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Tokyo - Asian shares declined on Friday as investors kept a wary eye on corporate earnings results under way, worried about the outlook for corporate performance as the region's exporters struggle against shrinking global demand.
With risk aversion setting in, pressure to sell the yen slackened to help the currency, regarded as a safer asset, recover from this week's lows, despite expectations for further easing measures by the Bank of Japan on Tuesday.
Oil retreated after rising on Thursday, while London copper edged higher after a fall to a six-week low in the previous session triggered some short-covering.
Samsung Electronics reported ecord quarterly profits for a fourth straight quarter on Friday. And Bank of China posted its biggest quarterly profit gain in a year the day before, but they failed to remove concerns about the outlook.
The MSCI index of Asia-Pacific shares outside Japan fell 0.5%, dragged down by a 1.3% slide in South Korean shares to their lowest since early September. Australian shares wiped out early gains and eased 0.4%, offsetting support from a rise in iron ore prices to a 3-month high.
Some markets in the region were closed on Friday, including the Philippines and Singapore, to mark a religious holiday.
Samsung Electronics, the world's largest electronics company and accounting for about 15% of Korea's benchmark KOSPI index, reported record quarterly profit of $7.4bn on Friday. But profit will likely decline into next year as TV markets stagnate and growth in the high-end smartphone market eases from the recent breakneck speed.
"Though Samsung's sales, particularly of its smartphones, are impressive, what shareholders would like to see is margins that are closer to those of Apple," said Lee Yong-jik, a fund manager at Pine Bridge Investments, who owns shares of the company.
Samsung's results came just hours after Apple, the most valuable public company in the United States, posted quarterly earnings that fell short of expectations.
In a sign how worries over a possible sharp tining in the US federal budget are already weighing on the economy, data showed on Thursday US business investment may be stalling in September. But another report suggested a slowly healing labour market as the number of Americans filing for initial jobless claims fell last week.
Bank of China posted strong third quarter profit after cutting back on bad-loan provisions, prompting concerns that it may face a cash crunch if more borrowers default as the economy worsens.
"(The) Positive surprise from the Bank of China should be supportive for sentiment, and the Agricultural Bank of China will follow later today. Focus from the macro perspective is on margins and nonperforming loans," Credit Agricole said in a research note.
Margins show the degree to which banks are using the loose lending rate policy, which will impact the speed of GDP growth recovery, while nonperforming loans gauge potential underlying problems related to hidden cost of stimulus programs over the past few years, it said.
Export powers hit
The deterioration in the eurozone economy, hit hard by the region's prolonged debt crisis, and shrinking global demand has hit Asian exporters.
South Korea's economy grew by 0.2% in the July-September period from the previous three-month period, the slowest quarterly growth since the fourth quarter of 2009 in Asia's fourth-largest economy. The median forecast called for a 0.1% expansion.
Japan, Asia's other export-reliant powerhouse, approved a ¥422.6bn economic stimulus package of subsidies and tax grants on Friday.
Japan's Nikkei average inched down 0.1% in choppy trade.
"The market is confused about how to react to the earnings cuts and to what extent they're priced in," said Yuuki Sakurai, CEO of Fukoku Capital Management.
The dollar eased 0.2% against the yen to ¥80.12 after hitting a fresh four-month high of ¥80.38 early in Asia on Friday on expectations the Bank of Japan will take aggressive easing measures at its policy meeting on October 30.
The euro was down 0.2% to ¥103.75 and the Australian dollar eased 0.3%t to ¥82.90.
Japan's core consumer prices fell for the fifth straight month in the year to September, keeping pressure on the BOJ to do more to achieve its inflation target.
The euro edged 0.1% higher to $1.2950, not far from a near two-week low around $1.2921 seen on Wednesday.
Markets' next key focus is the advanced reading of US third-quarter gross domestic product due later on Friday, with the annualised rate of growth in the world's largest economy seen at 1.9%, up from 1.3% in April-June.
US crude futures eased 0.1% to $85.94 a barrel and Brent eased 0.2% to $108.30.
Asian credit markets were subdued, keeping the spread on the iTraxx Asia ex-Japan investment-grade index little changed from Thursday.
