Asia Pacific share market registered third day of continuous fall on Thursday, 10 December 2015, as risk aversion selloff triggered amid weak lead from Wall Street overnight, y weak oil prices, and more signs of slowing growth in China. MSCI's broadest index of Asia-Pacific shares outside Japan lost 0.4%.
Market participants continued taking money off the table amid nervousness ahead of the U.S. Federal Reserve's moves next week, along with the soft oil price being viewed as a barometer of future economic activity.
Risk asset markets continued to take cues from crude oil. Brent crude LCOc1 edged up slightly to fetch $40.44 a barrel in Asia, but remains within reach of a 7-year low of $39.57 struck on Wednesday. At the moment people are assuming that oil is a barometer of global trade and they worry that falling oil prices mean there is no demand.
But all other concerns pale in significance to next week's Fed meeting. Traders were looking ahead to next week's Federal Reserve monetary policy meeting. The Fed is widely expected to announce an increase in interest rates following the meeting, but traders will pay close attention to the wording of the statement. The trouble with this recent volatility is it makes it harder to work out sentiment surrounding a possible rate hike. So far, recent growth and inflation data are not supporting the case of a faster pace of tightening. And there is little chance for Fed to sound hawkish with next week's FOMC statement.
Among Asian bourses
Australia stocks falls to one-month low
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Headline equities of the Australian market declined for third day in row, as worry about global growth prospects continued taking toll, with shares of property trusts, realty, and financials issues being major losers among ASX 10 industry groups. However, losses were capped after a surprisingly strong official employment figures. At the close, the benchmark S&P/ASX 200 index dropped 42.80 points, or 0.84%, to finish at 5037.70 points, a lowest level since November 16, 2015, when it closed at 5003.80.
Shares of financials and realty players continued to major drag on the Sydney market, as RBA rate cut bets continued to diminish after November's employment report crossed the wires. The Reserve Bank of Australia has a data-dependent monetary policy outlook with easing likely being its next move. Australian front-end government bond yields rallied as the jobs report came out. In addition, overnight index swaps are now pricing in a 36% probability of an interest rate cut from the RBA over the next 12 months, down from 76% yesterday.. Australia & New Zealand Banking Group dropped 0.9% to A$26.19, Westpac Banking Corp 2% to A$31.41, National Australia Bank 1.8% to A$28.43, and Commonwealth Bank of Australia 1.7% to A$78.90.
Consumer staples were weaker, with the big supermarkets soft. Woolworths slipped 0.7% to A$23.43, while Wesfarmers lost 0.9% to A$37.65. Meanwhile, Qantas gained 0.3% to A$3.87, while Telstra was down 1% to A$5.25.
Shares of materials and resources companies were the only sector in the black, being scooped up by bargain hunters after a week of heavy selling. Global miner BHP Billiton advanced 1.9% to A$17.48 and Rio Tinto added 2.4% to A$43.06. Fortescue Mining lost 1.4% to A$1.795.
Nikkei falls to five-week low
The Japanese share market declined to lowest level in five weeks, amid risk aversion selloff triggered by weak lead from Wall Street overnight, yen appreciation against the dollar, and more signs of slowing growth in China. Total 29 out of 33 TSE industry groups declined, with the day's notable losers comprised Rubber Products, Financial Business, Precision Instruments, Retail Trade, Services, and Securities & Commodities Futures issues. The 225-issue Nikkei Stock Average declined 254.52 points, or 1.32%, to 19046.55, the lowest close since November 29, 2015, when benchmark's ended at 18935.71. The Nikkei 225 has slumped 4.8% since closing at a three-month high of 20,012.40 on December 1, 2015. The Topix index of all Tokyo Stock Exchange First Section issues retreated 15.23 points, or 0.98%, to 1540.35.
Shares of exporters' were major drag on the Tokyo market, hit by stronger yen. The yen traded at 121.68 per dollar after jumping 1.2% on Wednesday, the most since Sept. 1. Panasonic Corp shares fell 1.8%, while Nissan Motor Co slipped 1.1% and Mazda Motor Corp. was 2.7% lower. Subaru automaker Fuji Heavy Industries, which relies on North America for 60% of sales, lost 1.7%.
Bridgestone Corp. lost 1.8% after reports that the tiremaker is planning to outbid Carl Icahn for Philadelphia-based auto service chain Pep Boys -- Manny Moe & Jack. Bridgestone had agreed to buy Pep Boys for about $835 million in October, but was later bested by a competing offer from Icahn.
Department store operator Isetan Mitsukoshi Holdings ended 0.3% down after Nomura Holdings Inc. cut its rating on the department-store operator to 'neutral' from 'buy'.
