Asian stocks hurt as US consumer sentiments weaken

Most of the indices end in red as as the US consumer confidence drops to its lowest in a year



Asian shares mostly ended lower, with China being a notable exception as the sentiments were hurt by extremely by weak cues from Wall Street, where the major indices erased bulk of the previous gains cent gains and slumped as the US consumer confidence dropped to its lowest in a year, raising concerns about the strength of economic recovery. On Friday, General Electric, Bank of America and Citigroup beat Wall Street's expectations, but investors sold some shares of all three after the companies reported a drop in quarterly revenues. The Dow Jones industrial average dropped 2.52% by Friday's close. The Standard & Poor's 500 Index declined 2.88% while the Nasdaq Composite Index plunged 3.11%.

In other economic data, lower energy costs pushed US consumer prices down for a third straight month in June. The US consumer sentiment figures showed a record-low share of Americans expected their incomes would rise in the next 12 months. Declining confidence may further restrain consumer spending, which accounts for 70 percent of the economy, and hinder the recovery in coming months.

The Australian stocks dropped as domestic political uncertainty clubbed with a weak undertone in the global arena inflicted heavy damage to the miners and resources. The sentiments were hurt right at the start as the benchmark S&P/ASX200 Index crashed under 4400 points mark. Prime Minister Gillard called a general election for Aug. 21, setting the stage for a battle that will determine whether the nation's resources companies pay higher taxes. Miners faced a heavy brunt following this and sharp correction in Copper prices on Friday took a massive toll. The benchmark S&P/ASX200 Index pared 64.40 points, or 1.46% and ended at 4,358, while the All-Ordinaries Index closed at 4,373, down 64.30 points, or 1.45%.

On economic front, a report released by the Australian Bureau of Statistics revealed that the value of the country's merchandise imports increased in June compared to the previous month. As per the report, the value of merchandise imported into the country during June increased by 4% or A$621 million to A$17.91 billion, from a revised total of A$17.29 billion for May. The report further noted that, on a balance of payments basis, the goods imports increased A$4 million in seasonally adjusted terms to A$18.41 billion in June. Intermediate & other merchandise goods imports rose 5%, with the fuels & lubricants component up 13%.

Chinese stocks rose though, notwithstanding the global rout as developers and airlines gained. The index linked counters surprisingly displayed a show of strength as the markets eyed the persistently selective risk appetite in the global markets as the dollar stayed lower and metals recovered some of the lost ground overseas. Bargain hunting triggered by policy makers' recent comments about the state of the domestic economy pushed up the benchmark Shanghai Composite Index by 51.15 points or 2.1% to close at 2475.42, after dropping under 2400 mark in intraday moves. However, the markets are likely to face some music on the way up as the country is expected not to relax curbs to cool the heated property market.

Premier Wen Jiabao said Friday that China will maintain the "continuity and stability" of its macroeconomic policies in the second half of this year and that the slowdown in economic growth the second quarter was due to "active regulation and control" by the government.

In other markets, Hang Seng Index in Hong Kong drop[ed 0.79%, Strait Times Index in Singapore shed 0.42% while Taiex in Taiwan slid lower by 0.19%. Japanese markets were shut for Marine Day.

In Mumbai, the key benchmark indices slipped into the red in late trade as most Asian stocks fell. The Sensex fell below the psychological 18,000 mark after crossing that mark in mid-morning trade. Realty, FMCG, healthcare and consumer durables stocks fell. But, capital goods stocks rose. Index heavyweight Reliance Industries (RIL) also edged lower. Private sector banking major HDFC Bank rose after reporting strong Q1 result. As per provisional figures, the BSE 30-share Sensex was down 26.36 points or 0.15% to 17929.46. The Sensex rose 49.25 points at the day's high of 18,005.07 in mid-morning trade. The index lost 99.42 points at the day's low 17,856.40 in early trade. The S&P CNX Nifty was down 7.55 points or 0.14% to 5386.35 as per provisional figures.

In was a volatile ride for the currencies market today. Dollar edged higher slightly in the initial moves but then pared gains and tumbled near 1.3000 levels against the Euro yet again. The DOW futures seesawed and managed to hold the gains in the London trades. Crude oil hovered just below $76 per barrel mark while Gold stayed little changed around $1190 per ounce after getting hammered by 20 dollars on Friday.