Investors risk confidence sapped numbers of uncertainties, including the Brexit and potential interest rate hikes by the US Federal Reserve later in the year. Brexit refers to Britain's decision on whether to keep its membership of the European trading bloc. Recent polls have suggested the vote is swinging toward a Brexit, unsettling investors across the globe.
investors were also cautious ahead to the US Federal Reserve's two-day policy meeting due to conclude on Wednesday US Eastern time, after which Fed chairwoman Janet Yellen will hold a press conference.
The US Federal Open Market Committee will begin its two-day meeting today, 14 June 2016 while the Bank of Japan will start its two-day meeting tomorrow, 15 June 2016. US stocks declined yesterday, 13 June 2016 as investors turned increasingly jittery ahead of a Federal Reserve policy meeting and a looming vote on 23 June 2016 on Britain's membership in the European Union.
Besides these uncertainties, worries about the health of the Chinese economy also weighed on investor sentiment on Tuesday when David Lipton, the International Monetary Fund's first deputy managing director, warned that China's corporate debt is high and rising fast and the problem should be addressed to avoid serious problems.
Investors were cautiously awaiting Morgan Stanley Capital International decision to include mainland-listed stocksknown as A-sharesin its key Emerging Markets Index, tracked by roughly $1.5 trillion worth of global funds. The decision, which follows its third consultation since 2013, is due Tuesday afternoon in the U.S. In the past, asset managers who run large global funds have expressed reservations about China's inclusion in MSCI indexes, citing concerns about the difficulty of getting money in and out of the country and a lack of clarity over shareholders' rights.
Among Asian Bourses
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Australia Market tumbles to five-and-a-half-weeks low
Australian share market declined to lowest level in five-and-a-half-weeks, on following weak lead from offshore markets overnight sparked by Brexit fears and China's slowdown woes. At close of trade, the benchmark S&P/ASX 200 index declined 109.30 points, or 2.1%, to 5203.30. The broader All Ordinaries dropped 109.10 points, or 2%, to 5282.50. Falling stocks outnumbered advancing ones on the Australia Stock Exchange by 780 to 302 and 350 ended unchanged. The S&P/ASX 200 VIX, which measures the implied volatility of S&P/ASX 200 options, was up 25.96% to 20.508 a new 3-months high.
Shares of banks and financial companies traded lower, with Commonwealth Bank down 2.6% to A$73.52, ANZ Banking Group down 2.6% to A$23.65, Westpac Banking Corp down 2.4% to A$29.23, and National Australia Bank down 2.3% to A$25.47.
Shares of materials and resources players declined, on the back of pullback in commodity prices. Among the big miners, BHP Billiton declined 3.2% to A$18.20 and Rio Tinto slipped 1.4% to A$43.47. Iron ore miner Fortescue was down 2.8% to A$3.13.
Energy shares also lost ground as oil prices slipped below $50 a barrel, with Santos falling 7% to A$4.39, Woodside Petroleum falling 3% to A$26.20, and Origin losing 4.8% to A$5.58.
Biopharma giant CSL dropped 3.3% to A$111.33, while Mesoblast dropped 42.2% to A$1.11 on concerns about the stem cell therapy firm's future after drugs heavyweight Teva Pharmaceutical ended a long-standing research partnership.
Bucking the broader market trend, gold mining stocks lifted thanks to rising gold prices. Newcrest Mining rose 25 cents to A$22.55, while smaller rival Regis Resources gained 11 cents to A$3.43.
Nikkei dives 1%
The Japan share market finished the session at lowest level in a two-month, dragged down by tracking declines offshore markets overnight on worries about U.S. growth and Britain potentially pulling out of the European Union. The benchmark Nikkei 225 index slumped 1%, or 160.18 points, to 15,859 by the close, its lowest since mid-April, while the broader Topix index of all first-section shares was down 0.98%, or 12.61 points, to finish at 1,271.93. Falling stocks outnumbered advancing ones on the Tokyo Stock Exchange by 1710 to 226 and 61 ended unchanged. The Nikkei Volatility, which measures the implied volatility of Nikkei 225 options, was up 1.24% to 32.78 a new 3-month high.
All but one of the 33 industry groups on the Topix sank, led by brokerages, banks and agricultural stocks. Sumitomo Mitsui Financial Group Inc. dropped 2% and Mitsubishi UFJ Financial Group Inc. fell 2.2%.
Eye-treatment developer Acucela Inc. plunged 24% after saying it has ended a tie-up with Otsuka Pharmaceutical Co. because a clinical trial of its eye-disease treatment failed to meet objectives. Acucela shares have dropped close to 70% over the past month after saying the clinical trial didn't meet targets.
