Asia Pacific share market closed mostly down on Thursday, 18 June 2015,
after the Federal Reserve indicated that interest rates likely commence
this year, but rise would more slowly than expected.
After a closely-watched two-day meeting, the Fed said the economy was likely strong enough to support an interest rate increase by the end of the year. But it lowered its forecasts for 2015 economic growth because of a weak start to the year and reduced its federal funds rate forecast.
The U.S. Federal Reserve signalled a gradual tightening path after keeping interest rate unchanged near zero yesterday. Policies makers maintained the projection that the federal fund rate would rise to 0.625% this year and the majority still expected a September hike. However, the interest rate forecast for end of 2016 was lowered quite considerably to 1.625%, down from March estimate of 1.875%. For end of 2017, interest rate was projected to be 2.875%, also revised down from March projection of 3.125%.
In the updated economic projections, Fed lowered central tendency forecast for 2015 GDP growth to 1.8%-2.0%, sharply lower than March projection of 2.3%-2.7%. The revision was even more drastic considering it was projected to be 2.6-3.0% back in December. 2016 growth is projected to be 2.4%-2.7% vs 2.3-2.7% in March. 2017 growth is projected to be 2.1%-2.5% vs 2.0%-2.4% in March. Core CPE inflation is projected to be 1.3%-1.4% for 2015, same as in March. For 2016, core PCE is projected to be 1.6%-1.9% vs 1.5%-1.9% in March. For 2017, core PCE is projected to be 1.9-2.0% vs 1.8-2.0%. Unemployment is expected to be at 5.2-5.3% by end of 2015 vs 5.0%-5.2% in March. End of 2016 unemployment forecast was held unchanged 4.9-5.1%. 2017 unemployment projection was slightly changed to 4.9%-5.1% vs 4.9%-5.1% in March.
In commodities, crude oil futures slipped after U.S. government data showed that gasoline stocks and distillate inventories raised last week, although falls were checked by the weaker dollar and continuing fears of unrest in the Middle East. Brent crude dipped 0.3 percent to $63.67 a barrel, while U.S. crude also fell about 0.5% to $59.61.
Among Asian bourses
Australia market surrenders 1.2%
The Australian share market finished the session sharply down today, in a broadbased selloff that wiped out more than yesterday's gain after the U.S. Federal Reserve signalled gradual interest rates hike path. All sectors ended lower, with banks and iron-ore miners being top losers. The benchmark S&P/ASX 200 Index retracted 70.50 points, or 1.26%, to 5524.90, while the broader All Ordinaries Index retreated 67.60 points, or 1.21%, to 5522.70. Market turnover was above average with 1.8 billion shares changing hands worth of A$6.06 billion.
Shares of banks and financial players were major losers in the Sydney market, on tracking losses in the US financials overnight. The big four had rallied the past two sessions after Warren Buffett signalled he may invest in the sector. Westpac Banking Corp dropped 1.3% to A$32.48, Australia & New Zealand Banking Group 1.5% to A$32.37, National Australia Bank 0.7% to A$33.13, and Commonwealth Bank of Australia 1.3% to A$83.20.
Materials and resources stocks were lower on following decline in commodity price overnight. Rio Tinto lost 1.9% to A$54.95 and BHP Billiton 0.7% to A$27.97. Junior iron ore producer Fortescue Metals Group fell 4.1% to A$2.13, extending roughly 7% over the past week as iron ore retreats toward the $60-per-ton mark.
Energy stocks were also down, inline with drop in crude oil futures. Oil Search surrendered 2% to A$7.36 and Woodside Petroleum 0.9% to A$35.35. But, Caltex Australia closed 3.4% to A$32.30 higher as Macquarie hiked it price target on the name and upgraded it to neutral from underperform.
Retailers were also in retreat, with Woolworths down by 0.8% to A$26.60 after cutting its earnings outlook and announcing the departure of its chief executive, while Wesfarmers lost 2.9% to A$40.20, Myer Holdings sank 3.5% to A$1.245 and JB Hi-Fi dropped 0.8% to A$20.36
Nikkei extends losses for fourth day ahead of BOJ meets
Japanese share market finished with losses for fourth straight session, as the U.S. Federal Reserve signals an interest-rate hike likely commence this year, and mounting uncertainty over whether the Bank of Japan will add to its easing program on Friday. Barring utilities, all sectors dived into negative terrain, with shares of civil aviation, energy, financials, realty, machinery and industrials players being top losers. The Nikkei Stock Average surrendered 228.45 points, or 1.13%, to end at 19990.82, off the intraday high of 20200.51. The Topix index of all Tokyo Stock Exchange First Section issues tanked 1.04%, or 17.04 points, to close at 1616.66.
