Stock markets review, July 25

ASIA

Asian benchmark stock index fell for a second day as investors weighed corporate earnings and awaited U.S. economic data that may shed light on when the Federal Reserve will taper stimulus.

 

The MSCI Asia Pacific Index lost 0.7% to 136.03, with all 10 industry groups on the measure falling.

The MSCI measure gained 5.9% this year through yesterday with consumer discretionary shares rising the most and energy shares falling the most.

 

Japan’s Topix index slipped 1.4% and the Nikkei 225 Stock Average lost 1.1%. South Korea’s Kospi Index lost 0.1% even as data showed the nation’s economy grew the most in more than two years. Australia’s S&P/ASX 200 Index was little changed. New Zealand’s NZX 50 Index dropped 0.5% after the central bank kept its key interest rate at 2.5% today.

 

Hong Kong’s Hang Seng Index dropped 0.3% and China’s Shanghai Composite slid 0.4%. Taiwan’s Taiex Index fell 0.4%, while Singapore’s Straits Times Index declined 0.6%.

 

Of the 63 companies in the Asia-Pacific gauge that have posted quarterly results, 60% beat projections while 40% missed them, the data show.

 

Canon Inc. (7751), the world’s No. 1 camera maker, tumbled 5.4% in Tokyo after cutting its sales and profit forecast. Komatsu Ltd., Japan’s largest construction machinery maker, dropped 2.4% after U.S. bellwether Caterpillar Inc. lowered its earnings estimate.

 

Chinese rail shares gained after Premier Li said China will speed railway construction, especially in central and western regions. The State Council yesterday also approved tax breaks for small companies and reduced fees for exporters, according to a statement after a meeting led by Li.

 

China Railway Group Ltd., the country’s No. 2 train-line builder, jumped 3%. CSR Corp., the country’s biggest maker of rolling stock, gained 2.4%.

 

EUROPE

European stock markets dropped on Thursday, as investors worried about the outlook for weakening growth in China and as downbeat earnings from some of region’s major companies soured the mood. A pickup in the U.K. economy also failed to boost sentiment.

 

The Stoxx Europe 600 index  dropped 0.5% to close at 299.63.

 

Metso Corp.  sank 8% after the industrial company trimmed its financial outlook for 2013 as it posted a bigger-than-expected drop in second-quarter profit.

 

Shares of Orange  lost 3.2% after the French telecom firm reported a 38% fall in first-half income on the back of price competition in the home market.

 

Chemicals major BASF SE  gave up 4.5% after reporting second-quarter earnings below expectations.

 

The broader European stock market also lost momentum as investors worried about the potential for lower growth in China.

 

Data out of the euro zone showed loans to the private sector weakened to -1.6% in June from -1.1% in May, while the M3 measure of money supply slipped to 2.3 from 2.9.

 

Investors were also eyeing data out of the U.K., with the first estimate of second-quarter gross domestic product coming in at 0.6% quarterly growth, in line with expectations.

 

The FTSE 100 index  dropped 0.5% to 6,587.95.

 

Shares of Unilever PLC    shaved off 1.6% after the consumer-products firm warned economic conditions remained difficult throughout its markets.

 

Shares of Rolls-Royce Holdings PLC  jumped 5.1% in London after the engine maker said pretax profit climbed 34% on an underlying basis and backed its prior full-year guidance.

 

In Germany, the Ifo business confidence index rose to 106.2 in July from 105.9 in June, beating economists’ forecasts for a 106.0 reading and rising further above its long-term average of 101.

 

On Thursday, however, the DAX 30 index  lost 1% to 8,298.98.

 

Siemens AG   slumped 6% after the industrial conglomerate issued a profit warning, saying it will miss its margin target for fiscal 2014.

 

And in France, the CAC 40 index  eased 0.2% to 3,956.02.

 

Shares of Michelin  shaved off 1.4% after the tire maker said first-half profit slid 45% and that it’s taking a 250 million-euro ($330 million) restructuring charge related to boosting manufacturing efficiency.

 

USA

U.S. stocks inched into positive territory Thursday afternoon as investors digested mixed earnings results and a pair of tepid economic reports.

 

The Dow Jones Industrial Average and S&P 500 ticked higher with the Nasdaq continued to gain, rising 0.6%. The tech-heavy index was lifted by Facebook's strong earnings report, released after Wednesday's close.

 

In economic news, the government released jobless claims data Thursday morning in line with expectations. Initial claims rose to 343,000 for the week ended July 20, an increase of 7,000 from the previous week.

 

New orders of durable goods, also reported by the Census Bureau, surged past expectations. The number jumped by 4.2% in June to $244.5 billion and has risen for four of the past five months.

 

Shares of Facebook (FB) surged more than 25% Thursday, a day after the social networking site posted strong quarterly results, led by a marked improvement in its mobile business.

 

The momentum propelled Zynga's (ZNGA) stock 5.5% up, as well. The app developer has games on Facebook.

 

Dow Chemical (DOW) and Tripadvisor (TRIP) reported quarterly profit gains.

 

General Motors (GM) reported an improvement in second-quarter earnings but a slowdown in China pressured overall profits.

 

PulteGroup (PHM) reported earnings and revenue that fell way short of forecasts. Despite the weak results, the homebuilder said the housing market was on track to recovery.

 

Baidu (BIDU) shares surged 14% after the Chinese Internet company reported a second quarter profit that topped analyst expectations.

 

Amazon (AMZN) and Starbucks (SBUX) are due to report after the close.

 

 

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