Headline shares on the Asia pacific market closed mixed after swinging between gains and losses on Tuesday, June 04, 2013, as risk sentiments muted after weaker US economic data and concerns over China's growth trajectory.
Market breadth was more negative than positive across the region as weaker-than-expected factory activity and construction spending in the US and concerns over China's growth trajectory neutralized views the Federal Reserve will keep economic stimulus in place.
Speculation the Fed may reduce its monetary stimulus earlier than expected has pushed global stocks down in recent sessions. Negative economic news out of the U.S. reinforced belief among many investors that the U.S. central bank would maintain its stimulus program to help the economy.
Investors' risk sentiments turned bearish after weaker than expected US economic data. The Institute for Supply Management on Monday said the manufacturing sector shrank in May for the first time since November. The institute's index of factory activity, in which any reading below 50 indicates contraction, fell to 49 from 50.7 in April. The reading, based on a survey of corporate purchasing managers, is the lowest since June 2009, the final month of the recession. The report showed weakness across the board, with both current production and future orders falling and employment levels remaining stagnant.
The Commerce Department reported on Monday that construction spending in the US rose 0.4% to a seasonally adjusted annual figure of $860.8 billion in April from March, less than half of the increase expected. Spending was up 4.3% from a year earlier.
Meanwhile, appetite for risk assets also hurt by renewed jitters about China's growth trajectory after 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.
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HSBC's Purchasing Managers' Index showed that China's manufacturing activity contracted to 49.2 in May, the lowest level since October 2012. The final result undershot the preliminary figure of 49.6, which was released on May 23 and also slower from final reading of 50.4 in April. These reports followed a similar survey by Official CFLP on weekend that showed China's official PMI ticked up slightly to 50.8 in May from 50.6 in April. Official PMIs focus on bigger and State-owned firms, while the HSBC/Markit series covers smaller private enterprises.
The China Federation of Logistics and Purchasing said on Monday that domestic non-manufacturing PMI fell to 54.3 in May from 54.5 in April, reinforcing the view that the recovery in the world's second-largest economy is losing steam. A reading above 50 indicates activity in the sector is accelerating, while one below 50 indicates it is slowing.
Turnover across the region were relatively lighter as many investors were awaiting sideline for the May non-farm payrolls report on Friday for further indication of Fed's policy move. The Federal Reserve will also release its latest Beige Book report on the state of the economy on Wednesday, which could provide a few clues as to how the Fed expects the recovery to continue over the rest of the year.
In the Asia Pacific region, Japanese share market rebounded sharply today, sending the benchmark Nikkei Stock Average 271.94 points, or 2.05%, higher to 13,533.76. Investors chased for value buying across the board following the benchmark index yesterday decline to more than five weeks low. Meanwhile rebound was also propelled after the Bank of Japan said that Japan's monetary base jumped 31.6% in May following an April increase of 23.1%. The benchmark index had surrendered 17% from May 23 to June 3. Most of Tokyo blue chips closed higher, with export related stocks benefited the most on halt in yen appreciation, hopes for more central bank easing spirited bargain buying in realty, banks and brokerage shares.
In Australia, Sydney stock market closed higher for the first time in four sessions in row, with gains in mining, energy and financials helped to offset losses elsewhere. The benchmark S&P/ASX200 index ended the day at 4900.80, higher by 12.50 points or 0.26%. However, gains on the market were limited as investors were awaiting for the Australian Bureau of Statistics gross domestic product (GDP) figures on Wednesday after the Reserve Bank of Australia hold its policy interest rate unchanged on Tuesday.
The Reserve Bank of Australia's has kept the cash rate at the record low of 2.75 per cent at its June board meeting, saying that recent rate cuts are helping the economy. The Board members judged that the easier financial conditions now in place will contribute to a strengthening of growth over time, consistent with achieving the inflation target. The Board also judged that the inflation outlook, as currently assessed, may provide some scope for further easing, should that be required to support demand.
In New Zealand, shares in the Auckland market closed weaker, weighing the benchmark NZX50 down by 0.83% to 4473.78, The decline in NZ shares triggered after the Organization for Economic Co-operation and Development recommended New Zealand implement a capital gains tax, permanent deposit insurance for large banks and boosting the age of government pension entitlement.
In China, shares of Shanghai-listed companies dived deeper into negative terrain, led by small-cap blue chips after 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 services sector cooled last month, pointing to slowing momentum in the country. The benchmark Shanghai Composite index was down 26.84 points, or 1.17%, to 2272.42.
In India, Indian stock market closed lower in volatile trade as investors booked profit in consumer durables, banking, realty and auto stocks on rate cut concerns. The 30-share index ended at 19,545.78, down 64.70 points or 0.33%. It touched a high of 19,742.70 and a low of 19,522.47 in trade today.
Elsewhere, Indonesia's Jakarta Composite rose 1%. Malaysia's KLSE Composite closed 0.6% higher. Taiwan's Taiex fell down 0.1%. Share market in the Singapore, Hong Kong and South Korea closed almost flat.
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