investors looking for safe investments.
On Thursday, the dollar ticked up to 108.85 yen from 108.69 yen in Asia on Wednesday, a plus for Japanese shares as a weaker yen boosts exporters’ profitability.
There was also support from figures showing exports in March saw their biggest gain for more than two years.
But the market turned lower in the afternoon following sharp falls in Japan Post Holdings, a former state-owned firm that also functions as the world’s biggest bank by deposits.
The benchmark Nikkei 225 inched down 1.71 percent to 18,430.49 but the Topix index of all first-section issues ticked up 0.09 percent, or 1.39 points, to finish at 1,472.81.
“Geopolitical angst, a faltering US economy and the UK snap election are consuming investors mindsets,” said Stephen Innes, senior trader at OANDA. “With so many uncertainties offering few incentives for investors to re-engage risk exposure, clearly there is little market bravado as dealers appear to be disposed to participate after the fact, rather than play the post-election knee-jerk.”
The Nikkei business daily said Japan Post was considering a write-off that could reach several billion dollars linked to Australian transport logistics giant Toll Holdings which it bought in 2015.
Its $5.0 billion takeover of Toll was Japan Post’s first overseas acquisition. But lower commodity prices have hit the Australian economy and, in turn, the logistics sector, the Nikkei said.
Japan Post closed 2.66 percent lower at 1,313 yen.
Banking giant Mitsubishi UFJ tacked on 1.70 percent to 666.6 yen while automakers broadly rose with Toyota up 1.03 percent at 5,754 yen.
Canon rose 2.65 percent to 3,483 yen after Japan’s Nikkei business daily reported its first-quarter operating profit likely nearly doubled, largely owing to the impact of its acquisition of Toshiba’s medical equipment business.
Toshiba, struggling to rehabilitate itself after taking massive losses from US nuclear projects, jumped 5.12 percent to 219.5 yen.
The Mainichi newspaper, citing documents it obtained, reported that Taiwan’s Foxconn is eyeing a 20 percent stake in Toshiba’s memory chip business with the rest to be held by Japanese and US companies including Apple, Amazon and Dell.
Earlier reports in Japanese media said Foxconn had bid 3 trillion yen in the initial tendering round for the unit, but there were concerns about its sensitive technology falling in foreign hands.
Markets have been rattled in recent weeks by a series of events that upended the optimism that welcomed in the year.
Trump’s failure to push through key healthcare reform last month dealt a huge blow to his chances of passing the tax-cutting, big-spending plan that had helped fan a global rally since his election win in November.
That was followed by a US missile strike on Syria—which hit US-Russian relations—and the ongoing sabre-rattling by North Korea that has fuelled worries about nuclear conflict.
At the same time France and Germany are preparing for elections that could have big implications for the eurozone, and Britain’s shock decision to call a general election next month is also keeping dealers on edge.
And an uninspiring Federal Reserve report Wednesday on the US economy also failed to provide any lift.
“Geopolitical angst, a faltering US economy and the UK snap election are consuming investors mindsets,” said Stephen Innes, senior trader at OANDA.
“With so many uncertainties offering few incentives for investors to re-engage risk exposure, clearly there is little market bravado as dealers appear to be disposed to participate after the fact, rather than play the post-election knee-jerk.”
Crude enjoyed a slight recovery in Asia after the oil minister of Saudi Arabia suggested an output cut among major producers “might have to” be extended.
But investors kept away from big-name companies after the US energy agency announced the increase in petroleum stockpiles, which fuelled worries about demand as the country heads into the crucial holiday season when Americans take to the roads.
CNOOC fell 1.3 percent and PetroChina shed 1.1 percent in Hong Kong, while Sydney-listed Woodside Petroleum lost 1.2 percent and Inpex sank 1.3 percent in Tokyo.
On forex markets, eyes are on this weekend’s first round vote in the French presidential elections, with a four-way race making it tough to call who will go into the run-off.
There are fears a win for far-right leader Marine Le Pen, riding a wave of populism, could see the collapse of the eurozone after she said she would withdraw France from the currency bloc.
In early European trade London and Paris each fell 0.2 percent, while Frankfurt shed 0.4 percent.
The Dow slid Wednesday following disappointing IBM earnings and a pullback in petroleum-linked shares due to a steep drop in oil prices.
IBM slumped 4.9 percent as it reported a 13 percent drop in first-quarter profit to $1.8 billion and suffered its 20th straight quarter of year-over-year revenue declines.
Fellow blue-chip companies ExxonMobil and Chevron dropped a respective 0.7 percent and 1.4 percent as a US petroleum inventory report showing higher gasoline supplies pressured oil prices.
Analysts also cited lingering worries about geopolitical issues, including Sunday’s first round of the French presidential election which has implications for the future of the eurozone.
The Dow Jones Industrial Average dropped 0.6 percent to 20,404.49.
The broad-based S&P 500 dipped 0.2 percent to 2,338.17, while the tech-rich Nasdaq Composite Index added 0.2 percent at 5,863.03.
Twenty-First Century Fox fell 0.8 percent as Fox News severed its relationship with Bill O’Reilly, dumping America’s most-watched cable news anchor after a flood of sexual-harassment allegations and an advertiser boycott.
Morgan Stanley rose 1.9 percent after reporting a 74.4 percent increase in first-quarter earnings on strong trading results.
Semiconductor company Lam Research surged 6.9 percent after reporting better-than-expected quarterly earnings and surprising the market with a bullish forecast for the current quarter.