Profit taking pressure continued for second straight session today on mounting uncertainty about monetary stimulus tapering in the US after comments of Richard Fisher, President, Fed Bank of Dallas.
Federal Reserve Bank of New York President William C. Dudley said yesterday in a speech the US Federal Reserve has a tapering timetable and will wind down the bond purchases when there is broad improvement in the American economy. William C. Dudley emphasized that the US economy is facing pulling forces from opposite directions that is, "improving economic fundamentals versus fiscal drags and somewhat tighter financial conditions". And he emphasized it still needs the support of a "very accommodative monetary policy". He urged officials to push against the headwinds "forcefully". And he'd like to see "continued improvement in the labour market" before cutting the pace of asset purchases.
Meanwhile, Atlanta Fed Lockhart said he's supportive to FOMC's decision to keep the asset purchase pace unchanged in the September meeting. He noted there have been "some slowing" in job market growth. And, between now and October, there won't be "accumulation of enough evidence" to change the economic outlook.
However, Dallas Fed Fisher said Fed's delay in tapering could threaten Fed's credibility. He said he warned during the last FOMC meeting that "doing nothing at this meeting would increase uncertainty about the future conduct of policy and call the credibility of our communications into question." Meanwhile, he criticized that White House has mishandled Fed chairman nomination terribly. And he also criticized that the front runner Yellen as "dead wrong on policy".
Meanwhile, risk off selling also fuelled by on-going concerns about the US debt ceiling, which Congress must decide on mid next month
The U.S. House of Representatives voted last week to finance the federal government through mid-December and choke off funding for Obama's signature health-care law, setting up a showdown with the Senate and the White House.
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Government funding expires Oct. 1 and the Treasury is expected to exhaust its ability to borrow funds in mid-October, when it will reach the statutory debt limit. The White House said Obama would veto the House bill and Senate Majority Leader Harry Reid said the bill is dead on arrival.
President Barack Obama on Saturday insisted that he won't negotiate with House Republicans over the debt ceiling, accusing them of threatening to plunge the U.S. into default and back into recession by tying the debt limit to their effort to defund his health-care law.
Investors, meanwhile, are poised for fresh market turmoil as politicians hurtle toward the latest budget-related showdown.
In his weekly radio and Internet address, Obama said that won't happen and they know it's not happening. Obama has vowed to veto a bill passed by the House of Representatives Friday that would keep the government open through mid-December while also eliminating funding for the health-care law. House lawmakers approved the bill in a 230-189 vote, mostly along party lines.
Among Asian bourses, Tokyo shares fell into the sea of red, dragging the Nikkei Stock Average 9.81 points, or 0.07%, lower from Friday to end the day at 14,732.61. The market was closed on Monday due to a national holiday.
Nikkei225 index fell down in the morning as investors indulged into profit taking on tracking overnight fall in Wall Street and the yen strengthening to the upper-98 yen range against the dollar. However, the benchmark index trimmed losses on the back of dip-buying interest late afternoon, thanks to the pause in the dollar's fall toward the close. Investors also began buying shares to benefit from dividend pay-outs, as Wednesday is the last day shareholders will be entitled to dividend payments from companies ending their fiscal year in March and September.
Shares of telecom companies went up in Tokyo after strong sales of Apple Inc.'s new iPhone models. Shares of mobile carriers KDDI Corp added 2.9% to 4950 yen, NTT DoCoMo Inc. 0.87% to 163200 yen and SoftBank Corp 1% to 6660 yen.
Shares of industrial-machinery major Komatsu dropped 1.6% to 2532 yen in spite of better-than-expected Chinese manufacturing data for September released by HSBC on Monday.
THK Co. shares declined 3.7% to 2218 yen after Credit Suisse downgrade their ratings on the company to neutral from outperform.
Shares of Mitsubishi Heavy Industries sank 2.8% to 589 yen following a report from the St. Louis Business Journal the company may be preparing an offer to buy carbon fibre specialist Zoltek Cos .
In Australia, Australian financial market extended losses for third straight day, dragging the benchmark S&P/ASX 200 lower by 0.35% to finish at 5234.20, as profit taking in blue-chip stocks continued on tracking overnight fall on Wall Street and on rising speculation the Fed will begin tapering stimulus in October.
Shares of precious-metal miners were biggest drag in ASX. Newcrest Mining lost 1% to A$11.91 and Perseus Mining dropped 1.8% to A$0.555. Kingsgate Consolidated was up 1.8% to A$1.73. Shares of Alacer Gold Corp bucked the trend, however, rising 0.9% to A$3.21 after securing a deal to sell its Australian precious-metals assets for almost A$38 million
Materials and resources blue chips were also lower in Sydney, with BHP Billiton was down 0.6% to A$35.87 and Rio Tinto lost 0.8% to A$62.10. Fortescue Metals Group bucking the trend, however, rising, 2.8% to A$4.72 after founder and Chairman Andrew Forrest bought more than 5.2 million shares for a total price of A$23.6 million, taking his ownership to 33%.
In China, Chinese shares ended in the red, with the benchmark Shanghai Composite index was 0.61% lower to 2207.53, on the back of profit taking on blue chip stocks following Monday's 1.3% gain on signs of improvement in manufacturing activity.
