Meanwhile, decline in global sovereign bonds has fuelled concerns about profit-taking in other asset classes. Higher debt yields also make equities more expensive relative to bonds. Bond yields in Australia, New Zealand and Japan edged higher today, 3 June 2015, after as a spike in US debt yields overnight. German government bond yields edged higher today, 3 June 2015, extending their sharp rise during the previous trading session. Yields rise as bond prices fall. Increase in bond yields weighed on Asian stocks.
The impasse over Greece's future lingered as both sides worked on rival proposals for the conditions of a financial lifeline with debt payments looming. With a deadline for Greece to repay some of its debt on Friday, the country's leaders and its creditors have exchanged reform proposals, although there are still fears agreement may not be reached.
Investors were spooked on Tuesday when Jeroen Dijsselbloem, the head of the Eurogroup of finance ministers said he was unimpressed with progress. His remarks come as Greek Prime Minister Alexis Tsipras prepares to meet European Commission President Jean-Claude Juncker in Brussels on Wednesday evening to discuss his proposal to secure a vital, long-overdue agreement with the country's bailout lenders. There are worries that if Greece defaults on its debt, that may mean a departure from the euro zone.
Among Asian bourses
Australia market extends losses on third day
The Australian shares declined for third straight session, as risk aversion selloff dominated the overall market. Barring miners, all sectoral indices dived into sea of red, with shares of healthcare, retailers, energy, financial, and realty companies being top losers. The benchmark S&P/ASX 200 Index dropped 52.40 points, or 0.93%, to 5583.60, while the broader All Ordinaries Index declined 51.60 points, or 0.91%, to 5588.30. Market turnover was relatively strong, with 2.1 billion shares changing hands worth of A$5.49 billion.
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Financial stocks closed down, with top four lenders being top losers, as investors continued to take profits in reaction to the RBA decision to leave the cash rate steady at 2%. The Commonwealth Bank of Australia fell 1.7% to A$81.57, Westpac Banking Corp 1.4% to A$31.88, National Australia Bank 1.1% to A$33, and ANZ Banking Group 1.2% to A$31.92. Investment bank Macquarie Group lost 1.2% to A$80.
Shares of materials and resources companies provided support on the benchmark index, as commodity prices climbed and futures trading suggested another bump up in the iron ore price tonight. Tighter availability of iron ore in top consumer China kept Chinese futures of the commodity near a three-week high on Wednesday as spot prices recovered to last month's peak above US$62 a tonne. Among major miners- BHP Billiton rose by 0.7% at A$28.53, while Rio Tinto grew 1.8% to A$57.50. Fortescue Metals Group rose 2.1% to A$2.43, Sandfire Resources gained 1.9% to A$5.27, and South32 rose 0.5% to A$2.15.
The Australia Bureau of Statistics said on Wednesday that Australia's GDP, in seasonally adjusted chain volume terms, grew 0.9% in the March quarter 2015. Net exports contributed 0.5 percentage points to GDP growth. Household final consumption expenditure and Changes in inventories each contributed 0.3 percentage points to GDP growth. This was offset by a -0.3 percentage point contribution from Gross fixed capital formation. The industries which drove GDP growth in the March quarter were Mining and Financial and insurance services. Mining contributed 0.3 percentage points and Financial and insurance services contributed 0.2 percentage points.
Nikkei closes softer on profit booking
Japanese share market saw another day of selloff, as investors continued booking profit, triggered by tracking weak lead from offshore market overnight and stronger yen. The Nikkei Stock Average declined 69.68 points, or 0.34%, to end at 20473.51. The Topix index of all Tokyo Stock Exchange First Section issues dropped 0.25%, or 4.22 points, to 1669.99.
Shares of export-related companies dropped the most, weighed by the greenback dropping to 124.08 yen after briefly breaking above the 125 yen handle the previous day. Among blue-chip exporters-Hitachi declined 0.6%, robot-builder Fanuc Corp 1%, and Murata Manufacturing Co 1%. Sumitomo Rubber Industries Ltd. declined 1.3%, while Bridgestone Corp sank 1.9%. Chemical maker Nitto Denko Corp., which gets more than 70% of sales abroad, dropped 2.8%. Fuji Heavy Industries Ltd., which gets 60% of sales from North America, lost 1.3%.
Auto makers were mixed following the release of U.S. sales numbers for May. Subaru maker Fuji Heavy Industries fell 1.3%, but Honda Motor Co rose 1.8%. Nissan Motor Co lost 0.5% after a 0.8% May sales drop in the U.S., offset by a 0.9% rise in sales of its Infiniti models. Toyota Motor Corp closed flat as its U.S. Toyota division posted a 1.6% drop in unit sales, though the company's Lexus unit saw a more than 10% gain.
Nippon Sheet Glass Co. rose 4.5% on reports that the company was boosting production at its Malaysian automotive-glass plant by 50%.
China stocks fall on profit booking
Mainland China share market closed softer after fluctuating in and out of the boundary line, as profit booking triggered due to dozen initial public offerings and Credit Suisse warning that China market has outstripped its fundamentals and is 23% overbought. The Shanghai Composite Index declined 0.55 point, or 0.01%, to end at 4909.98. The measure jumped 6.5% this week through Tuesday, extending this year's advance to 52%.