Shares of financials were mostly lower, on tracking losses for their U.S. peers overnight. Mizuho Financial Group Inc surrendered 2.3%, Daiwa Securities Group Inc 1.5%, and Resona Holdings Inc 1.6%. Mitsubishi UFJ Financial Group Inc dropped 1.5% despite report that its Bank of Tokyo-Mitsubishi UFJ unit would be the first in Japan to sell a yuan-denominated bond.
Shares of utilities companies saw solid gains after Japan passed the last of its electricity and city-gas market reforms Wednesday, with Tokyo Electric Power Co up 1.5%, Hokkaido Electric Power Co up 3.4%, and Kansai Electric Power Co up 1.3%.
Mitsui & Co. slid 1.3% after Mitsubishi UFJ Morgan Stanley Securities Co. cut its rating on the trading company to neutral from overweight..
Yamaha Corp. jumped 4.4% after Mizuho Financial Group Inc. boosted its outlook on the audio-equipment maker to buy.
Shares of beauty-product seller Mandom Corp rebounded 0.8% on reports that the company to post a 6% gain in April-June operating profit.
China market tanks 3.7% on IPO concerns
Mainland China share market closed sharply down, amid concerns about market liquidity squeeze after 11 companies started taking investor subscriptions for their initial public offerings (IPOs) today, while 9 more will follow suit on Friday. The new IPO subscriptions this week are set to lock up about 6.7 trillion yuan of funds. The benchmark Shanghai Composite Index tanked 182.54 points, or 3.67%, to 4785.36, taking its declines for the week to 7.4%.
Shares of banking sector were among the hardest-hit, as some investors took profit from banking shares after the previous session's jump, with heavyweights such as Bank of China and China Construction Bank, tanking more than 4% each.
Property counters turned negative despite fresh data showing property prices in the mainland fell at a slower pace of 5.7% year-on-year in May. Shanghai Shimao retreated nearly 4%, while Poly Real Estate and China Vanke fell more than 2% each.
Shares of technology and consumer companies were also lower. Leshi Internet Information & Technology (Beijing) Co., the biggest mainland-listed Internet video provider, tumbled by the 10% daily limit. Liquor makers Kweichow Moutai Co. and Wuliangye Yibin Co. slid more than 4%.
China's new home prices fell in 43 of the 70 cities monitored by the government on a monthly basis in May, down from 48 in April, according to data released on Thursday by the National Bureau of Statistics (NBS). Prices climbed in 20 cities, up from 18 in April. Year on year, 69 cities reported new home price drops, with Shenzhen being the only exception, with a 7.5-percent increase.
Hong Kong market falls 0.2% in seesaw trade
The Hong Kong stock market closed down after swinging between small gains and losses, after the Legislative Council rejected an election reform package. The selloff also pressured by tracking sharp losses in the Mainland China A-share market today and as the Federal Reserve indicated that interest rates likely commence this year, but rise would more slowly than expected. The Hang Seng Index declined 59.13 points or 0.22% to finish at 26694.66, off an intra-day high of 26873.67 and day low of 26595.96. The Hang Seng China Enterprises Index, benchmark measure of performance of mainland China enterprises, surrendered 151.46 points, or 1.13%, to 13263.37 points.
HK market heavyweights were mixed. China Mobile (00941) dipped 1.39% to HK$99 on news that the mobile operator may cut its international roaming fees. China Unicom (00762) plunged 3.97% to HK$12.08, making itself the top blue chip loser. HSBC (00005) rose 0.7% to HK$72.4.
China Resources (00291) shot up 8.18% to HK$25.8 as the sale price of its non-beer business will be increased to HK$30 billion, making itself the top blue chip gainer.
Shares of Hong Kong listed Chinese financials declined after reports that the Chinese central bank had decided not to extend some of its 670 billion yuan ($108 billion) Medium-term Lending Facility (MLF) loans maturing this month. Bank of Communications Co lost 2.4% to HK$7.75, Bank of China 1.2% to HK$5.16, China Merchants Bank Co 1.7% to HK$23.30, and China Citic Bank Corp 0.3% to HK$6.39.
Shares of realty developers mostly advanced after official fresh data showing property prices in the mainland fell at a slower pace of 5.7% year-on-year in May. Evergrande Real Estate Group gained 4.4% to HK$4.76, China Resources Land 2.5% to HK$25, Shimao Property Holdings 1.3% to HK$15.96.
