Asia Stocks Rise, Europe Falls on Goldman Earnings
European stocks and Wall Street futures fell Tuesday after lower than expected earnings from U.S. investment bank Goldman Sachs, while Japanese shares were hit hard by mounting concerns that a rising yen will hurt exports.
In Europe, the FTSE 100 index of leading British shares was down 49.65 points, or 1 percent, at 5,098.63 while Germany’s DAX fell 91.18 points, or 1.5 percent, to 5,917.93. The CAC-40 in France was 57.02 points, or 1.6 percent, lower at 3,429.31.
European stocks had been trading largely flat, until Goldman Sachs became the latest U.S. financial company to disappoint investors, following Bank of America Corp. and Citigroup Inc. last week.
Goldman Sachs said its second-quarter net income fell 83 percent to $453 million because of lower trading revenues and a one-off charge for its settlement of civil fraud charges with the Securities and Exchange Commission.
As a result, Wall Street is poised for losses at the open — Dow futures were down 100 points, or 1 percent, at 9,960, while the broader Standard & Poor’s 500 futures fell 10.9 points, or 1 percent, to 1,052.90.
Earlier in Asia, most stock markets advanced, with Hong Kong’s Hang Seng index up 0.9 percent at 20,264.59 and mainland China’s Shanghai index spiked 2.2 percent at 2,528.73 amid expectations Beijing will moderate its efforts to cool the world’s No. 3 economy.
However, Japanese shares retreated 1.2 percent to 9,300.46 following a three-day weekend as investors continued to fret about the implication on exports from the big rise of the yen against the dollar over recent weeks. A higher yen will make Japan’s exports more expensive, all other things being equal, in the American marketplace.
The dollar has been hamstrung over recent weeks by a raft of disappointing data, which have reined in market expectations of any imminent increase in U.S. borrowing costs.
Michael Hewson, an analyst at CMC Markets, said the risk is that the dollar could soon fall below last year’s yen low of 84.80, which would open up the potential for a move down to lows not seen since 1995.
“This would present the Bank of Japan with a decision of whether or not to intervene in the markets, something they haven’t done since 2004, to weaken the yen as their exporters become less competitive,” said Hewson.
By early afternoon London time, the dollar was up 0.2 percent at 86.95 yen while the euro fell 0.6 percent at $1.2863.
The euro has managed to brush aside a credit downgrade of Ireland and reports that stat-owned German bank Hypo Real Estate Holding AG has failed continent-wide stress tests, results of which are due this Friday.
“As news of the first casualty of the EU bank stress tests was reported, the market appears to be questioning whether tensions in the eurozone have eased sufficiently to justify gains for the euro above $1.30,” said Jane Foley, research director at Forex.com.
Benchmark crude for August delivery was down 41 cents at $76.13 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 53 cents to settle at $76.54 on Monday.
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AP researcher Bonnie Cao in Beijing contributed to this report.
PAN PYLAS, AP Business Writer LONDON