- The Washington Times - Tuesday, April 14, 2009

HONG KONG (AP) - Asian stock markets advanced Tuesday as surprisingly strong earnings from U.S. investment bank Goldman Sachs helped counter more signs of weakness from the region’s economies and companies. European shares also opened higher.

Hong Kong and Australian markets were among the day’s best performers, catching up with last week’s gains after being closed for a public holiday, but Japanese shares were dragged lower by the rising yen and sharp declines in automakers amid worries about General Motors. Oil prices traded below $50 a barrel after a gloomy forecast stirred more concerns about demand.

Investors were comforted after Goldman Sachs reported a better-than-expected profit of $1.66 billion for the first quarter, beating Wall Street’s forecasts and reinforcing the belief that U.S. banks may be stabilizing. That followed a similar reassuring forecast from Wells Fargo & Co.

But the news was more sobering in Asia.

Singapore’s economy suffered its biggest contraction ever, contracting by a record 20 percent in the first quarter as demand for Asia’s exports evaporated. In Australia, the country’s flagship carrier Qantas Airways slashed its annual profit forecast and said it would cut up to 5 percent of its workforce.

With the earnings season just getting under way in the U.S and a full economic recovery is still far off, some markets were held back by nagging worries that global equities, after a huge run-up, were due for a breather, analysts said.

“A number of investors are pretty sidelined during the earnings season and watching how the results play out before going either way, particularly since the market has risen so much already,” said Lorraine Tan, director of equities research at Standard & Poor’s in Singapore.

During early trade in Europe, benchmarks in Britain, Germany and France were higher by about 0.7 percent. Wall Street futures pointed to a slightly lower open on Tuesday. Dow futures fell 15 points, or 0.2 percent, to 7,980 and S&P; 500 futures slipped 3.2, or 0.4 percent, to 850.80.

Hong Kong shares led Asia earlier in the day, with the Hang Seng powering higher by 678.75 points, or 4.6 percent, to 15,580.16 after the bourse was closed for two days. Australia’s index climbed 2.2 percent.

Elsewhere, South Korea’s Kospi gained 0.3 percent to 1,342.63 in seesaw trade, and Shanghai’s index added 0.5 percent.

But Tokyo’s benchmark Nikkei 225 stock average lost 81.75 points, or 0.9 percent, to 8,842.68 as automakers skidded amid growing concern about the fate of ailing GM. Mazda tumbled 8.7 percent and Toyota fell 3.6 percent.

Shares of Japanese real estate companies also dropped after developer Sumitomo Realty & Development said annual profit likely fell 30 percent. The firm’s shares shed 5.6 percent.

In other stocks, Qantas shares fell nearly 9 percent after its profit warning but closed 1.3 percent higher at AU$1.985.

Markets worldwide have posted enormous gains since early March, with many swinging into positive territory for the year, amid evidence the staggering drop off in economic activity from Asia to the U.S. was beginning to slow as governments act.

On Tuesday, a top U.S. Federal Reserve official said the world’s largest economy was showing nascent signs of recovery in the form of better functioning credit markets and higher stock prices, but he stopped short of declaring the worst was over.

“It’s too early to tell if we’ve hit a bottom, but it seems the risk of falling of the table is significantly less than it was before,” Richard W. Fisher, president of the Federal Reserve Bank of Dallas, told reporters in Hong Kong.

Overnight in New York, stocks rebounded from early losses to end mostly higher, led by financials.

The Dow fell 25.57, or 0.3 percent, to 8,057.81, but the Standard & Poor’s 500 index rose 2.17, or 0.3 percent, to 858.73. The Nasdaq gained 0.1 percent to 1,653.31.

In oil, prices dipped amid pessimism demand for crude can recover in the near term following last week’s projection cut by Paris-based International Energy Agency.

Benchmark crude for May delivery fell 34 cents to $49.71 a barrel. The contract on Monday dropped $2.19 to settle at $50.05.

In currencies, the dollar fell to 99.70 yen from 100.34 yen, while the euro dropped to $1.3277.

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