Sensex, Nifty rally
Indian stock market closed higher, with Refinery and pharma stocks leading rally, after the US Federal Reserve signals monetary-policy tightening would be gradual, easing concerns of a possible sudden outflows from emerging markets. The Sensex was provisionally up 286.62 points or 1.07% at 27,119.28.
Foreign portfolio investors (FPIs) sold Indian shares worth a net Rs 940.91 crore yesterday, 17 June 2015, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) bought shares worth a net Rs 1447.07 crore yesterday, 17 June 2015, as per provisional data released by the stock exchanges.
Finance Minister Arun Jaitley has approved the formation of two separate committees for facilitating implementation of a nationwide Goods and Services Tax (GST) from 1 April 2016. The finance ministry said in a statement issued after trading hours yesterday, 17 June 2015, that progress is underway to finalise various aspects of GST design like business processes, payment systems, matters relating to dual control, threshold, exemptions, place of supply rules and also making of model GST, SGST and IGST laws and rules. A Steering Committee been formed under the co-chairmanship of Additional Secretary, Department of Revenue and Member Secretary, Empowered Committee of State Finance Ministers. This committee will monitor the progress of IT preparedness of Goods and Services Tax Network (GSTN)/CBEC/tax authorities, finalisation of reports of all the Sub-Committees constituted on different aspects relating to the mechanics of GST and drafting of CGST, IGST and SGST laws/rules. The committee will also monitor the progress on consultations with various stakeholders like trade and industry and training of officers.
Another committee has been formed under the chairmanship of the Chief Economic Advisor, Ministry of Finance to recommend possible tax rates under GST that would be consistent with the present level of revenue collection of the Central Government and the state governments. While making recommendations, this committee would take into account expected levels of growth of economy, different levels of compliance and broadening of tax base under GST, the finance ministry said in a statement. This committee would also analyse the sector-wise and state-wise impact of GST on the economy. The committee is expected to give its report within two months.
Elsewhere in the Asia Pacific region: Taiwan's Taiex index rose 0.3% to close at 9218.37. South Korea's KOSPI rose 0.34% to 2041.88. New Zealand's NZX50 lost 0.5% to 5749.71. Singapore's Straits Times index sank 0.7% at 3303.81. Malaysia's KLCI declined 0.5% to 1718.12. Indonesia's Jakarta Composite index fell marginal 0.01% to 4945.50.
After a closely-watched two-day meeting, the Fed said the economy was likely strong enough to support an interest rate increase by the end of the year. But it lowered its forecasts for 2015 economic growth because of a weak start to the year and reduced its federal funds rate forecast.
The U.S. Federal Reserve signalled a gradual tightening path after keeping interest rate unchanged near zero yesterday. Policies makers maintained the projection that the federal fund rate would rise to 0.625% this year and the majority still expected a September hike. However, the interest rate forecast for end of 2016 was lowered quite considerably to 1.625%, down from March estimate of 1.875%. For end of 2017, interest rate was projected to be 2.875%, also revised down from March projection of 3.125%.
In the updated economic projections, Fed lowered central tendency forecast for 2015 GDP growth to 1.8%-2.0%, sharply lower than March projection of 2.3%-2.7%. The revision was even more drastic considering it was projected to be 2.6-3.0% back in December. 2016 growth is projected to be 2.4%-2.7% vs 2.3-2.7% in March. 2017 growth is projected to be 2.1%-2.5% vs 2.0%-2.4% in March. Core CPE inflation is projected to be 1.3%-1.4% for 2015, same as in March. For 2016, core PCE is projected to be 1.6%-1.9% vs 1.5%-1.9% in March. For 2017, core PCE is projected to be 1.9-2.0% vs 1.8-2.0%. Unemployment is expected to be at 5.2-5.3% by end of 2015 vs 5.0%-5.2% in March. End of 2016 unemployment forecast was held unchanged 4.9-5.1%. 2017 unemployment projection was slightly changed to 4.9%-5.1% vs 4.9%-5.1% in March.
In commodities, crude oil futures slipped after U.S. government data showed that gasoline stocks and distillate inventories raised last week, although falls were checked by the weaker dollar and continuing fears of unrest in the Middle East. Brent crude dipped 0.3 percent to $63.67 a barrel, while U.S. crude also fell about 0.5% to $59.61.