Shares of financials and realty companies declined the most in Shanghai amid concern the government may encourage more competition among banks and expand property taxes. The China Securities Journal reported today that China may place priority on financial reform after the Communist Party plenum in November. Premier Li Keqiang said on Monday that China has chosen not to loosen or tighten monetary policy.
Among banks, Ping An Bank tumbled 4.7% to 12.27 yuan. Industrial Bank Co., part-owned by a unit of HSBC Holdings Plc, fell 3.5% to 11.45 yuan. Kingfa surged by the 10% daily limit.
Meanwhile, realty shares declined after the China Securities Journal reported that China will start a second round of property training for people working in the taxation system next month. Vanke, the nation's biggest listed property developer, fell 3% and Poly Real Estate, the second largest, lost 3.1%.
Shares of Apple Inc. suppliers jumped in China after a record number of iPhones were sold in the weekend debut. Sales of iPhones almost doubled from the previous record even amid supply constraints, Apple said in a statement. The results led Apple to say that quarterly revenue and gross margin will be at the top end of a prior forecast. GoerTek surged 3.2%, extending a 6.2% gain yesterday.
In Hong Kong, HK stocks traded broadly weaker with the benchmark Hang Seng index falling192.50 points, or 0.82%, from prior day to end the day at 23179.04.
Among the 50 HK blue chips, rose and 36 fell, with two stocks remaining steady. Cathay Pacific soared 3.5% to HK$15.66, while China Resource Land fell 3.4% to HK$22.55, making themselves the top blue-chip gainer and loser. Market heavyweights were softer. HSBC and China Mobile both fell 0.6% to HK$85.75 and HK$87.65, respectively.
Shares of telecom companies declined the most in Hong Kong after all three wireless carriers posted overall subscriber growth in August. China Unicom Hong Kong dropped 3.2% to HK$12.20, China Telecom Corp 1% to HK$3.96 and China Mobile 0.6% to HK$87.65.
China Unicom said its net additions of 3G service subscribers in August rose to 3.933 million from 3.856 million in the previous month, bringing the aggregate 3G customer size to around 108 million. China Unicom added 3.9 million mobile subscribers last month, up from 3.4 million in July, with the total number of mobile subscribers of 269 million. On fixed line business, there were reductions of 298,000 of local access subscribers and additions of 514,000 of broadband subscribers in August, with the total customer size reaching 89.03 million and 63.68 million by the end of last month.
China Mobile said it added a total of about 11.64 million 3G customers in August, faster than the pace of 9.17 million in the month before, with the number of 3G customers reaching 159 million by the end of last month. The accumulated net addition of customers for August was about 5.45 million, faster than the pace of 4.81 million in July, with the total number of customers rising to around 750 million as at 31 August 2013.
Hong Kong recorded a Balance of Payments (BoP) surplus of HK$25.4 billion (as a ratio of 5.2% to GDP) in the second quarter of 2013, compared with a BoP surplus of HK$16.4 billion (as a ratio of 3.2% to GDP) in the first quarter of 2013. Reserve assets correspondingly increased by the same amount in the second quarter of 2013, data from the Census and Statistics Department showed.
The current account recorded a deficit of HK$2.5 billion (as a ratio of 0.5% to GDP) in the second quarter of 2013, compared with a deficit of HK$6.8 billion (as a ratio of 1.4% to GDP) in the same quarter of 2012. On a year-on-year comparison, the decrease in the current account deficit was due to an increase in the invisible trade surplus and an increase in the net inflow of primary income, partly offset by an increase in the visible trade deficit and an increase in the net outflow of secondary income.
In India, Indian benchmark indices provisionally settled with small gains as higher European stocks supported domestic bourses. The barometer index, the S&P BSE Sensex, fell below the psychological 20,000 mark, having alternately moved above and below that level in intraday trade. The barometer index, the S&P BSE Sensex, was provisionally up 27.24 points or 0.14%, up close to 150 points from the day's low and off about 120 points from the day's high.
Among the 30-share Sensex pack, 15 stocks rose and rest of them fell. Cipla (up 1.71%), Tata Power Company (up 2.46%), and HDFC (up 1.9%), were ended higher from the Sensex pack.
Two-wheeler stocks rose modestly in India on expectations of pickup in sales during the upcoming festive season and on hopes good rains this year will boost rural sales. The festive season starts with the Durga Puja in October. The festival is followed by Dussehra and Diwali. Bajaj Auto gained 2.54%. TVS Motor Company advanced 3.72%. Hero MotoCorp gained 0.55%.
Mahindra & Mahindra (M&M) rose 1.6%. M&M announced during trading hours on Monday, 23 September 2013, the appointment of Dr. Pawan Goenka to the board of the company as Executive Director (ED), the first ED appointment to the board since 1992. He has been designated Executive Director and President (Automotive & Farm Equipment Sectors), with effect from Monday, 23 September 2013.
Elsewhere, New Zealand's NZX50 jumped 0.2% and Taiwan's Taiex rose 0.08%. Indonesia's JKSE Composite dropped 2.25%, Singapore's Straits Times Index lost 0.1%, Malaysia's KLSE Composite fell 0.22% and South Korea's KOSPI shed 0.1%.
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