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Asia: Stocks retreat as yen holds gains, earnings disappoint

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[SYDNEY] Asian stocks retreated from a four-month high as the yen held gains, weighing on Japanese exporters, and companies including Sony Corp and Microsoft Corp reported earnings that fell short of estimates. Crude oil resumed its advance.

All 10 industry groups on the MSCI Asia Pacific Index fell, with raw-materials producers and energy stocks posting the steepest declines after commodities prices lost ground on Thursday.

Japan's Topix Index fell from its highest level in more than two months, while the Shanghai Composite Index was headed for its steepest weekly loss since January. Australia's dollar led gains among the currencies of resource-exporting nations as US crude rose more than one per cent. South Korea's won was the biggest loser.

US corporate results have in the main beaten projections so far, helping drive an equity rally that this week pushed global shares to the highest level since December.

Microsoft and Google parent Alphabet Inc on Thursday dimmed the picture somewhat as their first-quarter earnings fell short of analysts' forecasts, while Sony announced an annual profit that was 9 per cent lower than it predicted in January.

McDonald's Corp, General Electric Co and Caterpillar Inc are among firms scheduled to report on Friday.

"There's been scant evidence of sustained earnings growth," said Matthew Sherwood, head of investment strategy at Perpetual Ltd in Sydney, which manages about US$21 billion.

"It's too soon to declare that the earnings recession is over in all regions - things look better in the US, but central-bank policy in Europe and Japan appears increasingly deflationary and the prospect for strong economic recovery in emerging markets is still hard to fathom."

The European Central Bank on Thursday refrained from adding to the unprecedented stimulus announced in March, while 23 of 41 economists surveyed by Bloomberg predict that the Bank of Japan will ease at a review next week.

Traders see zero chance of the Federal Reserve adding to December's interest-rate increase at a meeting that concludes on Wednesday, Fed Funds futures show.


The MSCI Asia Pacific Index fell 0.5 per cent, paring its weekly gain to one per cent, as of 10:45 am Tokyo time. The Topix declined 0.5 per cent, Australia's S&P/ASX 200 Index slipped 0.4 per cent and Hong Kong's Hang Seng Index lost 0.8 per cent. The Shanghai Composite Index was down more than 4 per cent for the week.

Sony slumped 3.4 per cent after the company scaled back expected demand for the sensors and lenses that go into cameras as well as smartphones. The company is assessing the impact of this month's earthquake in Japan for earnings in the current year. Microsoft and Alphabet declined in after-hours US trading.

Futures on the Standard & Poor's 500 Index were little changed after the benchmark dropped by the most in two weeks.


The euro rose 0.1 per cent to US$1.13. It jumped as much as 0.9 per cent in the last session and subsequently erased the gain as the ECB's policy statement and President Mario Draghi's news conference struggled to convince investors that unprecedented stimulus will jump-start growth in the region after years of failing to do so. 

The yen rose 0.1 per cent to 109.36 per US dollar, after strengthening 0.4 per cent on Thursday.

The Aussie climbed 0.3 per cent, after dropping 0.7 per cent in the last session, and the Canadian dollar gained 0.2 per cent.

South Korea's won fell 0.7 per cent, wiping out the bulk of this week's advance.


Oil rose 1.2 per cent to US$43.70 a barrel, after falling Thursday from the highest level in almost five months amid rising US crude stockpiles and speculation producers will be unable to agree on an output freeze.

Gold was headed for its highest close in a week, while silver climbed to an 11-month high. The latter jumped more than 5 per cent for the second week in a row, entering a bull market.


The yield on 10-year US Treasuries was little changed at 1.86 per cent, 10 basis points higher than at the end of last week.