Asia Pacific share market declined on Friday, 04 October 2013, as seemingly intractable U.S. budget standoff compelled investors to close positions ahead of the weekend. The MSCI Asia Pacific Index dropped 0.2%.
The profit taking took toll on the regional market on growing fears that the U.S. government shutdown could lead to a devastating debt default and strike a huge blow to the global economy. In the U.S., a partial government shutdown enters a fourth day today, with as many as 800,000 federal employees temporarily out of work as lawmakers wrangle over the budget for the new financial year, which started Oct. 1.
The standoff comes just weeks before a crucial deadline to raise the $16.7 trillion nation's borrowing limit, a measure which also must be approved by lawmakers. While the shutdown has fuelled jitters among investors, market pundits have generally expressed even deeper concerns about the Oct 17 deadline to raise the U.S. debt ceiling.
If Congress failed to raise the borrowing limit by Oct. 17, the government would run out of cash to pay all of its bills at some point between Oct. 22 and Oct. 31.
The Treasury Department said on Thursday that a federal default could have a catastrophic effect and lead to a recession comparable to the 2008 financial crisis or worse. Separately, International Monetary Fund chief Christine Lagarde warned that a U.S. failure to raise the borrowing limit could wreak havoc on the global economy.
Among Asian bourses, shares prices on the Japanese market declined for third day in row, with the benchmark Nikkei Stock Average was 0.94% lower from prior day to finish the session at 14024.31, a lowest level in one month (3 September 2013).
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Selloff in the Tokyo market triggered amid yen strengthening against the major currencies and mounting concerns over negative effects of U.S. government shutdown and political stalemate over the country's debt ceiling on the world's largest economy.
Export related stocks were major drag on the Nikkei index, as yen strengthening against the US dollar making exporters products competitive with overseas rivals. Shares of electronics manufacturers Panasonic Corp dropped 3.4% to 915 yen and Sharp Corp lost 3.7% to 317 yen.
Shares of Seven & I Holdings Co rose 0.14% to 3525 yen after the operator of 7-Eleven chains reported strong profit growth for its fiscal first half. The company said its consolidated net profit for the first fiscal half rose 25% on year to 83.35 billion yen. The company stood pat on its net profit forecast of 170 billion yen for the full fiscal year ending February.
The Bank of Japan kept its monetary policy unchanged on Friday following its meeting, and said in an accompanying statement that the economy is recovering moderately. In terms of the inflation outlook, the central bank noted that consumer prices excluding fresh food are in the range of 0.5% to 1%, and that inflation expectations appear to be rising on the whole. The Bank of Japan has set a 2% inflation target, which it aims to reach by 2015.
In Australia, Australian market declined for the first time in three sessions, with the benchmark S&P/ASX200 falling 0.51% to end at 5208, as seemingly intractable U.S. budget standoff compelled investors to close positions ahead of the weekend.
Shares of precious-metal miners fell down in Sydney on profit taking after bullion prices eased modestly on Thursday after bouncing around the previous two days. The Comex December futures price fell by 0.2% to $1,317.60 per ounce. Newcrest Mining dropped by 1.1% to A$11.18 and Kingsgate sank 2.4% to A$1.615.
Shares of materials and resources blue chips declined in Sydney on profit taking after the base metal prices fell up to 1.6% on Thursday, with nickel falling most while tin lost only 0.3%. BHP Billiton was lower by 1.3 % to A$35.13 and Rio Tinto dropped 0.5% to A$60.47.
Shares of Virgin Australia climbed up 1.2% to A$0.43 after Air New Zealand announced plans to raise its stake in airline to 25.9% having received approval from Australian authorities. The Kiwi said it had received approval from the Australian Treasurer to lift its stake after gaining consent from the Foreign Investment Review Board (FIRB) and the Australian Competition and Consumer Commission (ACCC).
Shares of Oil Search closed 0.7% down at A$8.39 after the Exxon Mobil-operated Papua New Guinea liquefied natural gas (PNG LNG) project took on another $1.5 billion (A$1.60 billion) of debt to cover last November's cost blow-out.
In Hong Kong, HK shares fell down, with the benchmark Hang Seng index falling 0.33% to finish at 23138.54, as investors pocketed recent profit amid mounting worries that the US lawmakers won't reach an agreement on the federal budget this week.
Among the 50 HK blue chips, 18 rose and 29 fell, with three stocks remaining steady. CITIC Pacific soared 9.2% to HK$11.14 while Galaxy Ent fell 3.1% to HK$56.9, making both stocks the top blue-chip gainer and loser respectively. China Mobile dropped 2.9% to HK$84, while HSBC was flat at HK$84.35. Elsewhere, China Unicom rose 1.1% to HK$13.26 while China Telecom slid 1.5% to HK$4.06, after reports yesterday about a possible adjustment of interconnection fees.
In India, Indian benchmark indices extended gains and hit fresh intraday high in mid-afternoon trade on expectations that the US government's partial shutdown and US political impasse could lead to the US Federal Reserve postponing tapering of monetary stimulus to the US economy. At 14:20 IST, the S&P BSE Sensex was up 145.52 points or 0.73% to 20,047.59.
Wipro rose 0.28% after the company after market hours on Thursday, 3 October 2013, announced the changes in the top deck of the organisation. The company announced the appointment of Senior Vice President Shaji Farooq as the global head of its Banking, Finance Services and Insurance (BFSI) strategic business unit. Shaji, who is currently leading the company's Advanced Technologies Service Line and Go-To-Market transformation initiatives, will take over from Senior Vice President Soumitro Ghosh, who will now head Wipro Infotech, the India and Middle East business.
Elsewhere in the region, New Zealand's NZX50 fell 0.23%. South Korea's Kospi lost 0.12%. Indonesia's JKSE Composite shed 0.66%. Singapore's Straits Times Index lost 0.21%. Taiwan's Taiex gained 0.07%. Malaysia's KLSE Composite added 0.29%. Markets in mainland China remained closed for the Golden Week holiday.
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