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Singapore - Asian stocks retreated from an almost five-month high as companies including Sony and Microsoft reported disappointing earnings. Japanese equities erased losses as banks surged.
The MSCI Asia Pacific Index fell 0.4% to 133.63 in Hong Kong. The measure is headed for a 1% gain this week, its third straight such advance. Alphabet and Microsoft missed estimates when they reported profits after regular US trading, while stalling global demand for smartphones made a dent on Sony’s results.
Earnings are the next test for an equity rally that this week pushed global shares to the highest level since December.
"There’s been scant evidence of sustained earnings growth," said Matthew Sherwood, head of investment strategy at Perpetual in Sydney, which manages about $21bn. "Persistent yen strength over the medium term will be just another factor weighing on Japanese earnings-per-share growth."
After a turbulent start to 2016, the rally in Asian shares since mid-February has pushed the dollar-denominated benchmark index back into positive territory. It’s now up 1.3% for the year, against a 4.4% decline for a measure of European shares and a 2.3% gain for the Standard & Poor’s 500 Index.
Japan’s Topix Index climbed 1%, erasing losses of as much as 1%, after Bloomberg reported the Bank of Japan is considering steps to provide relief to financial institutions. Banks surged in afternoon trading. The gauge capped a second straight weekly gain that has pushed the Topix index close to a bull market.
The Bank of Japan (BoJ) may consider helping financial institutions by offering a negative rate on some loans, according to people familiar with talks at the central bank. Such a discussion could happen in conjunction with a decision to make a deeper cut to the BOJ’s current reserve rate, which is already in negative territory, said the people, who asked not to be named as the matter is private.
Singapore raids
Singapore’s Straits Times Index fell 0.8%. Authorities raided a number of brokerages, including those owned by the nation’s largest lenders DBS Group Holdings and Oversea-Chinese Banking, in a probe of possible breaches of the securities law, while the stock exchange reported several cases related to alleged insider trading and market manipulation as the city sought to protect its reputation as a financial centre.
"It helps the image of Singapore as they clamp down on practices such as insider trading or market manipulation,"Bernard Aw, market strategist at IG Asia Pte., said by phone on Friday. 'To some extent this will help restore individual investor confidence on the market, if this relates to trading privileged information then it’s unfair to the individual investors."
Regional indices
South Korea’s Kospi index slipped 0.3%. Australia’s S&P/ASX 200 Index fell 0.7%. New Zealand’s S&P/NZX 50 Index dropped 0.6%. Taiwan’s Taiex index declined 0.4%. Hong Kong’s Hang Seng Index decreased 0.7%.
China’s Shanghai Composite Index added 0.2%, reversing losses of as much 0.9%. The gauge tumbled 3.9% this week, the biggest weekly drop in almost three months, amid concern that improving economic data will prevent further stimulus and corporate defaults will rise.
BHP Billiton, the world’s biggest mining company, dropped 3.3% in Sydney as industrial metals from zinc to copper declined. Sony fell 1.7% in Tokyo. The electronics maker posted a full-year operating income that missed its own forecast after it took a 59.6bn yen ($544M) impairment charge in its image-sensors business, which makes parts used in smartphone cameras. Mitsubishi UFJ Financial Group surged 6.6%, pacing gains among Japanese banks.
E-mini futures on the S&P 500 slid less than 0.1%. The US benchmark stock index dropped 0.5% on Thursday as corporate earnings provided little incentive for investors to send US stocks higher.
West Texas Intermediate crude gained as much as 1.9% in Friday trading, poised for a third weekly advance as producers suggest the door is still open to agree on limiting supplies after a proposal to freeze output failed on Sunday.
