Investment rationale across the regional bourses muted due to another Nasdaq-inspired retreat on Wall Street overnight and as investors fretted over the rise in tensions in eastern Ukraine. The Bank of Japan's decision to keep its monetary stimulus at previous levels added to a downbeat mood.
The tone for trading in world markets has been largely set by Wall Street since Friday as many investors became worried that the valuations of technology, Internet and biotech stocks had gone too high. Overnight, US markets tumbled on concern technology and consumer-oriented stocks were overvalued.
Risk sentiments in the regional market were deadened on caution ahead to the release of minutes from the US Federal Reserve's policy setting committee scheduled on Wednesday and to watch developments in eastern Ukraine.
On Monday, pro-Russian separatists seized a provincial administration building in the eastern Ukrainian city of Donetsk and proclaimed the region independent an echo of events prior to Russia's annexation of Crimea. Though Ukrainian authorities say they are driving them out, tensions remain.
Among Asian bourses, Japanese share market declined for second consecutive day on the back of weak cues from Wall Street overnight. The selloff in the Tokyo intensified after the yen appreciation against basket of major currencies, and the Bank of Japan's decision to stand pat on monetary policy and stick to its upbeat assessment of the economy. The benchmark Nikkei-225 index fell 1.36% to 14606.88, while the Topix index of all first-section shares lost 1.86% to 1174.56.
Shares of Japanese exporters and inflation-sensitive companies slid the most in Tokyo due to yen appreciation against the US dollar. As of the TSE close, the pair was trading at Y102.85, down from above Y103 before trading began. A stronger yen is worst for Japanese manufacturers, as it makes prices of goods more costly overseas. Orix lost 3.4%, Sumitomo Mitsui Financial Group fell 3.5%, Daiwa Securities Group slipped 4.5%, Sumitomo Realty & Development fell 2.1%, and Honda Motor lost 3.2%.
More From This Section
Shares of Japanese technology companies extended fall today after their counterparts in the U.S. were hit hard. Yahoo Japan lost 3.3%, Rakuten fell 2.1% and social networker Mixi Inc surrendered 3.9%.
Takeda Pharmaceutical, Japan's biggest drug maker by revenue, lost 5.2% after a U.S. jury imposed $6 billion in damages on it in a case alleging it hid the cancer risks of its Actos diabetes drug.
Bank of Japan said on Tuesday that its board, as widely expected, decided by a unanimous vote to leave the bank's policy target unchanged while repeating that the economy will stay on a gradual recovery track despite swings in demand before and after the April 1 sales tax hike. As expected, the BOJ voted unanimously at the end of its two-day meeting to maintain its pledge of increasing base money, its key policy gauge, at an annual pace of 60 trillion to 70 trillion yen (USD 589-USD 687 billion). The central bank said business sentiment continues to improve but some companies are cautious about the outlook.
Bank of Japan Governor Haruhiko Kuroda on Tuesday maintained his upbeat outlook, saying the economy can withstand the drag from the sales tax hike and head toward stable 2% inflation. He also told reporters after the bank's two-day policy meeting that downside risks to growth and inflation have decreased from one point in the recent past and employment is recovering more than expected last year. The output gap continues to shrink and is estimated to be close to zero, he said. Kuroda repeated his recent comments, saying, We are not considering conducting additional easing at this point but we are ready to take necessary actions. He said there is no fixed timing for making policy judgment on whether the central bank should respond to the negative impact of the increase in the 5% sales tax rate to 8% on April 1. The pullback (in consumption) after the tax hike will decrease in the summer onward, he said, adding that he hasn't heard of any evidence that there is a worse-than-expected drag from the fiscal tightening. The governor repeated that the aggressive monetary easing launched by the BOJ in April last year called QQE (quantitative and qualitative easing) is having the desired initial-stage effects. Japan can achieve 2% inflation sometime between late fiscal 2014 and during the course of fiscal 2015, Kuroda said, keeping it vague as to whether the BOJ can hit its target in about two years from April 2013.
