Earnings, Commodities Tug at Markets, Japan Ends Up
Asian markets wavered between losses and gains Tuesday, but closed broadly higher, as oil and gold prices gained. The U.S. dollar struggled to attract buyers due to signs of a weak earnings season for banks, which could expose yet more subprime losses and punish stocks worldwide.
The greenback's weakness and supply disruptions ahead of the U.S. summer gasoline season helped spur both U.S. and London Brent crude oil futures to new highs. Commodities were also getting a boost with soy and rice futures setting records. This lifted resource stocks across the region like Japan's Nippon Oil and Australia's Woodside Petroleum.
But fresh credit worries lingered after Wachovia, the No. 4 U.S. bank, posted a surprise first-quarter loss, prompting it to raise $7 billion of capital, slash its dividend and cut jobs. Further dampening sentiment, Goldman Sachs said in a note that the quarterly U.S. earnings season, which is just starting, looks "awful" and is expected to send U.S. stocks lower in the weeks ahead.
Tokyo's Nikkei 225 Average closed 0.6 percent higher, with Tokyo Electron jumping on a brokerage upgrade, while resource-related shares such as trading house Mitsui & Co climbed after oil hit record highs. The market also got a lift from steel shares as Nippon Steel and JFE Holdings gained despite a newspaper report saying double-digit profit falls expected this year.
Seoul shares ended down 0.26 percent, with losses in technology shares such as Hynix Semiconductor and Samsung Electronics after recent steep gains and concerns about the longer term outlook for the memory chip market outweighing gains by energy firms.
Australian shares finished 1.1 percent higher as record high oil prices boosted heavyweight resource firms, while Insurance Australia Group climbed after it rebuffed a takeover bid from a rival. IAG jumped 10 percent after larger rival QBE Insurance Group, Australia's biggest insurer by
premium income, said that IAG had rejected its A$7.3 billion (US$6.8 billion) takeover proposal. Oil Search climbed over 5 percent after it said it will sell its Middle East and North Africa (MENA) unit to Kuwait Energy for $200 million. Among gold miners, Newcrest Mining and Lihir Gold rose.
China's Shanghai Composite Index closed 1.6 percent higher, after a late-session boost, ahead of the release of March GDP and inflation data Wednesday.
Hong Kong stocks ended 0.4 percent higher ahead of the release of Chinese economic indicators. Airline stocks came under pressure as crude oil prices hit a record high, driven by a weak dollar and supply disruptions. Shares of China Southern and Air China slid. China Eastern Airlines fell over 5 despite the carrier saying its earnings returned to the black to 268.9 million yuan in 2007 from a 3.31 billion yuan loss a year ago.
Singapore's Straits Times Index edged higher. But shares of Singapore Exchange, Asia's second-biggest listed bourse, fell after it posted its smallest quarterly profit in four quarters, hurt by volatile markets. SGX reported a net profit of S$101.5 million (US$74.74 million) for the three months to March, below the S$130 million to S$157 million earned in the preceding three quarters.