Stock markets across Asia dropped sharply from a 20- month high after U.S. jobless claims rose and China took steps to cool its real-estate market. The yen strengthened on prospects Greece will struggle to control the widest budget deficit in the euro region, while the pound weakened.
The MSCI Asia Pacific Index slid 0.8 percent to 128.03 at 4 p.m. in Tokyo. The Stoxx Europe 600 decreased 0.5 percent to 270.89. Standard & Poor’s 500 futures declined 0.5 percent as Google Inc. posted disappointing first-quarter profit. The yen traded at 125.63 per euro, the strongest since April 9.
U.S. jobless claims unexpectedly rose last week and China’s government increased requirements for down payments on some home purchases, increasing investor concerns that this year’s 6 percent increase in the MSCI World Index may not be justified by the pace of the economic rebound. While the U.S. is “on the right track,” it’s ‘important not to lose sight of just how fragile this recovery is,” Federal Reserve Bank of San Francisco President Janet Yellen said in a speech yesterday.
“Investors believe that the growth outlook is continuing to improve, and they’re trying to buy opportunities,” said Angus Gluskie, who oversees $300 million at White Funds Management Pty. In Sydney. “But overall at the moment, people are a bit cautious about having too much risk on the table.”
Japan’s Nikkei 225 Stock Average and Hong Kong’s Hang Seng Index sank 1.5 percent. The drop in S&P 500 futures indicates that the benchmark’s six-day streak of advances may falter today. The index rose 0.1 percent yesterday.
Google’s Results
Google reported first-quarter net income rose 37 percent to $1.96 billion, or $6.06 a share. Excluding some costs, profit was $6.76 a share. Estimates compiled by Bloomberg were as high as $6.91. Google fell as much as 5.3 percent yesterday in after- hours trading to $563.50.
The U.S. earnings season continues next week with Microsoft Corp., American Express Co. and Coca-Cola Co. reporting their latest quarterly results. Combined profit for S&P 500 companies will increase 30 percent in the first quarter from a year earlier, according to analyst estimates compiled by Bloomberg.
Japanese exporters slid as the yen strengthened. Sony Corp., which gets 23 percent of sales in the U.S., lost 1.8 percent to 3,350 yen. Honda Motor Co., which gets 44 percent of its sales in North America, dropped 1.4 percent to 3,220 yen.
China stocks dived after the country’s cabinet yesterday said “more forceful” steps are needed to cool real estate speculation. China’s economic growth in the first quarter hit 11.9 percent, the fastest pace in almost three years.
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