Asian stocks retreated from an almost five-month high as companies including Sony Corp and Microsoft Corp reported disappointing earnings.
Japanese equities erased losses as banks surged.
The MSCI Asia Pacific Index fell 0.4 percent to 133.63 as of 4:37pm in Hong Kong on Friday. The measure is headed for a 1 percent gain this week, its third straight such advance. Alphabet Inc and Microsoft missed estimates when they reported profits after regular US trading, while stalling global demand for smartphones made a dent on Sony’s results. Earnings are the next test for an equity rally that this week pushed global shares to the highest level since December last year.
“There’s been scant evidence of sustained earnings growth,” said Matthew Sherwood, head of investment strategy at Perpetual Ltd in Sydney, Australia, which manages about US$21 billion. “Persistent yen strength over the medium term will be just another factor weighing on Japanese earnings-per-share growth.”
After a turbulent start to the year, the rally in Asian shares since mid-February has pushed the dollar-denominated benchmark index back into positive territory.
It is now up 1.3 percent for the year, against a 4.4 percent decline for a measure of European shares and a 2.3 percent gain for the Standard & Poor’s 500 Index.
The TAIEX declined 0.38 percent to 8,535.75 on Friday, down from 8,667.71 on Friday last week.
Japan’s TOPIX climbed 1 percent, erasing losses of as much as 1 percent, after Bloomberg reported the Bank of Japan (BOJ) is considering steps to provide relief to financial institutions.
Banks surged in afternoon trading. The gauge capped a second straight weekly gain that has pushed the TOPIX index close to a bull market.
The BOJ might consider helping financial institutions by offering a negative rate on some loans, according to people familiar with talks at the central bank.
Such a discussion could happen in conjunction with a decision to make a deeper cut to the BOJ’s current reserve rate, which is already in negative territory, said the people, who asked not to be named as the matter is private.
Singapore’s Straits Times Index fell 0.8 percent. Authorities raided a number of brokerages, including those owned by the nation’s largest lenders, DBS Group Holdings Ltd (星展銀行) and Oversea-Chinese Banking Corp (華僑銀行) in a probe of possible breaches of the securities law, while the stock exchange reported several cases related to alleged insider trading and market manipulation as the city sought to protect its reputation as a financial center.
“It helps the image of Singapore as they clamp down on practices such as insider trading or market manipulation,” IG Asia Pte market strategist Bernard Aw said by telephone on Friday. “To some extent, this will help restore individual investor confidence on the market, if this relates to trading privileged information then it’s unfair to the individual investors.”
South Korea’s KOSPI slipped 0.3 percent. Australia’s S&P/ASX 200 Index fell 0.7 percent. New Zealand’s S&P/NZX 50 Index dropped 0.6 percent. Hong Kong’s Hang Seng Index decreased 0.7 percent.
China’s Shanghai Composite Index added 0.2 percent, reversing losses of as much 0.9 percent. The gauge tumbled 3.9 percent this week, the biggest weekly drop in almost three months, amid concern that improving economic data will prevent further stimulus and corporate defaults will rise.
Additional reporting by staff writer
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