Asian Stocks Swing From Gain to Loss on Earnings Outlook 

Asian stocks swung between gains and losses as investors weighed corporate earnings and after U.S. equities advanced.

China Petroleum & Chemical Corp. slid 1.3 percent in Hong Kong after Asia’s biggest refiner posted first-quarter profit that missed analyst estimates. Newcrest Mining Ltd., Australia’s No. 1 gold producer, slipped 2.1 percent in Sydney as the price of the bullion headed for a second day of decline. Posco climbed 2.7 percent after the Korean Economic Daily said South Korea’s largest steelmaker is considering the sale of Daewoo International Corp.

The MSCI Asia Pacific excluding Japan Index fell 0.2 percent to 475.08 as of 11:16 a.m. in Hong Kong, reversing a gain of 0.1 percent. Major U.S. indexes recovered in the last hour of trading yesterday, paring losses sparked by the U.S. and European Union levying new sanctions against Russia, amid optimism over mergers and acquisitions. Pfizer Inc. added 4.2 percent after proposing to buy AstraZeneca Plc for about 58.8 billion pounds ($98.7 billion).

“When you see M&A activity, that’s enough to drive things a little bit higher as people try to anticipate the next deal,” Tim Schroeders, a Melbourne-based money manager who helps oversee $1 billion in equities at Pengana Capital Ltd., said by phone. “Take the M&A driver out of the market, investors are justifiably cautious. We’ve seen mixed results during this earnings season and the geopolitical situation, particularly in Ukraine, doesn’t seem to get any better.”

FOMC Meeting

The Federal Reserve will probably announce a fourth straight stimulus cut at the conclusion of a two-day meeting tomorrow, economists polled by Bloomberg say.

“It will take a lot to get the Fed to veer off on their current course,” Bruce McCain, Cleveland-based chief investment strategist at Key Private Bank, said on Bloomberg TV. “If we see some signs of inflation along the way, they might be worried but otherwise they’re content to stay the course that they have set and let it wind down gradually over the course of this year.”

South Korea’s Kospi index lost 0.1 percent and Australia’s S&P/ASX 200 Index fell 0.6 percent. Singapore’s Straits Times Index slipped 0.3 percent, while Taiwan’s Taiex index rose 0.6 percent. New Zealand’s NZX 50 Index climbed 0.7 percent. China’s Shanghai Composite Index advanced 0.1 percent and Hong Kong’s Hang Seng Index added 0.4 percent. Markets in Japan are closed for a holiday.

The MSCI Asia Pacific excluding Japan Index yesterday traded at 12.3 times estimated earnings, compared with 15.9 for the Standard & Poor’s 500 Index, according to data compiled by Bloomberg.

U.S. Futures

Futures on the S&P 500 added 0.2 percent today. The U.S. benchmark measure closed 0.3 percent higher yesterday, erasing losses of as much as 0.7 percent.

The Obama administration turned up the slow boil of sanctions against Russia with little expectation that the latest round targeting officials and companies would prompt a turnabout by President Vladimir Putin.

The U.S. yesterday named seven individuals, including Igor Sechin, chief executive officer of oil giant OAO Rosneft, and 17 companies linked to Putin’s inner circle such as InvestCapitalBank and Volga Group. The European Union added 15 individuals to its sanctions list, though their identities weren’t immediately released.

Of the 179 companies on the MSCI Asia Pacific Index that reported results since the beginning of April and for which estimates are available, 44 percent missed analyst estimates, according to data compiled by Bloomberg.

(By Jonathan Burgos)

Source: bloomberg

---