Asia Pacific share market declined on Tuesday, August 2, 2016, as the rate decision in Australia and Japan's stimulus package failed to excite investors in the region. MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.4 percent.
The cabinet of Japanese Prime Minister Shinzo Abe on Tuesday approved a 28 trillion yen ($274 billion) stimulus package, which on paper ranks as one of the nation's largest since the 2008 global financial crisis. However, some three-quarters of the package will be made up of targeted low-interest loans from the government and state-owned companies, leaving just 7.5 trillion yen being actual new and direct spending, but even that will be spread over the next two years.
The Reserve Bank of Australia's on Tuesday cuts its overnight cash rate-target by a quarter percentage point to an all-time low of 1.50%, in response to record-low inflation and a slowing jobs market.
Overnight, oil prices fell sharply, briefly dipping below $40 a barrel because of a supply glut. Brent crude was trading 0.2% lower in late Asia trading. Prices have dropped 22% in less than two months, ending a rally that sent prices above $50 in early June. Supply is returning to Iraq and Nigeria, while Saudi Arabia's output will likely hit record levels, say analysts.
Among Asian bourses
Australia Market slips 0.84%
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Australian share market ended down after reversing early gain, as a tumbling oil price weighed on energy stocks and as the Reserve Bank of Australia cut the benchmark lending rate to a new record low had been expected by the market. At close of trade, the benchmark S&P/ASX 200 index declined 46.90 points, or 0.84%, to 5540.50. The broader All Ordinaries has lost 48 points, or 0.85%, to 5622.10.
Energy and materials were the biggest drag on the market, down 3.2% and 2.1% respectively, following an overnight tumble in the oil price on fears of an expanding glut, particularly in the United States.. Rio Tinto and BHP Billiton fell 0.6% to A$49.41 and 2.2% to A$19.41, respectively. Fortescue Metals shares were down 1.1% to A$4.42. Woodside Petroleum dropped 2.2% to A$26.44 and Origin Energy sank 3.9% to A$5.48.
The banks and financials had a worst day, as the Reserve Bank of Australia delivered a 25 basis point cut, dropping the official cash rate to a record low 1.5 per cent, had been expected by the market. National Australia Bank declined 0.4% to A$26.59, Commonwealth Bank of Australia 0.5% to A$77.59. Westpac Banking Corp 0.9% to A$30.83, and ANZ Banking Group 0.2% to A$25.73.
Japan Market tumbles 1.47%
The Japan share market closed down, amid concern that a well-flagged government spending package from Prime Minister Shinzo Abe will fail to deliver much benefit to the economy. The 225-issue Nikkei Stock Average slipped 244.32 points, or 1.47%, to 16391.45. The broader Topix Index of all First Section issues on the Tokyo Stock Exchange finished 21.63 points, or 1.64%, down at 1,300.20.
Shares of financial companies have were the biggest drags on the Topix, with all 33 industry groups falling. Mitsubishi UFJ Financial Group Inc. dropped 5.9% after reporting a 32% decline in net income in the first quarter from a year earlier, as negative interest rates lowered lending income and the company slowed sales of its shareholdings.
ANA Holdings Inc. retreated 4% after the Nikkei newspaper reported the airline's operating profit last quarter is likely to be around 20% less than last year amid fiercer competition from budget operators on Japan-China routes.
Nippon Soda Co. surged 6.4% after the chemical-products manufacturer said it'll spend about 2 billion yen buying back shares.
China Stocks rebound 0.61%
Mainland China stock market rebounded from one-month low, as investors chased for bottom hunting, with real estate shares leading rally on encouraging price reports, while small-caps bounced on signs of foreign interest. However, trading remained thin as investors are still concerned about the economy, and worry about market liquidity as regulators step up their crackdown on speculative trading while nine companies launch initial public offers this week. The CSI300 index of the largest listed companies in Shanghai and Shenzhen gained 0.39%, to 3189.05, while the Shanghai Composite Index inclined 0.61%, to 2971.28 points.
Real estate stocks were firm, rising 1.6 percent, amid reports that home prices in China's 100 major cities have posted month-on-month gains for 15 months in a row.
China's yuan erased early losses to swing to a gain in afternoon trading. The Chinese currency rose 0.09 percent to 6.6360 a dollar of 6:07 p.m. in Shanghai, according to China Foreign Exchange Trade System prices. The PBOC Tuesday weakened the yuan's daily fixing against the greenback by 0.26 percent, halting a five-day increase of 0.9 percent.
Sensex hits lowest closing level in a week
Key benchmark indices registered small losses in a volatile trading session. The barometer index, the S&P BSE Sensex shed 21.41 points or 0.08% to settle at 27,981.71. The Nifty dropped 13.65 points or 0.16% to settle at 8,622.90.
Stocks of public sector banks were mostly higher. Stocks of private sector banks were mixed. Tech Mahindra shrugged off weak Q1 June 2016 earnings. Hero MotoCorp edged higher after the company announced a 9.13% growth in its total sales in July 2016. Maruti Suzuki India rose after the company increased prices of select models with effect from 1 August 2016. Bharat Financial Inclusion tumbled following the arrest of the company's President S Dilli Raj by the Enforcement Directorate.
Elsewhere in the Asia Pacific region: New Zealand's NZX50 fell 0.4% to 7329.20. South Korea's KOSPI index slipped 0.5% to 2019.03. Taiwan's Taiex index grew 0.13% to 9068.76. Malaysia's KLCI was down 0.3% to 1660.23. Indonesia's Jakarta Composite index added 0.2% to 5373.32. Singapore's Straits Times index slipped 1.2% to 2856.67. Hong Kong market trading was suspended as Typhoon Nida.
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