Market participants largely took a wait-and-see approach ahead of the two-day Federal Open Market Committee meeting concluding on Thursday. Economists are expecting that the Federal Open Market Committee (FOMC) will signal an initial a measured tightening soon, but hold off a September rate hike. The World Bank's chief economist joined Christine Lagarde, managing director of the International Monetary Fund, in warning that a rate rise could trigger panic and turmoil in emerging markets.
Many market participants expects the Fed likely decline to raise short-term rates at its closely watched meeting, given uncertainties over growth in China. The market is eager to get some hints from the accompanying statement and comments from Chair Janet Yellen on the monetary policy outlook. Since PBOC's devaluation of renminbi and the financial market volatility in mid-August, speculations for Fed funds rate hike in September have greatly diminished. It is now widely anticipated that the Fed would stand on the sideline this month.
Among Asian bourses
Japan stocks up slightly
The Japanese share market managed to close above the neutral line after trimming early gains, as the Bank of Japan (BOJ) maintained its expansionary monetary policy at an annual pace of 80 trillion yen, as widely expected. However, overnight fall at Wall Street along with strengthening Yen against U.S. Dollar capped the upside in the Nikkei. Total 17 out of Topix's 33 industry groups declined, with information & communication, financial business, iron & steel and construction issues led losses. The Nikkei Stock Average advanced 60.78 points, or 0.34%, to end at 18026.48 points. The broader Topix index dropped 0.01%, or 0.17 point, to 1462.24 at the close in Tokyo.
The Bank of Japan held fire on expanding its unprecedented monetary easing scheme on Tuesday. As widely expected, after a two-day meeting the Bank of Japan's nine policy board members voted 8-1 to maintain the policy of buying assets at an annual pace of Y80 trillion. The BOJ last raised the purchase amount in October. The BOJ said in a statement that the economy has continued to recover moderately, although exports and production are affected by the slowdown in emerging economies. The BOJ also warned that slowing demand in emerging markets was taking a toll on Japan's exports and output.
Shares of food-related counters underpinned the gains, with Itoham Foods Inc and Yonekyu up 2.9% and 8.4%, respectively, after reports that both companies are planning an operational merger that would create the country's biggest vendor of ham and sasuage.
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Japanese cellphone carrier stocks extended their losses after Japanese Prime Minister Shinzo Abe's call for reductions of mobile charges which he sees becoming a burden for Japanese households. KDDI Corp. lost 5.7% and NTT DoCoMo Inc. fell 3.7%.
Toshiba Corp declined 1.8% after posting a first-quarter loss of 12.27 billion yen on sales falling 4.5% to 1.35 trillion yen, due to a poor performance in television and personal computer businesses. Last week, Toshiba said it would book a 37.8 billion yen annual loss to March 2015 to account for a billion-dollar profit-padding scandal that hammered the reputation of one of Japan's best-known firms. The net loss was a reversal from a previously expected 120 billion yen annual profit.
Australia market ends down on global concern
The Australian share market closed down, as risk aversion selloff triggered after the Reserve Bank's negative outlook for the local economy. Malcolm Turnbull's appointment as Prime Minister had limited influence on the market. Investors are largely opted a wait and see stance because of uncertainty about the US Federal Reserve's highly anticipated meeting on interest rate decision due on Thursday. All ASX sectors ended down, with financial, realty, material, industrial, and energy issues being major drag on the market. The benchmark S&P/ASX 200 index declined 78.10 points, or 1.53%, to 5018.40 points. The broader All Ordinaries index ended down 73.90 points, or 1.44%, at 5046.60.
Energy stocks were down after world crude oil World crude prices have extended their losses, pressured by persistent concerns about the global supply glut as OPEC lowered its demand growth forecast for next year. US benchmark West Texas Intermediate for delivery in October dropped 63 cents to $44 a barrel on the New York Mercantile Exchange on Monday. Brent North Sea crude for October, the global benchmark for crude oil, tumbled $1.77 to $46.37 a barrel in London on Monday. Oil and gas heavyweight Woodside Petroleum ended down 0.6% to A$28.25, meanwhile Oil Search sank 2.9% to A$7.27 and Origin Energy was down 1.5% to A$7.07.
Materials stocks ended softer after base metal, including copper, declined as economic data from China reinforces worries about demand growth in the world's top consumer of industrial metals. BHP Billiton fell 1.3% to A$23.43 and Rio Tinto dropped 2.2% to A$50.74.
Banks and financial stocks were mostly down due to the Reserve Bank's negative outlook for the local economy, with Australia & New Zealand Banking Group down 2.3% to A$27.14, Westpac Bank down 2.6% to A$30.20, National Australia Bank down 2.3 to A$29.88, and Commonwealth Bank down 1.5% to A$73.42.
