Asian Shares Down on Europe Woe, Apple Hits Techs

By webadmin on 12:06 pm Jul 25, 2012
Category Archive

Asian markets fell and the euro sat at multi-year lows amid growing fears that Spain will need a full bailout, while tech shares were hit by a disappointing earnings report from Apple.

Tokyo fell 1.37 percent, Hong Kong lost 0.97 percent, Shanghai was 0.12 percent lower, Sydney shed 0.67 percent and Seoul skidded 1.50 percent.

Eyes are firmly on Europe, where Madrid remains in focus as its borrowing costs for benchmark 10–year bonds reached 7.621 percent on Tuesday, well inside the danger zone considered too much to sustain.

The figure is also around the levels that forced Greece, Ireland and Portugal to seek bailouts, raising the prospect that Spain will have to go cap-in-hand.

But economists fear help for Spain, one of the region’s biggest economies, could cost more than the previous three put together, putting pressure on the eurozone bailout fund.

Also Tuesday, the finance minister of Catalonia, Spain’s second biggest region, said he may have to ask for access to an 18-billion-euro ($22 billion) fund set up by Madrid to rescue struggling regions.

Those comments come just a week after another region, Valencia, became the first to apply for help.

Economists increasingly agree that a eurozone bailout of up to 100 billion euros agreed for Spain’s banks will be insufficient to get the country through the crisis brought on by a collapse of its real estate boom in 2008.

More bad news came as Moody’s lowered the outlook on the EU’s bailout fund from stable to negative Tuesday, a day after threatening the triple-A ratings of Germany, the Netherlands and Luxembourg, three of the eurozone’s top guarantors.

The euro remained under pressure, sitting at 12-year lows against the yen and two-year lows against the dollar.

In early Asian trade the common currency fetched $1.2059 and 94.21 yen, compared with $1.2063 and 94.28 in New York late Tuesday.

The dollar was at 78.10 yen against 78.17 Japanese yen.

The rolling crises pressed on Wall Street, which saw the Dow close 0.82 percent lower, the S&P 500 fall 0.90 percent and the Nasdaq drop 0.94 percent.

Adding to the downward pressure on US stocks was Apple’s announcement that quarterly profit rose 20.5 percent to $8.8 billion on hot iPad sales, although that was below forecasts.

Revenues rose 22.5 percent to $35 billion, also below expectations of more than $37 billion.

The firm blamed the underachievement on customers putting off buying the iPhone ahead of the expected release of iPhone 5 later in the year.

Asian tech firms with links to Apple were hit by the report.

In Japan Sharp dropped 3.8 percent and LG Display lost 4.1 percent in South Korea.

Oil prices were lower. New York’s main contract, light sweet crude for September delivery, declined by 57 cents to $87.93 a barrel in morning trade and Brent North Sea crude for delivery in September also fell by the same amount to $102.85.

Gold was at $1,583.20 at 0210 GMT from $1,573.81 late Tuesday.

Agence France-Presse