China Stocks end 0.31% up
Mainland China stock market ended higher after fluctuating between gains and losses, on growing confidence that Morgan Stanley Capital International will include mainland-listed stocksknown as A-sharesin its key Emerging Markets Index, tracked by roughly $1.5 trillion worth of global funds. The decision, which follows its third consultation since 2013, is due Tuesday afternoon in the U.S. But gains were limited amid uncertainties include a possible departure of Britain from the European Union after the June 23 referendum, as well as policy decisions by the US and other major central banks at meetings slated for later this week. Besides these uncertainties, worries about the health of the Chinese economy were also caped upside. The CSI300 index of the largest listed companies in Shanghai and Shenzhen added 0.31%, to 3075.98, while the Shanghai Composite Index rose 0.32%, to 2842.19 points.
MSCI will announce early Wednesday morning Hong Kong time whether China's domestic equities will be added to its global benchmark gauges -- a move that would initially spur inflows of as much as $30 billion, according to HSBC Holdings Plc. The addition of A shares to MSCI's global benchmarks would offer investors greater access to companies in the world's second-largest economy and stock market. The index compiler, which has been considering whether to include mainland-traded Chinese shares since 2013, has twice put off the approval, citing concerns about market accessibility among other reasons.
ICBC, the nation's largest lender, rose 0.7 percent among financial companies in Shanghai. Shanghai Lujiazui Finance & Trade Zone Development Co. dropped 1.9 percent to pace losses for a measure of mainland property developers. Xiamen C & D Inc. plunged 11 percent as the investment holding company with business interests in property and logistics resumed trading after being suspended for nearly a year.
Hong Kong Market tumbles
The Hong Kong stock market finished down, tracking overnight losses on Wall Street amid the uncertainties of Fed's meetings this week, UK's referendum of Brexit next week, and tomorrow's MSCI decision on A-share inclusion. The benchmark Hang Seng Index declined 125.46 points, or 0.61%, to 20387.53 points. The Hang Seng China Enterprises Index, benchmark measure of performance of mainland China enterprises, sank 36.83 points, or 0.43%, to 8583.09. Turnover decreased to HK$53.2 billion from HK$65 billion on Monday.
HSBC (00005) and Standard Chartered (02888) dipped 1% and 3% to HK$47.25 and HK$55.2 as risk-aversion sentiment prevails. UK media also reported that Standard Chartered has found misconduct among senior managers.
Lenovo (00992) was the worst blue chip today. It slid 4% to HK$4.72. Credit Suisse has earlier issued research report expecting the PC maker to incur lower loss in the current year.
Chinese banks were firmer as S&P Global said the Total Loss-Absorbing Capacity (TLAC) requirements may lead to an acceleration of the overhaul of China's bank resolution regime. CCB (00939) and ICBC (01398) gained 1% to HK$5.08 and HK$4.13. BOC (03988) added 1% to HK$3.21.Elsewhere, Goodbaby (01086) plunged 19% to HK$3.66 after it hit a 5-year high earlier.
Indian Market edges lower after rangebound trade
Indian benchmark indices settled a tad lower after hovering within a narrow range near the flat line throughout the session. The barometer index, the S&P BSE Sensex shed 1.06 points to settle at 26,395.71. The Nifty 50 index slipped 1.75 points or 0.02% to settle at 8,108.85. Indian (Domestic) bourses witnessed a lackluster session of trade amid a drop in global stocks as investors maintained caution ahead of the outcome of US Federal Reserve's policy meeting tomorrow, 15 June 2016. Back home, data showing rise in wholesale and consumer price inflation has quashed hopes of announcement of cut in policy rates by the Reserve Bank of India in its next policy meeting in August.
Realty major DLF gained 1.49% on media reports that its rental arm has received non-binding bids estimated at between $1-1.3 billion from three big global investors for acquiring 40% stake.
PSU bank stocks rose and private bank stocks were mixed after the Reserve Bank of India announced a scheme for sustainable structuring of large borrowal accounts which are facing severe financial difficulties. Among public sector banks, Punjab National Bank (up 7.9%), Bank of Baroda (up 1.99%), State Bank of India (SBI) (up 2.65%), Union Bank of India (up 2.87%), Canara Bank (up 2.39%), and Bank of India (up 3.37%) edged higher.
Elsewhere in the Asia Pacific region: New Zealand's NZX50 sank1.3% to 6834.95. South Korea's KOSPI index fell 0.4% to 1972. Taiwan's Taiex index rose 0.5% to 8576.12. Malaysia's KLCI declined 0.2% to 1626.11. Indonesia's Jakarta Composite index rose 0.3% to 4821.59. Singapore's Straits Times index fell 0.61% to 2768.33.
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