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Nikkei Markets

Asian equities decline tracking Wall Street losses

Doosan Heavy, Tata Motors among key movers on A300 index

HONG KONG (Nikkei Markets) -- Asian shares outside of Japan fell Friday on the back of losses in U.S. equities despite the European Central Bank indicating an interest rate cut in the near future.

The Nikkei Asia300 Index declined 0.7% to close at 1,318.50.

The ECB yesterday hinted at a rate cut, possibly as early as September, by changing its forward guidance. Officials now expect key interest rates to remain at their present or lower levels at least through the first half of 2020, compared with earlier expectations of rates remaining unchanged till the middle of next year.

The central bank underscored the need for an accommodative stance for a prolonged period of time on account of both realized and projected inflation being persistently below its target. The European central bank further said that it would recommence asset purchases if needed.

Despite the ECB flagging a potential interest rate cut and raising prospects of quantitative easing, European and U.S. equities declined yesterday and German bond yields rose.

Focus now shifts to the U.S. Federal Reserve's meeting next week. The Fed is expected to cut interest rates by at least a quarter percentage points. The last important data point ahead of the meeting is due later Friday in the form of the June quarter GDP data. Economists polled by Reuters expected the world's largest economy to have grown by 1.8% in April-June period.

Among movers on the A300 on Friday, Samsung Electronics declined 0.1%, Taiwan Semiconductor Manufacturing dropped 1.5%, while Tencent Holdings added 0.6%.

Tata Motors closed 2% higher despite the Indian carmaker reporting a wider-than-expected June quarter loss.

Doosan Heavy Industries & Construction jumped 4.8% after the South Korean company said June quarter operating profit reportedly increased 6.3% from a year ago.

Hyundai Engineering & Construction declined 2%. The South Korean company reported a 4.7% fall in the net profit for the April-June period, while operating profit rose 11%.

BDO Unibank declined 2.4%. The Philippine bank reported a 24% increase in net interest income in the first half of the year.

Singapore Technologies Engineering ended little changed. The company's aerospace and electronic sectors secured contracts totaling S$1.5 billion ($1.1 billion) in the second quarter.

--Nimesh Vora

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