Stocks saw selling pressure after minutes from the Federal Reserve's latest policy meeting gave little clarity on when the central bank might start paring stimulus measures. Minutes from the July 30-31 meeting showed almost all the policymakers on the central bank's Federal Open Market Committee broadly comfortable with Chairman Ben S. Bernanke's plan to start reducing $85 billion per month in bond buying later this year if the economy improves, with a few saying tapering might be needed soon.
Almost all Fed committee members agreed that a change in the purchase program was not yet appropriate, and a few said it might soon be time to slow somewhat the pace of purchases as outlined in that plan, A few members emphasized the importance of being patient and evaluating additional information on the economy before deciding on any changes to the pace of asset purchases, the minutes show. Almost all participants confirmed that they were broadly comfortable with the committee moderating the pace of its securities purchases later this year. Fed officials also discussed the rise in interest rates following the June FOMC meeting. Some participants indicated that overall financial-market conditions had tightened significantly. They expressed concern that the higher level of longer-term interest rates could be a significant factor holding back spending and economic growth.
However, positive manufacturing production numbers out of China and Germany helped to limit losses. The Flash HSBC China's Purchasing Managers' Index rose to 50.1 from July's final reading of 47.7, which was the weakest in 11 months, though it barely passed the watershed 50 line which demarcates expansion of activities from contraction, thus providing some relief to the local market.
China's manufacturing growth has started to stabilize on the back of modest improvements of new business and output. This is mainly driven by the initial filtering through of recent fine-tuning measures and companies' restocking activities, despite the continuous external weakness.
Markit's preliminary composite Purchasing Managers' Index (PMI), which measures growth in both the manufacturing and services sector and covers more than two-thirds of the economy, rose to 53.4 in August from 52.1 in July. Flash Germany Services Activity Index at 52.4 (51.3 in July), 6-month high and Flash Germany Manufacturing PMI at 52.0 (50.7 in July), 25-month high
Among regional market, Tokyo market finished lower after minutes from the Federal Reserve's July policy meeting showed it was still on track to start downsize its monthly bond purchases as early as next month. However, market managed to recoup some losses thanks to yen weakening against greenback and as data showing China's key manufacturing sector recovered strongly in August. The Nikkei Stock Average was down 0.44% to 13365.17 and the broader Topix gave up 0.2% to 1119.56.
Toyo Suisan Kaisha, an instant noodle maker, gained 3.1% to 3,070 yen after SMBC Nikko rose its rating to outperform from underperforms.
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Tokyo Electric Power Co, the operator of the Fukushima nuclear facility, slumped 4.1% to 534 yen, extending losses this week, after Japan's Nuclear Regulation Authority yesterday said a radioactive water leak at its stricken plant is a serious incident rated three on the seven-level International Nuclear and Radiological Event Scale.
Australian stock market finished lower but well above the intraday low, thanks to better than expected China flash manufacturing PMI data that helped to trim initial losses caused after FOMC minutes stoked speculation of QE tapering by next month. The benchmark S&P/ASX200 index was down 24.30 points at 5075.70 points. The broader All Ordinaries index sank 23.60 points to 5066.70 points.
Insurance Australia Group, the parent company of the NRMA, has almost tripled its FY13 profit to $776M. The final dividend has almost doubled to 25c per share. IAG shares closed 2.2% down at A$5.80.
Iron ore miner Fortescue Metals Group (FMG) has reported a 12 per cent rise in FY NPAT to US$1.75B. Operating sales revenue increased by 21 per cent to US$8,120 million during the year, primarily due to the 41 per cent increase in iron ore shipments, but was partially offset by a 13 per cent decrease in realized iron ore prices. Total cost of sales increased by 28 per cent to US$5140 million for the full year, consistent with higher production volumes. Importantly, total costs per tonne decreased by 9% from the previous financial year reflecting operational efficiencies and a continuous drive to reduce costs. FMG has reiterated a FY14 guidance of 127-133M tons or iron ore shipments. FMG shareholders will receive a final dividend of 10 cents per share. FMG shares were up 4.2% to A$4.26.
Chinese stock market finished lower as Fed tapering worries were balanced out by positive production numbers out of China. The Shanghai Composite Index declined 5.28 points to 2068.12.
Baotou Steel declined 3% to 29.20 yuan after the rare earth producer reported a 33% drop in first-half profit last week.
Yunnan Baiyao surged 5.7% to 107.30 yuan after the drug maker said its first-half profit jumped to 936.6 million yuan, while revenue rose 19% to 7.31 billion yuan from a year ago.
ZTE gained 1% to 17.03 yuan after the company's reported better than expected first-half net income of 310 million yuan. The company forecasted to post net income of up to 440 million yuan in the third quarter, compared with a net loss in the same period a year ago.
Hong Kong's shares have finished higher for the first time in six sessions, with the benchmark Hang Seng Index rising 0.36% to 21895.40, as positive manufacturing production numbers out of China and Germany helped to overshadowing Fed tapering worries.
Among the 50 HK blue chips, 27 rose and 20 fell, with three stocks remaining steady. Market heavyweights were little changed. China Mobile (00941) edged down 0.3% to HK$82.75. HSBC (00005) was flat at HK$83.55. Chinese banks rose across the board, with CCB (00939) added 2.5% to HK$5.84. BOC (03988) gained 1.8% to HK$3.33. ABC (01288) put on 1.8% to HK$3.38. ICBC (01398) rose 1.6% to HK$5.16.
Indian benchmark indices surged after data showed a pickup in manufacturing activity in euro zone and China. The barometer index, the S&P BSE Sensex, reclaimed the psychological 18,000 level. The Sensex was provisionally up 395 points or 2.21%, up close to 540 points from the day's low and off about 50 points from the day's high.
Indian pharma stocks edged higher. Metal and mining stocks spurted after a report showed China's manufacturing unexpectedly expanded in August. Steel shares were in demand on reports steel major JSW Steel will hike product prices by 4% to 6% from 1 September 2013, following a steep rise in raw material cost. IT stocks edged higher on weak rupee.
Elsewhere, New Zealand's NZX50 lost 0.48%, Taiwan's Taiex shed 0.23%, South Korea's KOSPI lost 0.98%, Indonesia's Jakarta Composite shed 1.1%, Malaysia's KLSE Composite declined 1.4% and Singapore's Strait Times shed 0.63%.
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