Asia Pacific shares were mostly down on Thursday, 17 July 2014, as
investors withdrew some profit off the table amid speculation the US
Federal Reserve would tilting towards tighter monetary policy and on
caution before the release of US economic data and corporate earnings
reports. The MSCI Asia Pacific Index lost less than 0.1% to 147.18.
Most of the region's markets took a positive lead at open, after equity markets in the United States advanced overnight with the Dow Jones Industrial Average hitting an all-time high after upbeat U.S. corporate results, particularly from tech firms like Intel Corp.
But, Asian shares finished in negative territory or were little changed with the optimism from China's growth report the previous day proving to be short-lived. The risk sentiments hit after the European Union and U.S. imposed further sanctions on Russia over Ukraine.
The U.S. and EU imposed the most aggressive sanctions to date on Russian businesses and said more may follow, because of the Kremlin's continued support for separatists in eastern Ukraine.
The new rounds of U.S. sanctions targeted two major energy firms, a pair of powerful financial institutions, eight weapons firms and four individuals. The U.S. penalties are meant to increase pressure to end the insurgency in eastern Ukraine believed to be supported by Moscow.
Investors were also nervous about looming corrective sell-off, particularly as the U.S. Federal Reserve edges toward its first interest rate hike since the Great Recession. Fed chair Yellen hinted to the House Financial Services Committee that Fed is on track to start hiking interest rates in late 2015. And, Fed policymakers projected the federal fund rate to reach 1.00% by the end of next year.
Fed's Beige Book economic period showed that all 12 districts reported expanding economic activity during the period from mid-May through June. All districts reported growth in consumer spending and manufacturing. In particular, manufacturing was robust in Midwest and West districts. Banking and financial services improved slightly but non-financial services had steady or improving growth. Residential real estate was mixed, nonetheless, while commercial construction generally strengthened. Labor market continued to improve with all districts reporting slight to moderate employment growth. Wage pressures were modest in most districts.
Also, risk sentiments weakened on caution ahead of the release of U.S. economic data and corporate earnings reports. For the rest of the week, earnings reports from Google and IBM are key events on the corporate side. The U.S. government is also set to release economic data including unemployment claims and home construction.
Among Asian bourses
Stronger yen weighs down Tokyo shares
Japan share market closed down, registering second drop in a row, on tracking weakness in regional equities and yen strengthening against the greenback. The Nikkei 225 index slipped 0.06%, or 9.04 points, to finish at 15370.26, while the Topix index of all first-section shares was down 0.02%, or 0.21 points, to 1273.38.
Shares of brokerages and shippers fell the most today in Tokyo. Nomura dropped 1% to 665 yen and Daiwa Securities Group Inc. lost 1.2% to 846 yen. Nippon Yusen slipped 1.4% to 284 yen.
Komatsu Wall shares slumped 7.6% to 2,720 yen after reporting quarterly operating profit declined 11% to 240 million yen ($2.4 million) from a year earlier.
Sharp added 1.6% to 328 yen after its rating was upgraded to neutral from underperform at Merrill Lynch.
Sumitomo Electric Industries gained 1.2% to 1,497 yen after a maker of electric wires and cables boosted full-year profit forecast 59% to 111 billion yen. Kyushu Electric Power lost 2.1% to 1236 yen. Japan's nuclear watchdog gave safety clearance on Wednesday for restarting two nuclear reactors operated by Kyushu Electric.
Miners put Australian shares back in black
Australian stock market closed higher, as strength in mining and bullion stocks were more than offset drop in shares of lender, realty and utilities companies. The benchmark S&P/ASX 200 Index rose 3.50 points, or 0.06% to 5522.40, while the broader All Ordinaries Index added 5.40 points, or 0.1%, to 5509.90.
Material and resources stocks closed higher, lifted by solid quarterly production numbers and better than expected China GDP growth data for the June quarter. Resources giant BHP Billiton rose 0.8% to A$38.55 after chief executive Andrew McKenzie predicted China will cut iron ore production as Australia expands its lower cost output. Junior iron ore miner Mount Gibson lifted 4.4% to A$0.71 5 after showing record quarterly production and revenue.