Among Asian bourses
Australia market surrenders 1.2%
The Australian share market finished the session sharply down today, in a broadbased selloff that wiped out more than yesterday's gain after the U.S. Federal Reserve signalled gradual interest rates hike path. All sectors ended lower, with banks and iron-ore miners being top losers. The benchmark S&P/ASX 200 Index retracted 70.50 points, or 1.26%, to 5524.90, while the broader All Ordinaries Index retreated 67.60 points, or 1.21%, to 5522.70. Market turnover was above average with 1.8 billion shares changing hands worth of A$6.06 billion.
Shares of banks and financial players were major losers in the Sydney market, on tracking losses in the US financials overnight. The big four had rallied the past two sessions after Warren Buffett signalled he may invest in the sector. Westpac Banking Corp dropped 1.3% to A$32.48, Australia & New Zealand Banking Group 1.5% to A$32.37, National Australia Bank 0.7% to A$33.13, and Commonwealth Bank of Australia 1.3% to A$83.20.
Materials and resources stocks were lower on following decline in commodity price overnight. Rio Tinto lost 1.9% to A$54.95 and BHP Billiton 0.7% to A$27.97. Junior iron ore producer Fortescue Metals Group fell 4.1% to A$2.13, extending roughly 7% over the past week as iron ore retreats toward the $60-per-ton mark.
Energy stocks were also down, inline with drop in crude oil futures. Oil Search surrendered 2% to A$7.36 and Woodside Petroleum 0.9% to A$35.35. But, Caltex Australia closed 3.4% to A$32.30 higher as Macquarie hiked it price target on the name and upgraded it to neutral from underperform.
Retailers were also in retreat, with Woolworths down by 0.8% to A$26.60 after cutting its earnings outlook and announcing the departure of its chief executive, while Wesfarmers lost 2.9% to A$40.20, Myer Holdings sank 3.5% to A$1.245 and JB Hi-Fi dropped 0.8% to A$20.36
Nikkei extends losses for fourth day ahead of BOJ meets
Japanese share market finished with losses for fourth straight session, as the U.S. Federal Reserve signals an interest-rate hike likely commence this year, and mounting uncertainty over whether the Bank of Japan will add to its easing program on Friday. Barring utilities, all sectors dived into negative terrain, with shares of civil aviation, energy, financials, realty, machinery and industrials players being top losers. The Nikkei Stock Average surrendered 228.45 points, or 1.13%, to end at 19990.82, off the intraday high of 20200.51. The Topix index of all Tokyo Stock Exchange First Section issues tanked 1.04%, or 17.04 points, to close at 1616.66.
Shares of financials were mostly lower, on tracking losses for their U.S. peers overnight. Mizuho Financial Group Inc surrendered 2.3%, Daiwa Securities Group Inc 1.5%, and Resona Holdings Inc 1.6%. Mitsubishi UFJ Financial Group Inc dropped 1.5% despite report that its Bank of Tokyo-Mitsubishi UFJ unit would be the first in Japan to sell a yuan-denominated bond.
Shares of utilities companies saw solid gains after Japan passed the last of its electricity and city-gas market reforms Wednesday, with Tokyo Electric Power Co up 1.5%, Hokkaido Electric Power Co up 3.4%, and Kansai Electric Power Co up 1.3%.
Mitsui & Co. slid 1.3% after Mitsubishi UFJ Morgan Stanley Securities Co. cut its rating on the trading company to neutral from overweight..
Yamaha Corp. jumped 4.4% after Mizuho Financial Group Inc. boosted its outlook on the audio-equipment maker to buy.
Shares of beauty-product seller Mandom Corp rebounded 0.8% on reports that the company to post a 6% gain in April-June operating profit.
China market tanks 3.7% on IPO concerns
Mainland China share market closed sharply down, amid concerns about market liquidity squeeze after 11 companies started taking investor subscriptions for their initial public offerings (IPOs) today, while 9 more will follow suit on Friday. The new IPO subscriptions this week are set to lock up about 6.7 trillion yuan of funds. The benchmark Shanghai Composite Index tanked 182.54 points, or 3.67%, to 4785.36, taking its declines for the week to 7.4%.
Shares of banking sector were among the hardest-hit, as some investors took profit from banking shares after the previous session's jump, with heavyweights such as Bank of China and China Construction Bank, tanking more than 4% each.
Property counters turned negative despite fresh data showing property prices in the mainland fell at a slower pace of 5.7% year-on-year in May. Shanghai Shimao retreated nearly 4%, while Poly Real Estate and China Vanke fell more than 2% each.
Shares of technology and consumer companies were also lower. Leshi Internet Information & Technology (Beijing) Co., the biggest mainland-listed Internet video provider, tumbled by the 10% daily limit. Liquor makers Kweichow Moutai Co. and Wuliangye Yibin Co. slid more than 4%.