The Cabinet Office on Tuesday released Japan's Economy Watchers' Survey for March, showing that key sentiment index for Japan's current economic climate posted the first rise in three months, surging 4.9 points to a record high of 57.9 in March, up from 53.0 in February, when severe snow storms dampened confidence in many regions.
Japan posted its first current account surplus in five months in February, helped by a narrower trade deficit and higher returns on investment abroad, government data showed Tuesday. Japan logged a surplus of 612.7 billion yen ($5.9 billion) in February, down 5.7% from the surplus the year before, but a reversal of a deficit of 1.59 trillion yen in January. The monthly trade deficit shrank by 1.4% on-year to 533.4 billion yen as exports grew faster than imports. Exports rose 15.7% to 5.94 trillion yen thanks to robust shipments of automobiles and refined fuel products while imports went up 14.1% to 6.47 trillion yen.
In Australia, Australian stock market finished the session slight lower, as losses in shares of industrial, consumer discretionary, healthcare, technology and financial counters were more than offset by gains in bullion, material, realty, energy and consumer staple sectors. Australia's benchmark S&P/ASX200 sank 0.06% to 5410.60, while the broader All Ordinaries finished 0.13% down at 5409.20.
Shares of bullion industry was the best-performing in the ASX today, with Newcrest Mining up 1.9% to A$10.50 and Kingsgate Consolidated up 1.5% to A$1.02.
Material sector was up 0.5%, on demand optimism after announcement in China last week of a mini-stimulus government spending package. Meanwhile demand for metal stocks also propelled after the spot price for iron ore, landed in China, jumped 1.3% to $US117.20 a tonne. Resources giant BHP Billiton was up 0.4% to A$37.88. Rio Tinto rose 0.9% to A$64.50. Fortescue Metals Group added 2.4% to A$5.59.
The big four banks were mixed. ANZ Banking Group added 0.2% to A$33.55, and National Australia Bank edged up 0.06% to A$35.20. Commonwealth Bank of Australia fell 0.1% to A$76.76, while Westpac Banking Corporation edged down 0.06% to A $34.46
Shares of food and liquor retailers were mixed. Woolworths fell 0.4% to $35.71, while Wesfarmers, owner of Coles, rose 0.2% to $42.15 as analysts mulled the conglomerate's plans to sell out of the insurance business.
Cabcharge dropped 5.4% to A$3.87 after the company warned annual revenue could slump by A$14 million due to regulatory changes in NSW that will reduce income from surcharges on card payments.
Australian Agricultural Co, the largest beef exporter on the index rose 4.5% to A$1.29 on news report that Australia has signed a free trade deal with Japan that will slash tariffs on beef exports.
Treasury Wine Estates rose 7.2% to A$3.87 as new chief executive Mike Clarke said everything is on the table as he considers divesting under-performing brands following a troubled expansion into the US market.
Data on Australia Official Reserve Assets, showed the central bank's foreign reserves jumped A$10.4 billion to A$62.2 billion in March from the month-earlier A$51.8 billion, as emerging market central bankers accelerated their intervention in foreign exchange markets in an attempt support their economies.
The National Australia Bank's business survey, which was published on Tuesday, showed that business conditions in Australia lifted slightly in March, but remained at relatively subdued levels, weighing on business optimism. Confidence still positive but softened to its lowest post-election level to be below long-run trend. Sales fell slightly in March and employment, though better, still points to soft labour market conditions. Most industries saw some improvement in conditions, especially mining, but transport and bellwether wholesale weakened significantly. Near-term outlook looks still soft according to forward indicators. Inflation outlook well contained due to limited upstream pressures, and retail prices fell. Economic growth forecasts unchanged with unemployment still expected to rise to 6% by late 2014 and one more rate cut probable in late 2014.
In China, Mainland China share market skyrocketed today, on the back of bargain buying across the board, on growing speculation that Chinese government would introduce stimulus to ward off a slowdown. The benchmark Shanghai Composite Index, which tracks both A and B shares, advanced 1.92% from prior day closure to finish at 2098.28, while the CSI 300 Index, measuring exchanges in Shanghai and Shenzhen, added 2.37% to 2237.32. The Shanghai and Shenzhen exchanges were closed on Monday for the Qingming festival.