Rio Tinto advanced 1.3% to A$64.75, extending yesterday's 1.3% gain after the miner iron ore production numbers hit record levels in June quarter and the firm lifted its copper guidance after mining to 164.800/tonne of copper up 4% over last quarter. Rio posted strong results from its Pilbara iron ore production at 105.7M/tonnes up 11% over the last year also up 11% over the last quarter.
Fortescue Metals Group shares rose 1.8% to A$4.66, on the top of yesterday's 6.3% surge after junior iron ore miner told investors it could produce as much as 160 million tonnes in the new financial year, suggesting the capacity of its export system is not limited to 155 million tonnes as previously thought.
Woodside Petroleum (WPL) closed up 0.9% to A$41.87 after announcing a 24.8% rise in sales over the past three months to $US1.67 billion.
Shares of utilities players declined, dragged by electricity and gas retailer AGL Energy, shedding 5.5% to A$14.91as it warned the removal of the carbon tax will cut its profit in the current financial year by as much as A$200 million.
China stocks fall for second day on liquidity woes
Mainland China share market declined for second day in row, on the back of lingering concerns over the liquidity squeeze amid new share sales, with automakers leading retreat after China's order limiting government vehicles to senior officials. The benchmark Shanghai Composite declined 11.68 points, or 0.57%, to 2055.59. Trading turnover decreased to 79.10 billion yuan from yesterday's 102.03 billion yuan.
The China Securities Regulatory Commission (CSRC) has allowed 12 initial public offerings that may freeze subscription funds of as much as 766.5 billion yuan ($124 billion). CSRC has allowed six firms to get listed on the Shanghai Stock Exchange and the rest on the Shenzhen exchange. The companies range from machinery makers to pharmaceutical firms.
Shares of automakers declined on concerns demand slowdown after China's order limiting government vehicles to senior officials. Communist Party cadres and government officials ranked below vice minister will be given monthly allowances of 500 yuan ($80) to 1,300 yuan in lieu of government vehicles, the official Xinhua News Agency reported, citing the Party and State Council. SAIC, China's largest carmaker, fell 2.4%. FAW, which makes passenger cars with Volkswagen AG, retreated 2.8%. Chongqing Changan Automobile Co, a partner of Ford Motor Co. and Mazda Motor Corp., slid 2.3%.
Shares of technology companies extended fall. Software developer Neusoft tumbled 4.1% while Zhejiang Dahua Technology Co slumped 3.3%.
Hong Kong stocks end softer in volatile trade
Hong Kong share market finished the session marginally down in volatile trade, on caution ahead of the release of U.S. economic data and corporate earnings reports. The optimism from China's growth report the previous day was short-lived. The benchmark Hang Seng Index closed 2.41 points, or 0.01%, down at 23520.87. Turnover decreased to HK$52.06 billion from yesterday's HK$53.46 billion.
Kunlun Energy Co advanced 7.4% to HK$13.12, contributing 9-points gain to the benchmark Index and becoming the best-performing blue chip in %age term, on talks that it may see assets injection from its parent PetroChina (00857).
Sands China declined 1.2% to HK$55.75, contributing 5-points losses to the benchmark Index and becoming the worst-performing blue chips, after the company posted second-quarter net income that missed analysts' estimates on lower spending by high-stakes players. Other casino stocks also fell, with Wynn Macau, a unit of billionaire Steve Wynn's gaming company, dropping 2.5% to HK$29.05, while MGM China Holdings fell 2% to HK$26.50.
Shares of Auto makers were hurt by the news that China's order limiting government vehicles to senior officials. The Chinese government announced reform on government vehicles policy. It shifted to transportation subsidies for civil servants under deputy ministerial or provincial grades. The move is expected to save RMB150bn a year. GAC Group (02238) slid 4% to HK$9.03. Geely (00175) dipped 2% to HK$3.05. Zhengtong Auto (01728) fell 1% to HK$4.24. Greatwall Motor (02333) nudged up 0.8% to HK$30.65. Dongfeng (00489) nudged down 0.3% to HK$14.56.
