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Asian Shares Fall As US Earnings Awaited; Miners Weak

SINGAPORE (Dow Jones)--Asian shares were mostly lower Monday as investors looked for Alcoa Inc. to kick off an expected rough earnings season later in the U.S., and with resource stocks under some early pressure.

Trading was pretty quiet with Japanese markets shut for a public holiday; Australia's S&P/ASX 200 was down 2% with Korea's Kospi Composite lower by 1.6% and New Zealand's NZX-50 eking out a 0.1% gain.

"A string of bad data has nipped the New Year optimism in the bud," said Bank of New Zealand currency strategist Danica Hampton; "if you look at the data last week it's pretty terrible, so people will come back this week and decide the world is a pretty gloomy place again."

Asian shares were following a decline on Wall Street Friday, which came after data showed the U.S. economy shed 524,000 jobs in December, while the jobless rate jumped from a revised 6.8% to 7.2%; also, November payrolls were revised to reflect a fall of 584,000, from 533,000 initially.

Further downbeat news came Monday with the top executive at AutoNation Inc. saying the U.S. auto dealer would cut new vehicle orders in half for the first quarter; the company's national footprint and broad product line-up make it a key pointer for consumer sentiment on the U.S. auto industry.

Alcoa was due to report fourth quarter earnings later Monday, less than a week after the aluminum giant rattled Wall Street by unveiling a plan to cut more jobs, slash production and sell assets; the company, like other metals producers, has been hit hard by falling prices, waning consumption and rising stockpiles.

U.S. stock futures were mildly lower in screen trade.

In Sydney, mining stocks were down with BHP Billiton off 1.8% and Rio Tinto falling 3.9%; Rio said it was postponing its US$2.15 billion expansion of the Corumba iron ore mine in Brazil, "in response to the severe market downturn."

Baking company Goodman Fielder fell 5.3% in Australia after repeating it expected its first fiscal half net profit would be about 15% lower than a year earlier.

In Korea, banking and building stocks were lower again, amid concerns about their outlook; Shinhan Financial was down 2.0% and Daewoo Engineering off by 3.2%.

LG Display however had risen 4.0% on news it had inked a five-year deal to supply LCD panels to Apple Inc.

New Zealand shares were drifting in low-volume trade - the market's so quiet "it's like watching paint dry," said ABM Amro Craigs broker Bryon Burke; Michael Hill shares were 5.6% higher after falling last week on a profit warning.

In currency markets, the Japanese yen was higher on expectations for increased capital flows into the country given measures being taken by authorities there, and given risk aversion; the U.S. dollar was at Y90.05 after falling early in Asia to Y89.93, down from Y90.30 late in New York on Friday, with the euro at Y120.57, from Y121.36 in New York.

The euro was lower, around $1.3886, with the European Central Bank expected to cut interest rates at its meeting later in the week.

Recent gains in the euro would retrace as worsening economic data would lead the ECB to cut rates, eroding the single currency's rate and yield differentials, said strategists at BNP Paribas, who looked for the central bank to ease 50 basis points; "we should not fall into the trap of expecting a higher euro/dollar on the back of rallying share prices as we see the correlation between equities and the euro reversing this year as the anticipated capital market rebound becomes U.S.-centric."

Westpac strategist Jonathan Cavenagh expected further declines in the dollar and euro against the yen; the dollar/yen "is a definite sell, it's going to head lower on the day," he said.

Spot gold was trading 35 cents lower from its New York close, now at $853.25 a troy ounce; HSBC though raised its average 2009 gold forecast to $825 an ounce from $800 previously, and lifted its 2010 call to $775 from $725, saying gold would attract safe-haven buying amid economic woes.

February Nymex crude oil was 54 cents lower on Globex at $40.29 a barrel after dropping 2.1% in New York on Friday; Jim Ritterbusch at Ritterbusch and Associates was anticipating "further slippage to the low-to-mid-$30 area with selling possibly accelerating with the approach of the February contract" expiry on January 20.

-Rosalind Mathieson, Dow Jones Newswires; +65-6415-4140; rosalind.mathieson@dowjones.com

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(END) Dow Jones Newswires

January 11, 2009 20:05 ET (01:05 GMT)


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