Regional markets still lacking conviction

<p>Asian regional markets were again dragged lower on Europe’s failure to address the Greece issue. Europe’s shared currency weakened 0.6% to $1.4226 and retreated for […]</p>

Asian regional markets were again dragged lower on Europe’s failure to address the Greece issue. Europe’s shared currency weakened 0.6% to $1.4226 and retreated for a fourth day against the Japanese Yen in early afternoon Tokyo trading. The MSCI Asia Pacific Index slipped 0.3%, bound for the lowest close in three months. Futures on the Standard & Poor’s 500 Index decreased 0.5%. Crude declined 1.6% in New York, while copper sank 1.1% in London.

The MSCI Asia Pacific Index is extending seven consecutive weekly declines, this losing streak is the longest since 2004. Last week’s drop drove the index’s valuations to 14.2 times reported earnings, the lowest level since March 30. China’s Shanghai Composite Index fell 0.9%, bound for the lowest close in almost nine month. The news also comes as China battles raging floods in the south while parts of the north struggle to break out of a worsening drought. 

Reports also note China’s effort to cool home prices is damping the market for existing homes, with prices in May falling from the previous month in 23 of 70 cities measured. That’s more than the 16 cities that posted declines in April, data from the National Bureau of Statistics posted to its website June 18 showed. Existing home prices in Beijing fell 0.2% from April while those in Shanghai increased 0.2%. 

Japan’s Nikkei 225 Stock Average climbed 0.1%, snapping a two-day drop. Utilities rose, paced by Chubu Electric Power Co., amid signs the government may allow atomic reactors to be restarted following the worst nuclear accident in 25 years. In other corporate news, Mazda Motor jumped 3.1% after the automaker forecast it will return to profit in the year ending March 31. Olympus increased 3.9% after the optical-equipment maker forecast profit may more than double. 

In Australia, the ASX200 Index was trading 0.4% lower in late afternoon trade. Around 127 stocks were down, 58 up and 15 unchanged. Caltex Australia – the nation’s biggest oil refiner – dropped 6.6% after it forecast a drop in first-half operating profit because of plant disruptions and higher crude prices. The Australian dollar was initially up on bullish comments from Russian central bankers, noting the currency as a good buying opportunity as part of an overall diversification out of US$. The Australian dollar was however hurt by the European leads and was last trading down at A$/US$1.0562.

In commodities, Oil for July delivery slipped 1.5% to $91.59 a barrel on the New York Mercantile Exchange, retreating for a second day. Futures fell 2% on June 17, capping a 6.3% weekly slump that was the steepest since the period ended May 6. Copper for three-month delivery lost 1.2% to $8,989.50 a metric ton on the London Metal Exchange. Nickel, aluminum and lead also declined.

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.