Asian stocks ease, shored up by banks
Asian stocks eased slightly today while the yen hovered at a seven-week low against the dollar.
The drop in stocks was cushioned by strength in banks after Merrill Lynch confirmed that it received a cash injection from Singapore.
Trading activity was very quiet as many investors stayed away for the Christmas holidays. Markets in Australia and Hong Kong were shut and many European markets will remain closed.
Shares of South Korea’s Kookmin Bank, Singapore’s DBS Group Holdings and Japan’s Mitsubishi UFJ all rose, drawing support from news that U.S. investment bank Merrill Lynch, hit by huge sub-prime mortgage losses, confirmed a report that it would increase its capital with an investment from Singapore’s Temasek Holdings.
Merrill is the latest giant Wall Street firm to accept an investment from a sovereign wealth fund as the sector shores up its balance sheets against the backdrop of a yet-to-be-contained credit crisis.
Japan’s benchmark Nikkei average ended the morning session up 0.2%, with exporters, including carmaker Nissan and camera maker Canon, rising as the yen weakened. U.S. spending figures eased concerns that the major export market was tipping into a recession.
“Fairly strong U.S. Christmas sales are helping high-tech exporters, while the soft yen pushes up automakers,” said Katsuhiko Kodama, senior strategist at Toyo Securities.
U.S. retailers’ holiday sales up to Christmas Eve rose 3.6% from a year earlier, helped by a late-season spending surge on some items, according to data released Tuesday by SpendingPulse.
The dollar hovered at 114.01 yen, staying near Monday’s peak of 114.49 yen on electronic trading platform EBS, its highest level since Nov. 7. The euro traded at about $1.441.
MSCI’s measure of other Asia Pacific stocks was down 0.3%, drifting after rising about 4% in the past seven days.
The index is about 11% below its Nov. 1 record high but is still up more than 30% as the year draws to a close. The gain is more than three times that for the MSCI All-Country World index this year.
The South Korean composite stock index, or Kospi, fell 0.2%, giving up part of its 4% jump in the two previous sessions, although financials cushioned the drop.
“Concerns about the U.S. economy have been easing and investors are increasingly betting that global markets have pretty much reflected such risks,” said Kang Moon-seok, an analyst at Korea Investment & Securities.
Taiwan’s main Taiex shares index fell 1%. Singapore’s Straits Times index was up 0.4% and the Shanghai composite rose 0.5%.
Japanese government bond futures rose as investors hunted for bargains after a three-day slide and minutes from the Bank of Japan’s November meeting showed policy board members noted rising downside risks in the U.S. economy. The benchmark 10-year yield fell 0.015 of a percentage point to 1.565%.
Oil traded above $94 a barrel, although Mexican export terminals reopened after a cold front helped fuel pre-holiday gains. U.S. light sweet crude for February delivery was 34 cents higher at $94.47 a barrel.