Seven West Media was up 6.5% to A$0.74 after company launched a A$75 million share buyback.
China stocks decline further
The Mainland China's stock market extended losses, taking the benchmark index briefly below the psychological level of 3000 as investors worried about the slowing economy. Investors' risk sentiments were hurt after August industrial output and investment data on Sunday pointed the slowdown in the world's second largest economy is deepening. The Shanghai Composite Index tanked 3.52%, or 109.63 points, to 3005.17 points. The Shenzhen Composite Index, which tracks stocks on China's second exchange, tumbled 4.97%, or 82.63 points, to 1580.26. The ChiNext Index, which tracks China's NASDAQ-style board of growth enterprises, sank 5.7%, or 108.66 points, to close at 1797.56.
Risk aversion selloff continued taking toll on the Beijing on deepening concern the economic slowdown after data over the weekend showed industrial output missed estimates, meanwhile investment in the first eight months also increased at the slowest pace since 2000. The latest data from the National Bureau of Statistics showed growth in China's fixed-asset investment, one of the crucial drivers of the economy, slowed to 10.9% in the first eight months of 2015 from the same period a year earlier, compared with 11.2% in January-July. Factory output also was weaker than expected, rising 6.1% in August from a year earlier. Markets had expected a 6.4% increase, compared with July's 6%.
All 10 SSE industry groups ended down, with shares of technology and material sectors declined the most. Searainbow Holding Corp. and Yunnan Copper Co. both tumbled by the 10% daily limit.
China's central bank and commercial banks sold a net 723.8 billion yuan (US$113.63 billion) of foreign exchange in August, by far the largest on record, highlighting how capital outflows intensified in the wake of the yuan's devaluation last month. The previous largest outflow, in July, totalled 249.1 billion yuan.
Hong Kong market ends down
Hong Kong stock market ended softer in quiet trading, following declines in US and European bourses overnight and weakness in the mainland China bourses today. Investors stayed on the sideline ahead of the city's second-quarter gross domestic product (GDP) due to be released after the market close. The Hang Seng Index dropped 106.67 points, or 0.49%, at 21455.23 points. The Hang Seng China Enterprises Index, benchmark measure of performance of mainland China enterprises, sank 24.45 points, or 0.25%, to 9704.27 points. Turnover reduced to HK$63.7 billion from HK$69.6 billion on Monday.
Property counters declined the most in Hong Kong market. CK Property (01113) dipped 3% to HK$56.95. SHKP (00016) slid 4% to HK$100.4. K Wah (00173) also declined 4% to HK$3.11.
Belle International Holdings (01880) plunged 5% to HK$6.56 following a slew of research houses' target price downgrades. UBS Global Research cut its target price for Belle International to HK$6 from HK$6.5, and maintained its "sell" rating. Macquarie Research cut its target price for Belle International (01880) from HK$13.5 to HK$12.3, and maintained its "outperform" rating.
Sensex slides on weak global cues
Weakness in Asian stocks and caution ahead of a US Federal Reserve meeting later this week pulled key benchmark indices lower. The barometer index, the S&P BSE Sensex dropped 178.82 points or 0.69% to 25,677.88, as per provisional closing data. The 50-unit CNX Nifty lost 43.15 points or 0.55% at 7,829.10, as per provisional closing data. Metal and auto stocks led the decline for key indices which hovered in negative zone almost throughout the trading session.
Shares of Maruti Suzuki India (MSIL) were unchanged at Rs 4,320. The stock hit a high of Rs 4,415.70 and a low of Rs 4,320 in intraday trade. The Reserve Bank of India (RBI) yesterday, 14 September 2015 notified that foreign institutional investors (FIIs) can now invest up to 40% of the paid up capital of MSIL under the Portfolio Investment Scheme (PIS). RBI further announced that the total FII holding in MSIL has gone below the revised threshold limit and therefore the restrictions placed on the purchase of shares of MSIL have been withdrawn with immediate effect.
The latest data showed that inflation based on the consumer price index (CPI) remained benign last month. The headline CPI inflation eased to 3.66% in August 2015 from 3.69% in July 2015. Among the CPI components, the inflation for food and beverages rose to 2.9% in August 2015 from 2.8% in July 2015. The core CPI inflation declined to 3.8% in August 2015 from 4% in July 2015.
Elsewhere in the Asia Pacific region: Taiwan's Taiex index declined 0.6% to 8260. South Korea's KOPSI rose 0.3% to 1937.56. New Zealand's NZX50 slipped 0.2% to 5652.39. Singapore's Straits Times index lost 1% at 2841.94. Indonesia's Jakarta Composite index dropped 1% to 4347.16. Malaysia's KLCI rose 0.5% to 1647.54.
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