Headline equities of the Asia Pacific market ended mostly down on Wednesday, 02 December 2015, as sentiment remained shaky with investors awaiting more regional economic data coupled with of the European Central Bank policy meeting on Thursday and key November non-farm payroll number from the U.S. on Friday.
The Institute for Supply Management purchasing managers' index for the manufacturing sector dropped to 48.6 in November, marking the first contraction in three years. The disappointing result throws the focus on US employment figures on Friday as the Federal Reserve moves closer to a long-awaited interest rate hike.
Investors are also eyeing a speech in Washington by Fed Chair Janet Yellen later in the day for additional hints about the pace of a rate increase.
Chicago Fed president Charles Evans noted that there is "some nervousness" about the upcoming rate decision in December meeting. He expressed the preference to have "more confidence" that inflation is "beginning to head higher" before hiking rates. Meanwhile, "regardless of the exact date for liftoff, I think it could well be appropriate for the funds rate to still be under 1% at the end of 2016."
Also in focus is a European Central Bank meeting Thursday that could see it unleash further monetary easing to boost growth in the sagging eurozone economy.
Among Asian bourses
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Australia market falls on profit taking
The Australian share market finished the session mild lower, as profit taking emerged following sharp rally in the previous session. However, losses were limited after solid economic-growth data in the third quarter. At the close, the benchmark S&P/ASX 200 index ended 7.80 points, or 0.15%, down at 5258.30 points, while the broader All Ordinaries index de-grew 7.90 points, or 0.15%, to 5304.70 points.
Government data showed that Australia's resource-rich economy expanded strongly in the third quarter amid a surge in commodity exports. Gross domestic product rose by 0.9% in the June-to-September period from the second quarter, and by 2.5% from a year earlier, according to the Australian Bureau of Statistics data released on Wednesday. Second-quarter growth was revised upward to 0.3% from the first quarter, compared with an earlier estimated 0.2% increase.
Shares of materials and energy companies ended mixed, weighed by lower commodities prices, particularly iron ore. Global miner BHP Billiton closed steady at A$18.75 while Rio Tinto lost 0.8%to A$46.55. Fortescue Mining sank 1.3% to A$1.965, but gold miner Newcrest Mining grew 1% to A$11.42. Oil and gas producer Woodside Petroleum was down 0.6% at A$30.62, while Oil Search firmed 0.6% to A$8.28. Santos shares were halted at A$4.06 as a narrow majority of retail shareholders in Santos took up their entitlements in the retail component of the A$2.5 billion equity raising.
Spotless shares tumbled 39.7% to A$1.32 after the cleaning and catering company issued a profit warning 18 months after its initial public offering, continuing a run of private equity exits which have run into difficulty soon after listing. Spotless said it expects net profit to fall 10% in the year to June 30, 2016.
Dick Smith bounced back 18.6% to A$0.415 after news Algy Pereira, the boss of Woolworths' Big W division, has resigned to take on a senior role at the struggling electronics retailer.
Nikkei ends 0.37% softer
The Japanese share market ended softer, as investors secured profit on caution ahead of key events later this week. Total 17 out of 33 TSE industry group declined, with the day's notable losers comprised Glass & Ceramics Products, Pulp & Paper, Precision Instruments, and Marine Transportation, while notable gainers inclined Construction, Information & Communication, Air Transportation, and Electric Power & Gas issues. The Nikkei 225 index at the Tokyo Stock Exchange fell 0.37%, or 74.27 points, to 19938.13, after closing on Tuesday at its highest level since Aug. 20. The wider Topix index of all first-section shares edged up 0.02%, or 0.31 point, to 1602.26.
With big events scheduled later this week, market participants sought defensive stocks with domestic exposure, such as in pharmaceuticals and construction. Tokyu Construction rose 7% Taisei Corp. added 3.9% and Kajima Corp. rose 3.4%, while Sawai Pharmaceutical gained 6.9%, and Daiken Medical rose 6.5%.
Euglena Co. jumped 8.8% after ANA Holdings Inc., Japan's largest airline, said it plans to use biofuel made by the algae-products maker.
Minebea Co. sank 6.7%, after saying sales of its liquid crystal display backlights shrank in November.
Heavily weighted Fast Retailing fell 1.8% on disappointing monthly department store sales figures announced the previous day. After market close Wednesday, Fast Retailing said domestic sales at its Uniqlo casual clothes stores fell 8.9% in November due to unseasonal warm weather.