Sensex adds 11 points, Nifty clings to 7600
Indian stock market eked out small gains after moving in a narrow range in intraday trade. As per provisional closing, the S&P BSE Sensex was up 11.44 points or 0.04% to 25561.16. The CNX Nifty was up 16.05 points or 0.21% to 7640.45.
Tata Power Company and Reliance Infrastructure edged higher on reports that Delhi Electricity Regulatory Commission has approved a tariff hike of 8.32% for the power distribution subsidiaries of these two companies in the national capital for the fiscal 2014-15.
Glenmark Pharmaceuticals rose 1.62% after the company said it plans to set up manufacturing facility at Monroe Corporate Center, North Carolina, USA.
Metal and mining stocks extended Wednesday's gains triggered by data showing acceleration in China's GDP growth to 7.5% in Q2 June 2014, from 7.4% in Q1 March 2014. China is the world's largest consumer of copper and aluminum. Hindustan Zinc (up 0.78%), NMDC (up 0.74%), National Aluminium Company (up 1.8%) and Hindustan Copper (up 0.2%) edged higher. Hindalco Industries rose 3.22% to Rs 187.50 after hitting a 52-week high of Rs 190 in intraday trade. The stock extended Wednesday's gain triggered by upgrade in rating of the stock from a foreign brokerage to 'buy' from 'underperform'.
The government raised export duty on bauxite from 10% to 20% in Union Budget 2014-15. Increase in export duty on bauxite will be favourable for aluminium smelters like Hindalco and Sesa Sterlite who will benefit from the resultant increase in domestic bauxite supply.
Elsewhere in the Asia Pacific region-- Taiwan's Taiex index fell 0.81% to 9408.24. South Korea's KOSPI index rose 0.37% to 2020.90. New Zealand's NZX50 sank 0.04% to 5112.39. Malaysia's KLSE Composite was down 0.21% to 1882.76. Singapore's Straits Times index declined 0.12% to 3300.54.
Indonesia's Jakarta Composite Index dropped 1.42% to 5041.17 on caution before official results of the presidential election. The Elections Commission (KPU) is to officially announce the result on 22 July 2014.
Most of the region's markets took a positive lead at open, after equity markets in the United States advanced overnight with the Dow Jones Industrial Average hitting an all-time high after upbeat U.S. corporate results, particularly from tech firms like Intel Corp.
But, Asian shares finished in negative territory or were little changed with the optimism from China's growth report the previous day proving to be short-lived. The risk sentiments hit after the European Union and U.S. imposed further sanctions on Russia over Ukraine.
The U.S. and EU imposed the most aggressive sanctions to date on Russian businesses and said more may follow, because of the Kremlin's continued support for separatists in eastern Ukraine.
The new rounds of U.S. sanctions targeted two major energy firms, a pair of powerful financial institutions, eight weapons firms and four individuals. The U.S. penalties are meant to increase pressure to end the insurgency in eastern Ukraine believed to be supported by Moscow.
Investors were also nervous about looming corrective sell-off, particularly as the U.S. Federal Reserve edges toward its first interest rate hike since the Great Recession. Fed chair Yellen hinted to the House Financial Services Committee that Fed is on track to start hiking interest rates in late 2015. And, Fed policymakers projected the federal fund rate to reach 1.00% by the end of next year.
Fed's Beige Book economic period showed that all 12 districts reported expanding economic activity during the period from mid-May through June. All districts reported growth in consumer spending and manufacturing. In particular, manufacturing was robust in Midwest and West districts. Banking and financial services improved slightly but non-financial services had steady or improving growth. Residential real estate was mixed, nonetheless, while commercial construction generally strengthened. Labor market continued to improve with all districts reporting slight to moderate employment growth. Wage pressures were modest in most districts.
Also, risk sentiments weakened on caution ahead of the release of U.S. economic data and corporate earnings reports. For the rest of the week, earnings reports from Google and IBM are key events on the corporate side. The U.S. government is also set to release economic data including unemployment claims and home construction.
