Wednesday, July 18, 2012

Asian stocks fall as Bernanke warns on economy

(AP) ? Most Asian stock markets dropped Wednesday despite upbeat U.S. corporate earnings as the Federal Reserve chief warned another recession is possible without giving a hint at plans for stimulus.

Hong Kong's Hang Seng was down 0.8 percent at 19,305.26 and South Korea's Kospi dropped 0.7 percent to 1,810.05. Australia's S&P/ASX 200 lost 0.5 percent to 4,156.30 while Japan's Nikkei 225 added 0.4 percent to 8,789.88. China's Shanghai Composite Index was little changed 2,161.77.

Investor sentiment was dampened as Federal Reserve Chairman Ben Bernanke gave a bleak assessment of the U.S. economy in his testimony to the Senate. Without a congressional agreement, tax increases and deep spending cuts would take effect in the U.S. at year's end. Bernanke noted Tuesday what the Congressional Budget Office has warned: A recession would occur, and 1.25 million fewer jobs would be created in 2013.

The fed chief gave no signal on what steps that the Fed might take to support the economy and whether any action was imminent, disappointing investors who expected a more aggressive stance.

Intel's gloomy assessment of the global economic outlook after U.S. markets closed also dented sentiment. The world's largest chipmaker said its revenue for the current quarter is likely to come in below market forecasts.

Investors reduced their holdings of Asian tech exporters after Intel's results, which reinforced worries that the economic uncertainty is hitting global sales of consumer electronics products. Samsung Electronics edged 0.3 percent lower and SK Hynix, the world's second-largest maker of memory chips, tumbled more than 4 percent. LG Electronics and LG Display dipped nearly 2 percent.

Overnight gains in the U.S. markets failed to cheer investors in Asia. On Tuesday, stronger-than-expected earnings reports from big U.S. companies lifted Wall Street. Shares of the U.S. biggest toy maker Mattel and Coca-Cola climbed after reporting earnings that beat expectations.

The Dow Jones Industrial Average rose 0.6 percent and the Nasdaq gained 0.5 percent. The Standard & Poor's 500 added 0.7 percent.

Investors are waiting for earnings releases and Bernanke's return to Capitol Hill on Wednesday to testify to the House Financial Services Committee.

Benchmark crude for August delivery was down 45 cents at $88.87 in electronic trading on the New York Mercantile Exchange. The contract added 79 cents to end Tuesday at $89.22 per barrel in New York.

In currency markets, the dollar fell 0.1 percent to 79.02 yen and the euro was slightly lower at $1.229.

Associated Press

Source: http://hosted2.ap.org/APDEFAULT/f70471f764144b2fab526d39972d37b3/Article_2012-07-18-World%20Markets/id-bca41871f1c145d588fd6109af094ae3

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