Prospect of more European downgrades push Asian stocks lower; Australia’s largest bank to report earnings tomorrow

<p>Asian stocks were dragged down by news from Moody’s that it is considering further downgrades on European countries. The MSCI Asia Pacific index was 0.3% […]</p>

Asian stocks were dragged down by news from Moody’s that it is considering further downgrades on European countries.

The MSCI Asia Pacific index was 0.3% lower in early afternoon Tokyo trading.  In Australia, the S&P/ASX200 index finished down by around 1%, weighed down by the major miners including BHP Billiton. The Kospi was little changed, as was the Hang Seng Index in Hong Kong.

The Australian dollar fell below 1.07 against the US dollar to last settle at around 1.0680. The Euro was largely flat since the Moody’s announcement, last trading at 1.3160 against the US dollar. The Japanese Yen continued to weaken against the US dollar which last bought 77.90.

Regional economic news was dominated by the Bank of Japan’s unexpected increase in asset purchase. The news came in response to yesterday’s weak export data. The Bank of Japan expanded its currency asset purchase program to 65 trillion Yen from 55 trillion Yen, inclusive of a credit loan facility.  Inflation is being targeted at 1%. The overnight lending rate was maintained at between zero and 0.1%.

Australian corporate news tomorrow will be dominated by the country’s largest bank – Commonwealth Bank of Australia – when it reports its interim results. The market is expecting a net profit number in the order of $3.5bn, anything short will be seen as a disappointment.

Overnight Asian time, U.S. President Barack Obama is due to meet Chinese Vice President Xi Jingping where a whole range of trade issues will be discussed.

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