Asian Shares Rise on Surge in U.S. Home Sales, but Decline in Retail Sales is Ominous

Asian markets were mixed Tuesday. In Hong Kong, the Hang Seng Index rose 0.6% to 20,973 and in China the Shanghai Composite Index slid 0.5% to 2,575. Japan's Nikkei 225 Index edged down 0.1% to end the day at 9,497.

For some investors, the data showing that new home sales in the U.S. jumped nearly 24% last month was a good sign to buy. But for many it was difficult to overlook the 16.7% drop in sales as compared to the same period last year. According to the Financial Times, "June was the second-worst month for new home sales since the series began in 1963." Even with mortgage rates at record lows, the number of applicants is dwindling. The increase in home , however, seemed to overshadow the ominous decline of U.S. retail sales figures for June, which some states are combating with sales tax holidays, offering respite to families doing their back-to-school shopping. All in the hopes of luring shoppers back into stores.

In Hong Kong, Li & Fung, the clothing and toy distribution behemoth that sources trendy teen products for Abercrombie & Fitch, Target and Wal-Mart, gained 1%, while Esprit, popular in both the U.S. and Europe, gained 1.4%.

But bigger gains were made by Hong Kong companies looking toward China for revenue. Tencent Holdings surged 3.8%. This communications company has big stakes in online games like Xunxian, a 3D online game based on an ancient Chinese legend and geared toward a Chinese audience. Other gainers included China Mobile, which rose 1.2%, oil exploration company Cnooc, which advanced 1.1% and PetroChina, which jumped 1.3% despite closing more than 100 oil wells that are threatened by flooding.

In China, banking shares closed lower, dragging the major index with it. Industrial & Commercial Bank of China fell 1.2%, Merchants Bank dropped 1.1% and Bank of China dipped 0.3%. Agricultural Bank of China, now the holder of the world record for the largest IPO, sank 0.7%.

The commodity sector in China was harshly affected by a slump in the price of coal, a major source of power for the country's factories. Datong Coal Industry tumbled 3.1%, Yanzhou Coal Mining declined 1.5% and Shenhua slipped 1.2%. Meanwhile Jiangxi Copper slid 2% and Zhuzhou Smelter, a zinc producer, dropped 2.2%. Zijin Mining, still reeling from a disastrous toxic leak, remained suspended today.

Japanese banks surged today after the Basel Committee on Banking Supervision relaxed some proposed restrictions on capital rules, reports Bloomberg. Sumitomo Mitsui Financial Group shot up 2.8%, Mitsubishi UFJ surged 2.5% and Mizuho Financial Group rose 2.2%.

Other winners included Seiko Epson, which rallied 4.4% after speculation that it may have earned $23 million in operating profit during the first quarter, rather than the loss it was expecting.

Japanese investors were less beguiled by the U.S. home sales data, extrapolating that Americans are still gun-shy about making big purchases. Toyota shares plummeted 1.6% and Isuzu fell 1.2%. Clarion, which makes car audio systems plunged 2.3%.

Electronics exporters were a mixed bag with Casio Computer rising 1.8% and Sony advancing 1.1%. But Canon dipped 0.4% and video game giant Nintendo declined 0.9%.