Asian shares are mixed as reports of dismal company earnings add to pessimism over the widespread economic fallout from the coronavirus pandemic
By
YURI KAGEYAMA AP Business Writer
July 29, 2020, 6:48 AM
4 min read
Share to FacebookShare to TwitterEmail this articleTOKYO -- Asian shares were mixed Wednesday as reports of dismal company earnings add to pessimism over the widespread economic fallout from the coronavirus pandemic.
Tokyo's Nikkei 225 index lost 1.2% to 22,397.11 after Fitch Ratings downgraded its outlook for Japan to “negative” from “stable.”
“The coronavirus pandemic has caused a sharp economic contraction in Japan, despite the country’s early success in containing the virus,” Fitch said in announcing its decision.
Japanese automaker Nissan Motor Co. reported a loss for the fiscal first quarter and projected to remain in the red for the second year straight. Other big-name Japanese companies such as camera company Canon and robot manufacturer Fanuc also reported weak results.
Earnings reports overnight also discouraged investors, pulling shares lower on Wall Street. Market players are awaiting the outcome of a U.S. Federal Reserve policy meeting that began Tuesday. Gold prices moderated their steep climb, adding $8.60 to 1,953.20.
The pandemic is the primary concern, as secondary outbreaks raise the likelihood of further lockdowns to curb a resurgence in countries that had thought to have the virus under control, said Jeffrey Halley of Oanda.
“An escalation followed by the renewal of severe movement restrictions could see the much-feared secondary wave double-dip recession occur. That has not been priced into markets remotely unless you are talking about precious metals. But as yet, we are not at the double-dip stage," Halley said in a commentary.
Elsewhere in Asia, South Korea's Kospi added 0.4% to 2,265.46. Australia's S&P/ASX 200 slipped 0.2% to 6,006.40. Hong Kong's Hang Seng climbed 0.5% to 24,7894.10, while the Shanghai Composite index jumped 1.8% to 3,284.41 as buying kicked in after recent losses.
The Federal Reserve began a two-day meeting on interest rates Tuesday, with an announcement scheduled for Wednesday. Investors largely expect the central bank to keep short-term rates at their record, near-zero low, but they’re also looking to hear what it says about how long they may stay there.
The Fed helped launch the stock market’s recovery in late March by slashing interest rates and promising to buy Treasurys, corporate bonds and other debt, pumping extra cash into the economy.
On Tuesday, the Fed said it will extend the lives of seven of the lending programs by three months through the end of the year, an acknowledgment of the severity of the recession.
Still, sentiment on Wall Street was downbeat.
The S&P 500 fell 0.6% to 3,218.44 after a last-hour slide erased a small gain from earlier in the day. The Dow Jones Industrial Average dropped 0.8%, to 26,379.28, and the Nasdaq composite lost 1.3%, to 10,402.09.
This week marks the heart of earnings reporting season for the S&P 500, and several big companies gave results that fell short of analysts’ already lowered expectations as the pandemic stole customers away and increased some costs.
Rising coronavirus counts in many states are bringing a new wave of shutdowns and investors are hopeful that Democrats and Republicans can reach a deal on more aid for the 16 million or so Americans who are getting unemployment benefits, even though the two sides still seem to be far apart.
Benchmark U.S. crude oil added 1 cent to $41.05 a barrel in electronic trading on the New York Mercantile Exchange. It lost 56 cents to $41.04 per barrel on Tuesday. Brent crude, the international standard, gained 11 cents to $43.33 per barrel.
The U.S. dollar slipped to 105.00 Japanese yen from 105.07 yen on Tuesday. The euro strengthened to $1.1741 from $1.1718.
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AP Business Writers Stan Choe and Alex Veiga contributed.
