Headline indices on the Asia pacific market ended last trading session of the week and of May 2013 mostly lower, as participants across the region were hurriedly offloading risk assets ahead of the US consumer-spending data and a key manufacturing gauge later in the day that could provide more clues to the Federal Reserve's stance on tapering bond buys.
Global risk appetite was frail amid looming uncertainty over the Fed continual of its mammoth purchases of government bonds to support the U.S. economy. The Fed's $85 billion-a-month purchases are aimed at keeping interest rates low to spur borrowing and investment. The efforts have boosted stock markets, where investors have turned for returns beyond what bonds are paying.
Meanwhile, investors were also hastily offloading risky positions ahead of China's new manufacturing data for cues on Chinese economic conditions. China is due to release the official Purchasing Managers' Index tomorrow. The HSBC flash PMI, the earliest indicator for China's industrial activity, fell in May to 49.6, slipping into the territory of contraction for the first time since October.
Appetite for investment in the risk assets evaporated after the Organization for Economic Cooperation and Development (OECD) on Wednesday cautioned that global growth could get hit as governments pare back easy-money programs. The OECD gave a bleaker forecast for the euro-zone economy this year. Also, the International Monetary Fund on Wednesday cut its estimate for China's economic growth in 2013 and 2014.
In the Asia Pacific market, the Japanese stocks rebounded today as previous day's steep 5.1% decline invited bargain-hunting, with signs of stability in the dollar providing further encouragement for buying. The Nikkei Stock Average climbed up 185.51 points, or 1.37%, to end the day at 13,774.54. The benchmark index shed 837 points over the week in what was the largest weekly slide since the third week of March 2011, the week after the Great East Japan Earthquake, when the index dropped 1,047 points. It is the first time for the Nikkei average to continue lower for two straight weeks since October. Also, it is the first time for the index to fall for two weeks in a row since then Prime Minister Yoshihiko Noda expressed his intention to dissolve the lower house of the Diet in mid-November.
The Japan Automobile Manufacturers Association said on Friday that production of cars, trucks and buses in Japan declined 6.5% on year in April for the eighth consecutive month. Vehicle output fell to 747,730 vehicles in April from 799,470 vehicles in the same month a year earlier, the association said. Domestic vehicle demand totaled 365,165, up 17.2%.
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In Australia, the Australian share market ended lower, with losses in financial stocks were more than offset gains by big miners. The benchmark S&P/ASX200 index ended last trading day of May 2013 at 4926.60, down by 4.10 points or 0.08%. The local market took its cues from a positive finish on Wall Street, opening up about 0.3 per cent, but slid into the close of trade to end down. The benchmark index shed almost 4.7% for the month marking its worst decline in 12 months. Additionally there has been a precipitous decline in the Aussie dollar which has also dealt confidence a blow. The local unit has lost more than 7% in May.
Agribusiness Elders shares tumbled 10% after emerging from a trading halt and reporting a hefty first half loss. The company posted a net loss of A$303.2 million for the six months to March 31, compared with net profit of A$47.1 million for the same period a year ago, as poor weather and depressed livestock markets hit the bottom line.
In China, the Chinese share market dived into the sea of red, with shares of realty, resources, telecom, tech and consumer companies led decline. The benchmark Shanghai Composite Index ended at 2300.59, down by 0.74% from prior day closure. The benchmark index was registering consecutive fifth week of rally, adding 0.5 this week and was up 5.6% in May 2013. Many of the participants retreated sideline after cutting risky position on caution ahead of China's new manufacturing data for cues on Chinese economic conditions. China is due to release the official Purchasing Managers' Index tomorrow.
Developers and construction related shares suffered heavy losses today on reports Hangzhou city may impose property taxes on existing homes. Vanke, the China's biggest listed property developer, retreated 2.7% to 11.98 yuan. Poly Real Estate, the second largest, fell 2.8% to 12.47 yuan. Chalco, as Aluminum Corp. of China is known, lost 1% to 4.11 yuan. Anhui Conch, the largest cement producer, retreated 0.9% to 16.90 yuan.
In Hong Kong, city shares were lower for second day in volatile and heavy trade, on tracking losses for mainland bourses and other regional markets. The benchmark Hang Seng Index was down by 0.41% at 22392.16. Among 50 HK blue chips, 32 stocks fell and 14 rose and remaining 4 stocks steady. Want Want slipped 3.4% to HK$11.48, while Sands China gained 4% to K$41.2, making themselves the largest blue-chip loser and gainer. Market heavyweights were mixed. China Mobile edged down 0.3% to HK$82.45. HSBC was a tick firmer at HK$86.1. Gome gained 2.6% to HK$0.8 after the company turned around in 1Q.
In India, Indian share market ended sharp lower, as on the back of steep selling pressure in rate sensitive sectors on dimming hopes of interest rate cuts after the Reserve Bank of India's governor on Thursday hinted at upside risks to retail inflation. All sectoral indices, barring IT, lost upto 3.3%.
Belying hopes of further rate cuts, the Reserve Bank Governor D. Subbarao's comments that there is still upside risks to inflation spooked stock markets. The RBI's concern about widening country's current account deficit, amid fall of the rupee to over 10-month lows, also put pressure on the index. Pulled down by poor performance of farm, manufacturing and mining sectors, economic growth slowed to 4.8 per cent in the January-March quarter and fell to a decade's low of 5 per cent for the entire 2012-13 fiscal.
Elsewhere, Indonesia's Jakarta Composite fell down 1.2%, Malaysia's KLSE Composite shed 0.3% and Singapore's Strait Times index fell 0.7%, while New Zealand's NZX50 rose 0.9%, Taiwan's TAIEX added tad 0.1% and South Korea's KOSPI Composite edged up 0.05%.
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