China's new home prices fell in 43 of the 70 cities monitored by the government on a monthly basis in May, down from 48 in April, according to data released on Thursday by the National Bureau of Statistics (NBS). Prices climbed in 20 cities, up from 18 in April. Year on year, 69 cities reported new home price drops, with Shenzhen being the only exception, with a 7.5-percent increase.
Hong Kong market falls 0.2% in seesaw trade
The Hong Kong stock market closed down after swinging between small gains and losses, after the Legislative Council rejected an election reform package. The selloff also pressured by tracking sharp losses in the Mainland China A-share market today and as the Federal Reserve indicated that interest rates likely commence this year, but rise would more slowly than expected. The Hang Seng Index declined 59.13 points or 0.22% to finish at 26694.66, off an intra-day high of 26873.67 and day low of 26595.96. The Hang Seng China Enterprises Index, benchmark measure of performance of mainland China enterprises, surrendered 151.46 points, or 1.13%, to 13263.37 points.
HK market heavyweights were mixed. China Mobile (00941) dipped 1.39% to HK$99 on news that the mobile operator may cut its international roaming fees. China Unicom (00762) plunged 3.97% to HK$12.08, making itself the top blue chip loser. HSBC (00005) rose 0.7% to HK$72.4.
China Resources (00291) shot up 8.18% to HK$25.8 as the sale price of its non-beer business will be increased to HK$30 billion, making itself the top blue chip gainer.
Shares of Hong Kong listed Chinese financials declined after reports that the Chinese central bank had decided not to extend some of its 670 billion yuan ($108 billion) Medium-term Lending Facility (MLF) loans maturing this month. Bank of Communications Co lost 2.4% to HK$7.75, Bank of China 1.2% to HK$5.16, China Merchants Bank Co 1.7% to HK$23.30, and China Citic Bank Corp 0.3% to HK$6.39.
Shares of realty developers mostly advanced after official fresh data showing property prices in the mainland fell at a slower pace of 5.7% year-on-year in May. Evergrande Real Estate Group gained 4.4% to HK$4.76, China Resources Land 2.5% to HK$25, Shimao Property Holdings 1.3% to HK$15.96.
Sensex, Nifty rally
Indian stock market closed higher, with Refinery and pharma stocks leading rally, after the US Federal Reserve signals monetary-policy tightening would be gradual, easing concerns of a possible sudden outflows from emerging markets. The Sensex was provisionally up 286.62 points or 1.07% at 27,119.28.
Foreign portfolio investors (FPIs) sold Indian shares worth a net Rs 940.91 crore yesterday, 17 June 2015, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) bought shares worth a net Rs 1447.07 crore yesterday, 17 June 2015, as per provisional data released by the stock exchanges.
Finance Minister Arun Jaitley has approved the formation of two separate committees for facilitating implementation of a nationwide Goods and Services Tax (GST) from 1 April 2016. The finance ministry said in a statement issued after trading hours yesterday, 17 June 2015, that progress is underway to finalise various aspects of GST design like business processes, payment systems, matters relating to dual control, threshold, exemptions, place of supply rules and also making of model GST, SGST and IGST laws and rules. A Steering Committee been formed under the co-chairmanship of Additional Secretary, Department of Revenue and Member Secretary, Empowered Committee of State Finance Ministers. This committee will monitor the progress of IT preparedness of Goods and Services Tax Network (GSTN)/CBEC/tax authorities, finalisation of reports of all the Sub-Committees constituted on different aspects relating to the mechanics of GST and drafting of CGST, IGST and SGST laws/rules. The committee will also monitor the progress on consultations with various stakeholders like trade and industry and training of officers.
Another committee has been formed under the chairmanship of the Chief Economic Advisor, Ministry of Finance to recommend possible tax rates under GST that would be consistent with the present level of revenue collection of the Central Government and the state governments. While making recommendations, this committee would take into account expected levels of growth of economy, different levels of compliance and broadening of tax base under GST, the finance ministry said in a statement. This committee would also analyse the sector-wise and state-wise impact of GST on the economy. The committee is expected to give its report within two months.
Elsewhere in the Asia Pacific region: Taiwan's Taiex index rose 0.3% to close at 9218.37. South Korea's KOSPI rose 0.34% to 2041.88. New Zealand's NZX50 lost 0.5% to 5749.71. Singapore's Straits Times index sank 0.7% at 3303.81. Malaysia's KLCI declined 0.5% to 1718.12. Indonesia's Jakarta Composite index fell marginal 0.01% to 4945.50.