Among Asian bourses
Stronger yen weighs down Tokyo shares
Japan share market closed down, registering second drop in a row, on tracking weakness in regional equities and yen strengthening against the greenback. The Nikkei 225 index slipped 0.06%, or 9.04 points, to finish at 15370.26, while the Topix index of all first-section shares was down 0.02%, or 0.21 points, to 1273.38.
Shares of brokerages and shippers fell the most today in Tokyo. Nomura dropped 1% to 665 yen and Daiwa Securities Group Inc. lost 1.2% to 846 yen. Nippon Yusen slipped 1.4% to 284 yen.
Komatsu Wall shares slumped 7.6% to 2,720 yen after reporting quarterly operating profit declined 11% to 240 million yen ($2.4 million) from a year earlier.
Sharp added 1.6% to 328 yen after its rating was upgraded to neutral from underperform at Merrill Lynch.
Sumitomo Electric Industries gained 1.2% to 1,497 yen after a maker of electric wires and cables boosted full-year profit forecast 59% to 111 billion yen. Kyushu Electric Power lost 2.1% to 1236 yen. Japan's nuclear watchdog gave safety clearance on Wednesday for restarting two nuclear reactors operated by Kyushu Electric.
Miners put Australian shares back in black
Australian stock market closed higher, as strength in mining and bullion stocks were more than offset drop in shares of lender, realty and utilities companies. The benchmark S&P/ASX 200 Index rose 3.50 points, or 0.06% to 5522.40, while the broader All Ordinaries Index added 5.40 points, or 0.1%, to 5509.90.
Material and resources stocks closed higher, lifted by solid quarterly production numbers and better than expected China GDP growth data for the June quarter. Resources giant BHP Billiton rose 0.8% to A$38.55 after chief executive Andrew McKenzie predicted China will cut iron ore production as Australia expands its lower cost output. Junior iron ore miner Mount Gibson lifted 4.4% to A$0.71 5 after showing record quarterly production and revenue.
Rio Tinto advanced 1.3% to A$64.75, extending yesterday's 1.3% gain after the miner iron ore production numbers hit record levels in June quarter and the firm lifted its copper guidance after mining to 164.800/tonne of copper up 4% over last quarter. Rio posted strong results from its Pilbara iron ore production at 105.7M/tonnes up 11% over the last year also up 11% over the last quarter.
Fortescue Metals Group shares rose 1.8% to A$4.66, on the top of yesterday's 6.3% surge after junior iron ore miner told investors it could produce as much as 160 million tonnes in the new financial year, suggesting the capacity of its export system is not limited to 155 million tonnes as previously thought.
Woodside Petroleum (WPL) closed up 0.9% to A$41.87 after announcing a 24.8% rise in sales over the past three months to $US1.67 billion.
Shares of utilities players declined, dragged by electricity and gas retailer AGL Energy, shedding 5.5% to A$14.91as it warned the removal of the carbon tax will cut its profit in the current financial year by as much as A$200 million.
China stocks fall for second day on liquidity woes
Mainland China share market declined for second day in row, on the back of lingering concerns over the liquidity squeeze amid new share sales, with automakers leading retreat after China's order limiting government vehicles to senior officials. The benchmark Shanghai Composite declined 11.68 points, or 0.57%, to 2055.59. Trading turnover decreased to 79.10 billion yuan from yesterday's 102.03 billion yuan.
The China Securities Regulatory Commission (CSRC) has allowed 12 initial public offerings that may freeze subscription funds of as much as 766.5 billion yuan ($124 billion). CSRC has allowed six firms to get listed on the Shanghai Stock Exchange and the rest on the Shenzhen exchange. The companies range from machinery makers to pharmaceutical firms.
Shares of automakers declined on concerns demand slowdown after China's order limiting government vehicles to senior officials. Communist Party cadres and government officials ranked below vice minister will be given monthly allowances of 500 yuan ($80) to 1,300 yuan in lieu of government vehicles, the official Xinhua News Agency reported, citing the Party and State Council. SAIC, China's largest carmaker, fell 2.4%. FAW, which makes passenger cars with Volkswagen AG, retreated 2.8%. Chongqing Changan Automobile Co, a partner of Ford Motor Co. and Mazda Motor Corp., slid 2.3%.
