Most Asian stocks declined as lower commodities prices dragged down materials producers, overshadowing better-than-expected earnings at Honda Motor Co. and Nissan Motor Co.
BHP Billiton Ltd., the world’s biggest mining company, sank 1.4 percent in Sydney, and Mitsubishi Corp., which gets more than half its revenue from resources, slumped 2.6 percent. Honda, Japan’s No. 2 automaker, climbed 8.1 percent after boosting its annual target for operating profit sevenfold, and smaller competitor Nissan advanced 7.6 percent. China’s benchmark index fluctuated following its biggest drop in eight months yesterday.
About four stocks retreated for every three that rose on the MSCI Asia Pacific Index, which gained 0.2 percent to 109.37 as of 11:09 a.m. in Tokyo. The gauge fell for the first time in 12 days yesterday after the 13 percent rally swelled prices to 24.7 times estimated profit, the highest ratio since March 30.
“Positive earnings surprises are supporting the market although the current valuations can’t be justified without further improvement in earnings prospects,” Hiroshi Morikawa, a senior strategist at Tokyo-based MU Investments Co., which manages the equivalent of $13 billion.
The Shanghai Composite Index climbed as much as 1.8 percent following a 5 percent slump yesterday after Caijing magazine said China’s central bank may increase reserve requirements for banks. The central bank said after markets closed that it will maintain a “moderately loose monetary policy” and aims to consolidate the nation’s economic recovery.
Nikkei 225, Benchmarks
Japan’s Nikkei 225 Stock Average was little changed at 10,116.49, and about half the benchmark indexes in Asia fell. NEC Electronics Corp., Japan’s fourth-largest chipmaker, dropped the most in two weeks after its first-quarter loss widened.
Futures on the U.S. Standard & Poor’s 500 Index climbed 0.2 percent. The benchmark dipped 0.5 percent yesterday after the drop in Chinese equities hurt investor sentiment.
BHP slid 1.4 percent to A$36.91 and was the biggest single drag on the MSCI Asia Pacific. Mitsubishi, the third-heaviest, fell 2.6 percent to 1,775 yen, and Sumitomo Metal Mining Co., Japan’s biggest nickel and gold producer, sank 5.2 percent to 1,373 yen as nickel fell the most in more than two weeks.
Crude oil declined 5.8 percent in New York yesterday, the most since April 20, while a gauge of six metals in London fell 1.8 percent, the steepest drop in three weeks.
The MSCI Asia Pacific Index rallied 55 percent through yesterday from a more than five-year low on March 9 on rising confidence the worst of the global recession has passed. Japanese manufacturers increased production 2.4 percent in June, a report from the Trade Ministry showed today, capping the fastest quarterly output expansion in more than half a century.
Japanese Carmakers Gain
Honda rose 8.1 percent to 2,995 yen. The automaker raised its operating profit forecast yesterday after Tokyo markets closed to 70 billion yen ($737 million) for the year to March 2010, citing cost cuts. Nomura raised its rating on the carmaker to “buy” from “neutral.”
Nissan jumped 7.5 percent to 678 yen. Japan’s No. 3 automaker posted a first-quarter net loss that was less than a third of what analysts had projected. Mazda Motor Co. gained 5.4 percent to 256 yen and Isuzu Motors Ltd. climbed 1.9 percent to 163 yen. Honda and Nissan had the steepest percentage increases in the Nikkei 225.
“Companies are coming out with results that give investors a sense of relief,” said Mitsushige Akino, who oversees the equivalent of $631 million at Ichiyoshi Investment Management Co. in Tokyo.
NEC Electronics slumped 8.9 percent to 930 yen, the sharpest decline since July 13. The company’s loss widened amid a slump in demand for devices used in automobiles, flat-panel televisions and handsets.