The losses in the Wall Street were driven by weaker-than-expected economic growth indicators that sparked fears of a slowdown in the world's biggest economy. The troubling data included weak hiring by businesses, a plunge in mortgage applications and sluggish orders to U.S. factories.
But, slew of weak US economic data failed to erase fears about the Fed's intentions for its stimulus program after Fed Beige Book showed growth is Modest to Moderate across most of America. The Federal Reserve's Beige Book survey found that the economy expanded at a modest to moderate pace in 11 of 12 Fed districts. The 12th district, Dallas, reported strong growth. The central bank has already said it may reduce stimulus measures if the economy improved.
Richard Fisher, President of the Federal Reserve Bank of Dallas, said on Wednesday that he wants to see the U.S. central bank slow down its bond-buying program, starting with purchases of mortgage-backed securities. Mr. Fisher described the Fed's policies as "kindling" for inflation in the long term, but said he's not in favor of stopping the bond buying abruptly, as it would be "very disruptive" for markets. "I don't want to go to cold turkey from wild turkey," he said in an interview on BNN, a Canadian business television channel.
In the Asia Pacific region, the Tokyo market closed volatile session sharp lower for second day in row in negative reaction to weaker than expected US economic data and strengthening of Japanese yen against the dollar amid fresh doubts over Prime Minister Shinzo Abe's economic policies. The benchmark Nikkei Stock Average last quoted at 12904.02, down by 0.85% or 110.85 points from prior day closure, after moving up and down of the boundary line. The index fell below 13,000 for the first time since April 5. The Nikkei has plunged about 17% from it peaked at a five-year high last month.
Japanese yen appreciated against the major currency baskets amidst disappointment over Prime Minister Shinzo Abe's latest plans to kickstart the economy, including boosting per-capita income by more than a third in 10 years as well as a string of deregulation measures.
The Japan Automobile Importers Association said on Thursday that sales of imported cars in Japan totaled 25,968 units on a preliminary basis in May, up 24.8% on the year and marking the 11 straight month of increase. The figure includes vehicles assembled at overseas plants of domestic automakers. Sales of small, fuel-efficient models were solid for all automakers, and sales of imported Japanese cars also rose. Imports from foreign carmakers totaled 20,695 units, up 17.47% and marking the 13th straight month of increase. It is the first time the figure has reached 20,000 units in May in 16 years. Imports from foreign automakers accounted for 9.4% of all new automobiles registered in May, the second-highest level for the month since 2011. The importers association attributed the solid sales of foreign autos to their increasing ability to compete on price against domestically made cars, with models starting at the 2,000,000 yen level. Volkswagen accounted for a leading 16.97% of all imports, followed by Mercedes-Benz, at 15.48%, and BMW, at 13.47%.
In Australia, shares in the Australian market dived lower pushed lower by widespread selling, with bullion energy, materials, industrials and consumer stocks led retreat. Selloff pressure spurred largely on tracking another slump in global markets and depreciation of Aussie dollar to new low against the greenback. The benchmark S&P/ASX200 index dropped 54 points to finish at 4781.20, while the broader All Ordinaries slumped 53.40 points to 4771.80.
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The Australian Bureau of Statistics (ABS) figures showed that the balance on goods and services was a surplus of A$28m in April 2013, a decrease of A$527m (95%) on the surplus in March 2013. In seasonally adjusted terms, goods and services credits fell A$302m (1%) to A$25,419m. Non-rural goods fell A$463m (3%) and net exports of goods under merchanting fell A$7m (37%). Non-monetary gold rose A$138m (12%) and rural goods rose A$64m (2%). Services credits fell A$34m (1%). Meanwhile, goods and services debits rose A$225m (1%) to A$25,391m. Capital goods rose A$733m (16%) and non-monetary gold rose A$67m (18%). Intermediate and other merchandise goods fell A$354m (4%) and consumption goods fell A$327m (6%). Services debits rose A$107m (2%).
In China, the Shanghai-listed shares closed sharp lower on concerns about the economic growth outlook and liquidity squeeze. Meanwhile, uncertainty about upcoming economic data also supported selling. The Shanghai Composite Index fell 1.3% to 2,242.11 at the close.
Investor wariness over China's growth trajectory deepened after announcement of disappointing manufacturing and service PMI data early this week. The HSBC'S data showed that China's factory activity shrank for the first time in seven months in May as both domestic and external demand softened, while Official CFLP data showed growth in the Chinese services sector cooled last month, pointing to slowing momentum in the country.
Meanwhile, concerns about liquidity squeeze in Mainland China spurred after short-term interbank lending rate surged sharply above the alarming level today. The seven-day repo rate, a gauge of borrowing costs among banks and usually watched as an indicator of liquidity stress, surged to 5.74%, while the overnight repo rate rose to 6%.
The securities regulator may begin approving initial public offerings again as early as mid-August, the 21st Century Business Herald reported May 29, citing an unidentified person close to regulator. IPOs have been suspended since October as investor appetite for new stock waned amid equity-market declines.
China is due to release trade, inflation and industrial output data this weekend. The market is cautious before the release of economic data amid uncertainty in case the data miss estimates.
In Hong Kong, shares in the city market retreated, with realty and lenders led retreat, in tandem with weak performance of overseas markets, triggered by weak US private-sector jobs report and lingering worries about Chinese economic growth. The Hang Seng Index fell 1.05% and the Hang Seng China Enterprises Index gave up 1.07%.
Shares of HK listed Mainland Property and financial stocks lost the most, with China Overseas Land & Investment down 2.8% and Hang Lung Properties lower by 1%, while Industrial & Commercial Bank of China shed 1.1%.
In Singapore, the FTSE Straits Times Index (STI) ended -49.92 points lower or 1.54% lower to 3,167.08, taking the year-to-date gains to 0.83%. The top active stocks were DBS (-2.32%), Singtel (-1.35%), Tee Land (IPO), UOB (-2.17%), and OCBC Bk (-1.64%).
In India, Indian share market closed volatile trade weaker on the back of weak global cues. Meanwhile, selloff was also propelled on concern about foreigners' trimming of local shares holdings after the rupee's drop to the weakest in a year. The 30-share index ended at 19519.49, down 48.73 points or 0.25%. It touched a high of 19,635.37 and a low of 19,395.32 in trade today.
India's rupee fell to 57 per dollar for the first time in a year on concern US policy makers will curb asset purchases that boosted flows to emerging markets.
Elsewhere, New Zealand's NZX50 closed little higher. Stock market in South Korea and Indonesia closed today. Malaysia's KLSE Composite was down 0.3%. Taiwan's Taiex dropped 1.1%.
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