Shares, euro little changed after Fed

2012-07-18 08:10

Hong Kong - Asian shares were on the backfoot on Wednesday after Federal Reserve Chairperson Ben Bernanke offered a gloomy view of the US economy, but hopes that the central bank is moving closer to more stimulus measures limited the day's losses.

Chinese shares underperformed the region, dragged down by property plays after data showing another year-on-year dip in home prices spurred profit-taking in one of this year's biggest outperformers in Asia.

MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.2% by midday. Hong Kong's Hang Seng index was down 0.6 percent while property shares in Shanghai were almost 4% lower.

"With market confidence battered by one disappointing economic data after another, investors want more than just vague promises of action down the road," said Han Bum-ho, an analyst at Shinhan Investment & Securities.

The move in Asia followed a choppy session overnight on Wall Street, where the S&P 500 eked out a 0.7% gain partly driven by earnings from Goldman Sachs and Coca-Cola that came in ahead of expectations.

Japan's Nikkei was up 0.2% but some analysts put the gains down to short-covering as worries about earnings from Japanese companies persist.

In his testimony to the Senate Banking Committee, Bernanke said the economic recovery was being held back by anxiety over Europe's debt crisis and the path of US fiscal policy, and he expressed unease over a stagnant jobs market.

Analysts said the Bernanke's comments on the economy, especially on the jobs market, suggested the central bank could opt for further monetary stimulus.

Bernanke's mixed message provided some support to the euro after a seesaw session overnight and was trading flat versus the dollar after pushing higher earlier in the day.

It was last at $1.2288, below Tuesday's one-week high of $1.2317 but well off a two-year low of $1.2162 hit last week.

Bernanke will address the House Financial Services Committee later on Wednesday, following his testimony to the US Senate Banking Committee on Tuesday.

Growth slowing

Brent crude fell 0.7% to below $104 a barrel, snapping five days of gains.

Top mining companies Rio Tinto and BHP Billiton both were down over 1%, after BHP followed its larger rival in setting out higher production forecasts amid risks of cooling demand from top customer China.

BHP said it expects to lift Australian iron ore output by 5% in the 2013 financial year.

The Asian tech sector also was under pressure after top chipmaker Intel reduced its growth forecast, reinforcing fears that a wavering global economy and a lack of consumer interest are dampening personal computer sales.

SK Hynix, the world's No.2 computer memory chip maker, declined 4.5%.

In China markets, property stocks were clear laggards, with top developers Vanke down 3.6% and Poly Real Estate down 4.7%.

Home prices in China showed signs of stabilising in June, which could help the cooling economy, but there were few indications of Beijing easing its grip on the sector.

"The upcoming earnings for the sector will be bad, but investors will probably gloss over that," said Lee Wee Liat, head of property research at BNP Paribas.

"Policy will still be key, and they will be watching the guidance the companies provide, especially on their margins since there have been a lot of price cuts," said BNP's Lee.