Investment rationale for cyclical assets turned bullish in China amid speculation the government will introduce more economic stabilization policies after China's State Council last week's outlining a package of measures including railway spending and tax relief to support the economy and create jobs after a slowdown endangered Premier Li Keqiang's target of 7.5% growth this year.
Among SSE sectors, all 10 sectors of the SSE index advanced, with financial sector was top winner in the SSE sectoral peers, with a 3.31% gain. Meanwhile, consumer discretionary issue was up 2.41%, consumer staples up 2.31%, energy up 2.26%, industrials up 2%, healthcare up 1.94%, utilities up 1.54%, telecommunication services up 1.49%, and information technology up 1.26%.
Shares of Chinese banks and property developers closed higher on market expectations that the government will introduce economic stabilisation policies. Industrial Bank of China added 2% to 3.50 yuan, China Construction Bank rose 1% to 4.03 yuan, and Agricultural Bank of China jumped 1.7% to 2.44 yuan. Property developer China Vanke climbed up 0.5% to 8.15 yuan and Gemdale Corp added 1.8% to 7.24 yuan.
China's central government plans to spend 115.8 billion yuan (US$18.8 billion) on affordable housing this year, according to a report from 21st Century Business Herald. The special fund includes subsidies for low-rent housing, public rental departments and shanty-town renovation. The figure is an increase of 14.3% from the money channeled to those programs last year, said the paper.
China's money markets rates rose on Tuesday after the People's Bank of China drained CNY63 billion via repos. The PBOC drained CNY16 billion via 28-day repos and another CNY47 billion via 28-day instruments. The bank drained a net CNY62 billion last week, compared with the CNY98 billion removed the previous week.
The overnight repo, a benchmark measure of interbank funding availability, traded at a weighted average of 2.71%, down 7 bps from previous session's closure. The seven-day repo rate, a gauge of interbank liquidity conditions, was quoted at 5.39% late afternoon, up 237.10 bps from previous session's closure.
In Hong Kong, equities of the Hong Kong market advanced, sending the benchmark Hang Seng index up by 1% to 22596.97 on Tuesday, 08 April 2014, defying weak lead from offshore, on hopes Beijing will unveil new measures to boost the mainland economy after last week's mini-stimulus.
Among the HK 50 blue chips, 39 rose and 10 fell, with one stocks remaining steady. Kunlun Energy Co declined 3.4% to HK$12.68, contributing 4-points losses to the benchmark Index and becoming the worst-performing blue chip. China Resources Power Holdings Co advanced 5.1% to HK$21.65, contributing 6-points gains to the benchmark Index and becoming the best-performing blue chip.
Traditional Chinese counters listed in HK led the march. CCB (00939) added 2.5% to HK$4.9. COLI (00688) advanced 2.9% to HK$21.35. CR Land (01109) put on 4.6% to HK$18.14.
Chinese insurers were higher as the regulator relaxes M&A rules for the industry. China Life (02628) and Ping An (02318) rose 1.4% and 1.5% to HK$22.5 and HK$66.3.
Tencent, Asia's largest Internet company, rose 1.6% to HK$509.50, registering the first gain in five days, after the company bought back HK$76.7 million worth of shares yesterday. Mobius said in an interview yesterday he's been adding to technology stocks after valuations at companies such as Tencent dropped to reasonable levels.
Elsewhere in the Asia Pacific region, New Zealand's NZX50 fell 0.87%. Malaysia's KLSE Composite shed 0.57%. Singapore's Straits Times index added 0.33%. Indonesia's Jakarta Composite Index edged up 0.01%. Taiwan's Taiex index added 0.13%. South Korea's KOSPI index was up 0.17%. Indian stock market remains closed today, 8 April 2014, on account of Ram Navami.
Powered by Capital Market - Live News