China stocks surge on speculation of more stimulus
The Mainland China stock market ended sharply higher on speculation of more economic stimulus measures from the People's Bank of China after raft of latest indicators signaling a deepening economic slowdown. The Shanghai Composite Index ended 2.33%, or 80.60 points, up at 3536.91 points. The Shenzhen Composite Index, which tracks stocks on China's second exchange, declined 0.41%, or 8.97 points, to close at 2189.31. The ChiNext Index, which tracks China's NASDAQ-style board of growth enterprises, was down 1.58%, or 42.08 points, to close at 2613.26.
Speculation of more government support has intensified amid a raft of recent economic indicators signalled a deepening slowdown in the world second largest economy. Market expert expects Beijing could roll out more stimulus measures as soon as year-end, as it seeks to reach its growth target of about 7% for 2015. The expectation is something targeting property purchases and an interest-rate cut or a bank reserve requirement ratio cut. The central bank has cut interest rates six times since last November and lowered the amount of reserves banks are required to hold a number of times. Investment flowed from more speculative small caps into relatively cheap blue chips.
Shares of financial and realty rallied strongly on bottom fishing after media reports that the government may allow mortgage interest to be deductible. Brokerage stocks were also rebounded on bottom fishing. The realty sector was also aided by expectations that China's home prices would rise slightly in the coming year on the back of Beijing's support. Financial stocks have been under pressure in recent days impacted by some investigations and regulatory scrutiny.
China Life Insurance Co., China Vanke Co. and China Citic Bank Corp. all surged by the 10% daily limit. Poly Real Estate Group Co ended 10% upper circuit.Citic Securities, the brokerage which is under investigation by the mainland authorities, rose 5.91% to 18.82 yuan in Shanghai
Henan Lianhua Gourmet Powder, a company focused on cooking seasoning, beat the daily limit up by 9.99% to 8.59 yuan, after it announced on Tuesday night to pick Xi Yinping, a cousin of president Xi Jinping, as a candidate for independent director. The company filed an announcement after the market closing that they cancelled the nomination of Xi, without stating a reason.
Hong Kong market extends gain
The Hong Kong stock market advanced for second straight day, led by financial and property shares, as risk sentiment boosted up by positive finish of Wall Street overnight and on prospects for more monetary stimulus in China. But gains were capped by downbeat US manufacturing data which raised questions about the US economy and the pace of expected interest rate rises by the Federal Reserve. The benchmark Hang Seng Index rose 98.34 points, or 0.44%, to 22479.69 points. The Hang Seng China Enterprises Index, benchmark measure of performance of mainland China enterprises, advanced 102.42 points, or 1.03%, to 10050.36 points. Turnover reduced to HK$79.2 billion from HK$80.5 billion on Tuesday.
Shares of realty companies extended gains in the Hong Kong market, on Deutsche Bank's recommendation and speculation that Beijing government will push out more supportive policies in the annual Central Economic Work Conference getting underway the middle of this month. There are also expectations that China will cut its interest rate further to boost the weak economy. The market also expects China to relax more property rules to boost sales. China Vanke (02202) gained 3% to HK$21.25. CR Land (01109) rose 2% to HK$22.8. COLI (00688) edged up 0.2% to HK$27.4. R&F Properties (02777) added 1.7% to HK$9.36. CK Property (01113) rose 2.6% to HK$53.15. Wharf (00004) added 1.2% to HK$45.25. SHKP (00016) gained 1.6% to HK$99.15.
Shares of lenders were also firmer. CCB (00939) inched up 0.4% to HK$5.4. CM Bank (03968) rose 0.8% to HK$18.7. Citic Bank (00998) gained 2.6% to HK$5.07.
Sensex, Nifty hit lowest closing level in almost a week
Losses for banking sector stocks and index heavyweights HDFC, Infosys and L&T outweighed gains for pharma stocks and index heavyweight Reliance Industries (RIL) resulting in small losses for key benchmark indices. The barometer index, the S&P BSE Sensex, lost 51.56 points or 0.20% to settle at 26,117.85. he Nifty shed 23.55 points or 0.30% to settle at 7,931.35.
Pharma stocks gained on weak rupee. Steel stocks gained on hopes China may announce further stimulus measures to prop up slowing economy. Bajaj Auto edged higher after announcing sales volume data for the month just gone by. Shares of hospitality and airlines companies surged. Shares of Chennai-based companies fell as heavy rains in Chennai has thrown life out of gear and created a flood like situation in many areas.
Elsewhere in the Asia Pacific region: Taiwan's Taiex index slid 0.1% to 8457.40. South Korea's KOPSI slipped 0.7% to 2009.29. Malaysia's KLCI sank 0.3% to 1676.77. Singapore's Straits Times index gained 0.5% at 2883.64. Indonesia's Jakarta Composite index fell 0.3% to 4545.86. New Zealand's NZX50 fell 0.1% to 6143.31.
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