The market already faces pressure from this week's big batch of IPOs, which some estimate could lock up more than 8 trillion yuan ($1.29 trillion) of cash. One day after 11 IPOs were launched, 12 companies started taking subscriptions on Wednesday. This prodded some investors to take profits after last two sessions' rally.
Credit Suisse models signaled that the Beijing market is 23% overbought and has potential downside of 15% in U.S. dollar terms by year-end. The Shanghai Composite is up around 50% year-to-date. The Shenzhen Composite is up around 110% year-to-date. Credit Suisse attributes the rally to factors including the People's Bank of China injecting liquidity through its easing measures, retail investors re-allocating assets to stocks and away from bank savings, wealth management products and property. Apart from some restrictions on margin trading, the securities regulator also appears to be letting the rally ride, the bank noted.
Shares of Bank of Ningbo Co. jumped 5.1% after getting regulatory approval to sell preferred shares. The China Banking Regulatory Commission approved the company's plan to raise as much as 5 billion yuan through the sales of 50 million preferred shares.
The HSBC China Services Purchasing Managers' Index rose to an eight-month high of 53.5 in May, according to HSBC Holdings PLC survey data released on Wednesday, with both new orders and employment in the sector rising to multi-year highs. China's official nonmanufacturing PMI, a competing a gauge, edged down to 53.2 in May from 53.4 in April, the China Federation of Logistics and Purchasing said Monday.
Hong Kong market closes 0.7% up
The Hong Kong stock market closed higher, as investors chased for bottom fishing after data showing an improvement in the Chinese services sector. The benchmark index opened 249 points higher and pared its gains as the Shanghai market reversed its trend when the index hit an intra-day high of 4,942. The Hang Seng Index ended up 190.75 points or 0.69% to 27357.47, off an intra-day high of 27767.23 and day low of 27508.84. The Hang Seng China Enterprises Index, benchmark measure of performance of mainland China enterprises, lost 86.69 points, or 0.61%, to 14114.94 points. Turnover increased to HK$150.55 billion from HK$146.49 billion on Tuesday. Among Hong Kong index top-weighted stocks- Tencent Holdings gained 0.6% and China Mobile rose 1.8%. China Shenhua (01088) continued its rally, rising 2.8%. Li & Fung (00494) slid 2.6% after UBS Research reiterated its "sell" call on the stock.
Hong Kong listed Chinese banks closed mixed after China's central bank unveiled detailed regulations on the issuance of large-denomination certificates of deposite, a move widely seen as a challenge to banks' existing investment products. Industrial & Commercial Bank of China fell 0.9%. while China Construction Bank Corp rose 0.1% and China Merchants Bank Co added 0.8%.
Cheung Kong Property Holdings closed at HK$74.10 on its first trading day in Hong Kong, adding 219 points to the index, after being spun off from billionaire Li Ka-shing's conglomerate. That's 5.9% higher than the opening price of HK$70. CK Property combines real estate assets of Li's two main companies, which merged into CK Hutchison Holdings last month in the biggest reorganization of his corporate empire. The real estate unit is now the second-biggest landlord in Hong Kong after Sun Hung Kai Properties, with total assets valued at HK$420.1 billion.
Sensex hits lowest closing level in almost four weeks
Prospects of no near term policy rate cut from the Reserve Bank of India (RBI) after forecasts of deficient rains this year from the India Meteorological Department and increase in global bond yields triggered a broad based decline in Indian stocks today, 3 June 2015. The market sentiment was also hit adversely after a survey showed contraction in India's services sector in May 2015. The Sensex shed 351.18 points or 1.29% to settle at 26,837.20.
Index heavyweight and cigarette major ITC slumped on reports of Maharashtra government's decision to ban sale of loose cigarettes in the state. FMCG stocks declined after the India Meteorological Department (IMD) in its second stage Long Range Forecast (LRF) for Southwest Monsoon 2015 said monsoon season is likely to be deficient. Shares of Nestle India slumped after news reports suggested that the Delhi city government conducted tests on 13 samples of Maggi noodles and 10 were found to be unsafe with lead exceeding the allowable level.
Shares of tractor major Mahindra & Mahindra slipped after IMD's forecast. Shares of two-wheeler makers also declined on concerns of weak monsoon.
Foreign portfolio investors sold Indian shares worth a net Rs 673 crore into the secondary equity market yesterday, 2 June 2015, as per data from Central Depository Services (India). Domestic institutional investors (DIIs) bought shares worth a net Rs 271.64 crore yesterday, 2 June 2015, as per provisional data released by the stock exchanges.
Elsewhere in the Asia Pacific region: Taiwan's Taiex index fell 0.6% to 9556.52. South Korea's KOSPI slid 0.7% to 2063.16. New Zealand's NZX50 was down 0.1% to 5858.71. Singapore's Straits Times index added 0.3% at 34349.84. Malaysia's KLCI was up 0.5% to 1749.17. Indonesia's Jakarta Composite index sank 1.3% to 5130.50.
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