Shares of technology companies extended fall. Software developer Neusoft tumbled 4.1% while Zhejiang Dahua Technology Co slumped 3.3%.
Hong Kong stocks end softer in volatile trade
Hong Kong share market finished the session marginally down in volatile trade, on caution ahead of the release of U.S. economic data and corporate earnings reports. The optimism from China's growth report the previous day was short-lived. The benchmark Hang Seng Index closed 2.41 points, or 0.01%, down at 23520.87. Turnover decreased to HK$52.06 billion from yesterday's HK$53.46 billion.
Kunlun Energy Co advanced 7.4% to HK$13.12, contributing 9-points gain to the benchmark Index and becoming the best-performing blue chip in %age term, on talks that it may see assets injection from its parent PetroChina (00857).
Sands China declined 1.2% to HK$55.75, contributing 5-points losses to the benchmark Index and becoming the worst-performing blue chips, after the company posted second-quarter net income that missed analysts' estimates on lower spending by high-stakes players. Other casino stocks also fell, with Wynn Macau, a unit of billionaire Steve Wynn's gaming company, dropping 2.5% to HK$29.05, while MGM China Holdings fell 2% to HK$26.50.
Shares of Auto makers were hurt by the news that China's order limiting government vehicles to senior officials. The Chinese government announced reform on government vehicles policy. It shifted to transportation subsidies for civil servants under deputy ministerial or provincial grades. The move is expected to save RMB150bn a year. GAC Group (02238) slid 4% to HK$9.03. Geely (00175) dipped 2% to HK$3.05. Zhengtong Auto (01728) fell 1% to HK$4.24. Greatwall Motor (02333) nudged up 0.8% to HK$30.65. Dongfeng (00489) nudged down 0.3% to HK$14.56.
Sensex adds 11 points, Nifty clings to 7600
Indian stock market eked out small gains after moving in a narrow range in intraday trade. As per provisional closing, the S&P BSE Sensex was up 11.44 points or 0.04% to 25561.16. The CNX Nifty was up 16.05 points or 0.21% to 7640.45.
Tata Power Company and Reliance Infrastructure edged higher on reports that Delhi Electricity Regulatory Commission has approved a tariff hike of 8.32% for the power distribution subsidiaries of these two companies in the national capital for the fiscal 2014-15.
Glenmark Pharmaceuticals rose 1.62% after the company said it plans to set up manufacturing facility at Monroe Corporate Center, North Carolina, USA.
Metal and mining stocks extended Wednesday's gains triggered by data showing acceleration in China's GDP growth to 7.5% in Q2 June 2014, from 7.4% in Q1 March 2014. China is the world's largest consumer of copper and aluminum. Hindustan Zinc (up 0.78%), NMDC (up 0.74%), National Aluminium Company (up 1.8%) and Hindustan Copper (up 0.2%) edged higher. Hindalco Industries rose 3.22% to Rs 187.50 after hitting a 52-week high of Rs 190 in intraday trade. The stock extended Wednesday's gain triggered by upgrade in rating of the stock from a foreign brokerage to 'buy' from 'underperform'.
The government raised export duty on bauxite from 10% to 20% in Union Budget 2014-15. Increase in export duty on bauxite will be favourable for aluminium smelters like Hindalco and Sesa Sterlite who will benefit from the resultant increase in domestic bauxite supply.
Elsewhere in the Asia Pacific region-- Taiwan's Taiex index fell 0.81% to 9408.24. South Korea's KOSPI index rose 0.37% to 2020.90. New Zealand's NZX50 sank 0.04% to 5112.39. Malaysia's KLSE Composite was down 0.21% to 1882.76. Singapore's Straits Times index declined 0.12% to 3300.54.
Indonesia's Jakarta Composite Index dropped 1.42% to 5041.17 on caution before official results of the presidential election. The Elections Commission (KPU) is to officially announce the result on 22 July 2014.
