Zimpapers Logo

The European Union statistics office said on Wednesday that nine of the 17 countries that use the euro are in recession, including France. The combined economy of the 17 countries shrank by 0,2 percent in the first three months of 2013 compared to the prior quarter.

Meanwhile, the economy of Germany, whose growth supports lesser economies in the region, expanded by a slight 0,1 percent in the first quarter of the year, undershooting expectations of a 0,3 percent rise.

“The eurozone has registered six straight quarters of contraction and any recovery is likely to be limited in the months ahead,” said analysts at Credit Agricole CIB in Hong Kong in a market commentary.

Hong Kong’s Hang Seng rose 0,4 percent to 23 127,04. South Korea’s Kospi added 1 percent to 1 989,89. Japan’s Nikkei lost 1,1 percent to 14 933,66. Australia’s S&P/ASX 200 shed 0,4 percent to 5 171,10. Benchmarks in Taiwan and Indonesia rose while the Philippines and Thailand fell.

Gains were registered even though US manufacturers cut back on production in April, government data showed on Wednesday. The Federal Reserve said factory output dropped 0,4 percent in April, the third decline in four months, as auto companies cranked out fewer cars and factories made fewer consumer goods.

Among individual stocks, Virgin Australia Holdings plummeted 13 percent after the airline issued a profit warning after the market closed on Wednesday. Japan’s Olympus Corp. surged more than 15 percent after reporting a net profit for fiscal 2012, Kyodo News agency said.

The negative economic news on Wednesday wasn’t enough to slow things down on Wall Street, which has been fuelled by strong corporate earnings. Google’s stock topped US$900 for the first time on Wednesday after the company announced several upgrades to its Android software for smartphones.

Quarterly earnings reached a record in the first quarter, according to S&P Capital IQ, rising 5 percent from the year before.
Francis Lun, chief economist at GE Oriental Financial Group in Hong Kong, said he thinks the rally will continue until fall, particularly since US$85 billion in automatic spending cuts, known as a “sequester”, did not derail the US economy, despite predictions that it would.

According to the latest figures, the US economy grew at an annual rate of 2,5 percent in the January-March quarter.
“Everyone was predicting the sequester would be a disaster for the US economy, but it turned out to be a non-event. The American economy has enough strength to survive the sequester,” Lun said.

The Dow Jones industrial average rose 0,4 percent, to close at 15 275,69. The Standard & Poor’s 500 index gained 0,5 percent to 1 658,78. Both closed at all-time highs. The Nasdaq composite index rose 0,3 percent to 3 471,62.

Benchmark oil for June delivery was down 30 cents to US$94 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 9 cents to close at US$94,30 a barrel on the Nymex on Wednesday.
In currencies, the euro slipped to US$1,2873 from US$1,2875 on Wednesday in New York. The dollar fell to 102,23 yen from 102,32 yen. — AP.