Toshiba Corp. shares bucked the weakness, gaining 0.7%, after reports that it will pull out of TV manufacturing and cut jobs. Yahoo Japan Corp. lost 0.8% after Yahoo! Inc. -- its second-largest shareholder -- said it's considering a spinoff of its stake in the Japanese website operator.
The corporate goods price index (CGPI) from the Bank of Japan released today, showing the corporate goods price index fell 3.6% on year in November for the eighth straight fall after -3.8% in October as the costs for iron and steel as well as non-ferrous metals showed sharper year-on-year drops while the double-digit%age decline in petroleum and coal product prices continued to ease slightly. The decrease was slower than the 4% drop in September. On the month, the producer price index dipped 0.1% in November, the sixth straight drop after falling 0.6% in October.
China stocks fall as govt moves toward IPO reforms
The Mainland China stock market ended down after a volatile trade, after reports that the Chinese regulators would introduce new rules for IPO listings in March 2016.Total 7 out of 10 industry categories on the main section lost ground, with decliners being led by industrials, utilities, and consumer discretionary issues. The Shanghai Composite Index declined 0.49%, or 16.94 points, to close at 3455.50, erasing an intraday gain of as much as 0.9%. The Shenzhen Composite Index, which tracks stocks on China's second exchange, dropped 0.11%, or 2.35 points, to close at 2211.86. The ChiNext Index, which tracks China's NASDAQ-style board of growth enterprises, rose 1.03%, or 27.59 points, to close at 2695.51.
China's cabinet announced late on Wednesday that the country would shift to a registration system for initial public offerings (IPOs) within two years. As per media reports, Chinese regulators would introduce new rules for IPO listings in March 2016. Companies could then list in the Shanghai and the Shenzhen composites under the new rules from May. The report said that right now about 670 companies were waiting for government approval to go public.
The reform will allow the market, instead of regulators, to decide which firms get to list and how many shares they can sell. But it also raises the prospect of a large number of companies rushing to the stock market for fundraising simultaneously. In an apparent move to ease investors' concerns, China's securities regulator said that the reform will be a gradual process, and the IPO floodgate would not be opened all of a sudden.
Shares of Industrial and material companies posted the steepest losses among sectors, with Metallurgical Corp. of China and China Minmetals Rare Earth Co. sliding more than 4%.
Hong Kong Markets tumbles to two-month low
Headline equities of the Hong Kong stock market declined for sixth consecutive session, dragging the benchmark Hang Seng Index down 99.15 points, or 0.45%, to 21704.61 points, a lowest level since October 2, 2015, when the benchmark's closed at 21506.09 points. The Hang Seng China Enterprises Index, benchmark measure of performance of mainland China enterprises, declined 108.27 points, or 1.13%, to 9450.49 points. Turnover increased to HK$68.90 billion from HK$65.99 billion on Wednesday. The risk aversion selloff followed a sell-off on Wall Street overnight that saw all three indexes end in the red. The falls in city bourses sustained amid weaker global risk sentiment on the back of the crude concerns and as additional ECB stimulus measures announced fell short of some forecasts. Also, sentiments hit by concern the Chinese government's efforts to make domestic consumption and services a bigger part of the economy won't be fast enough to offset sluggish demand for industrial goods and commodities.
Value-buying lifts Sensex
Indian stocks were trading up around late afternoon on value-buying in blue-chips despite weak global cues. Besides, covering-up of short positions by speculators boosted the market sentiment. At 13:18 IST, the barometer index, the S&P BSE Sensex, was up 104.26 points or 0.42% at 25,140.31. The 50-unit Nifty 50 index was currently up 29.90 points or 0.39% at 7,642.40.
Among BSE sectoral indices, oil & gas index gained the most by 1.3%, followed by realty 1.1%, metal 0.7% and IT 0.4%. On the other hand, auto index was down 0.6%, followed by banking 0.5%, and healthcare 0.3%.
Bharat Forge rose 1.4% after the company said it has formalised an agreement for long term supply of aero engine components to Rolls-Royce. The agreement envisages supply of critical and high integrity forged and machined components for a range of aero engines including the flagship Trent engine.
Elsewhere in the Asia Pacific region: Taiwan's Taiex index fell 0.2% to 8216.17. South Korea's KOPSI rose 0.2% to 1952.07. Malaysia's KLCI slipped 0.4% to 1652.11. Singapore's Straits Times index lost 0.4% at 2850.76. Indonesia's Jakarta Composite index shed 0.2% to 4455. New Zealand's NZX50 fell 0.2% to 6040.56 after the Reserve Bank of New Zealand (RBNZ) cut interest rates early on Thursday but said further easing should not be needed.
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