Markets still trending lower Japan posts 5 7 billion trade deficit

Most regional markets were lower in early afternoon trade with the Kospi down 0.8% and Hang Seng and Nikkei down 0.6% and 0.1% respectively. The MSCI Asia Pacific Index slipped 0.4% in early Tokyo trade. More than two shares declined for every one that gained on MSCI’s Asia Pacific Index, which was on course for its lowest close since March 21.

Glencore debuted slightly lower in Hong Kong, down as much as 2.8% at one stage. In economic news, Japan posted a $5.7 billion trade deficit in April, with overseas shipments down 12.5%, the biggest drop since October 2009, while imports gained 8.9%. Exports to China were 6.8% lower, raising further doubts of consensus estimates for a return to surplus by the third quarter.

The ASX200 remains in a downturn trend, struggling to shrug off weak offshore leads despite some positive movements in commodity markets overnight. The market is to take similar leads in the weeks ahead until (and if) it hits the psychological 4500 target level where bargain hunters will no doubt see an opportunity to start buying. May is proving to be another tough month for the markets.

In corporate news semiconductor manufacturer Tokyo Electron – a rival to Applied Materials – slipped 2% while Elpida Memory shed 4.1%. Applied Materials declined in extended trading after the largest producer of chipmaking equipment said profit excluding certain costs in the current period will be 31 cents to 37 cents a share, and sales will drop 3% to 10% from the prior quarter.

Australian-listed Austal tumbled 9.7% in Sydney trading after the shipbuilder cut its full-year profit forecast, citing the ‘unprecedented strength” of the Australian dollar alongside “softness” in Europe’s ferry market. Westfield is upbeat on its assets saying sales from specialty stores grew 4.4% in March and April compared to the same period last year. The improvement was much larger in the US, up 7%. More importantly, WDC reaffirmed its earnings guidance despite significant economic headwinds.

The Dollar Index tracking the US currency against those of six trading partners climbed 0.2%. In key regional movements, the New Zealand dollar dropped 0.4% to 79.33 US cents, while South Korea’s won slid 0.2% to 1,095.55 per dollar. The American Petroleum Institute (API) said crude inventories fell 860,000 barrels for the week ended May 20, compared with analysts’ expectations for a 1.3 million-barrel draw. Brent crude for July fell 65 cents to $111.88 a barrel.

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