SEOUL, South Korea (AP) — Most Asian stock markets dropped Wednesday despite upbeat U.S. corporate earnings as the Federal Reserve chief warned another recession is possible without giving a hint at plans for stimulus. European markets advanced.
Hong Kong's Hang Seng fell 1.1 percent to 19,239.88 and South Korea's Kospi dropped 1.5 percent to 1,794.91. Australia's S&P/ASX 200 lost 0.4 percent to 4,123.60 and Japan's Nikkei 225 shed 0.3 percent to 8,726.74. China's Shanghai Composite Index gained 0.4 percent to 2,169.10.
Investor sentiment was dampened after Federal Reserve Chairman Ben Bernanke gave a bleak assessment of the U.S. economy in his testimony to the Senate. Without a congressional agreement, tax increases and deep spending cuts would take effect in the U.S. at year's end. Bernanke noted Tuesday what the Congressional Budget Office has warned: A recession would occur, and 1.25 million fewer jobs would be created in 2013.
The fed chief gave no signal on what steps that the Fed might take to support the economy and whether any action was imminent, disappointing investors who expected a more aggressive stance.
Intel's gloomy assessment of the global economic outlook after U.S. markets closed also dented sentiment. The world's largest chipmaker said its revenue for the current quarter is likely to come in below market forecasts.
In Europe, markets had already absorbed Bernanke's testimony and inched higher. Britain's FTSE 100 was up 0.1 percent at 5,636.81 and Germany's DAX gained 0.3 percent to 6,595.67. France's CAC-40 jumped 0.9 percent to 3,206.95.
But Wall Street was set to fall after being boosted on Tuesday by better-than-expected earnings from the U.S. biggest toy maker Mattel and Coca-Cola. Dow futures were down 0.2 percent at 12,706 and S&P 500 futures were off 0.3 percent at 1,354.70.
Investors are waiting for earnings releases and Bernanke's return to Capitol Hill on Wednesday to testify to the House Financial Services Committee.
Benchmark crude for August delivery was down 34 cents at $88.88 in electronic trading on the New York Mercantile Exchange. The contract added 79 cents to end Tuesday at $89.22 per barrel in New York.
In currency markets, the dollar fell 0.1 percent to 79.02 yen and the euro was slightly lower at $1.229.
- Investment & Company Information
- Congressional Budget Office