Risk aversion selloff dominated in the regional market on caution ahead of key event risks this week, including high-level policy meeting in China, the European Central Bank meeting where it may foreshadow a further reduction to record low interest rates and the advance estimate of U.S. third quarter economic growth due the same day. U.S. October jobs figures are due on Friday.
China's leaders are scheduled to meet in Beijing from Nov. 9-12 to craft a new blueprint for the world's No. 2 economy as the country heads for its slowest annual growth in more than two decades. Hopes are high that the plenum will announce changes to give private businesses a greater say in the economy but reforms will face resistance from officials and state companies who benefit from the status quo.
A crucial meeting of top leaders from Nov. 9 to Nov. 12 will shed light on just how committed the government is to enforcing reforms, many of which analysts say would test politicians' will to push through unpopular changes.
The European Union yesterday cut its forecast for euro-area growth next year and raised its unemployment estimate as the economy struggles to regain momentum after a record-long recession. The European Central Bank (ECB) holds a monetary policy meeting tomorrow, 7 November 2013. The ECB is seen retaining its key policy rate at a record-low 0.5%.
The US government will on Friday, 8 November 2013, release nonfarm payrolls figures for October 2013. The job data is a key economic indicator that has been watched closely in recent months to see whether the US Federal Reserve will roll back its bond-buying program.
Market participants digested a stronger-than-expected reading on the U.S. services industry as it seen as a factor triggering reprising of Fed expectations. The U.S. nonmanufacturing sector expanded last month at a slightly faster pace than expected, according to data released Tuesday by the Institute for Supply Management. The reading on employment last month improved significantly. The ISM's nonmanufacturing purchasing managers' index rose to 55.4 in October from 54.4 in September.
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The FOMC statement released last week sounded like Fed is still open to December tapering. While the general consensus is that Fed wouldn't scale back the asset purchase before March, some investors are quietly betting on and earlier schedule.
Among Asian bourses, Japanese shares advanced, sending the benchmark Nikei225 index higher by 0.79% to 14337.31 on the back of better than expected earnings from Nissan Motor and Toyota Motor.
Toyota Motor Corp rose 0.5% to 6350 yen after the automaker reported a dramatic surge in its quarterly net profit and boosted its earnings outlook for the fiscal year to a near-record level as the weaker yen and growing sales in the U.S. enabled it to extend its lead on its rivals. The world's biggest car maker by volume said Wednesday it logged a net profit of 438.4 billion yen ($4.4 billion) in the three months ended September, up from 257.92 billion yen a year earlier, but slightly below a 451.69 billion yen average estimate by seven analysts compiled by Tokyo-based financial data provider Quick.
Nissan Motor rose 2.8% 885 yen after the company cut its full-year net profit forecast Friday to 355 billion yen from 420 billion yen due to costly recalls in the first fiscal half year and disappointing performances in some emerging markets.
Dianippon Screen Mfg. slid 4.5% at 506 yen after the firm's earnings announcement failed to impress investors. The company raised its full-year operating guidance to 7.8 billion yen from 6.5 billion yen.
Mitsubishi Motors Corp rose 0.6% at 1,114 yen after news that it would join Nissan Motor Co and French peer Renault in an alliance that includes sharing technology and production facilities.
Fast Retailing declined 0.8% at 32,250 yen after reporting an almost 14% drop in October same-store sales at its Uniqlo clothing chain, compared to a year earlier. The percentage loss was the largest since December 2010 and followed September's on-year rise of 4.4%.
In Australia, shares in Sydney market finished flat after recouping losses, thanks to strong showing from shares of metal & mining and financial heavyweight companies that helped to offset losses elsewhere. The benchmark S&P/ASX 200 index rose 1.80 points, or 0.03%, to 5433.80. The broader All Ordinaries added 0.30 point, or 0.01%, to 5426.
Shares of iron ore producers were the bright spot in the Sydney market today, driven by stronger than expected bulk commodity prices and a shrinking trade deficit, with junior miners leading the way. Iron ore producer Atlas Iron Ore (AIO) rose by 7.3%, Mount Gibson (MGX) moved ahead by 4.8%. Fortescue Metals (FMG) surged 5.6% to A$5.84. Australia's second biggest miner, Rio Tinto jumped 1.4% to A$65.60 while the larger BHP Billiton rose 0.6% to A$38.09.
The Australian Bureau of Statistics said Australia's trade deficit narrowed to A$284 million in September, from A$693 million in August. During the month, exports were mostly flat, while imports were down 1%.
In China, shares in the Chinese financial market fell down on caution ahead of high-level policy meeting, dragging the benchmark Shanghai Composite index down by 0.82% to 2139.61, with auto, drug maker and financial companies leading losses.
Shares of automakers declined on fading hopes for loosening policy during Communist Party meeting starting later this week after Premier Li Keqiang said as he warned the government against further expanding already loose money policies.
Chinese Premier Li Keqiang has warned the government against further expanding already loose money policies during the Workers' Daily. His remarks were made at a union meeting two weeks ago but were only published in full this week. Yet even as authorities keep an eye on growth, Li sounded a warning on easy credit supply, which he said had exceeded 100 trillion yuan (US$16.4 trillion) in the world's second-biggest economy. Our outstanding M2 money supply has at the end of March exceeded 100 trillion yuan, and that is already twice the size of our gross domestic product (GDP), Li was quoting as saying. In other words, there is already a lot of money in the 'pool,' to print more money may lead to inflation.
Among automakers, Great Wall Motor Co. sank to 40.20 yuan. Chongqing Changan Automobile Co., the partner of Ford Motor Co., plunged 5.6% to 11.43 yuan. SAIC Motor Corp. declined 3.4% to 14.69 yuan.
Mainland China listed banks and financials were also lower, with Ping An Bank dropped 3.7% to 13.15 yuan. Industrial Bank slumped 2.6% to 11.19 yuan. Poly Real Estate, the second-biggest developer, retreated 2.1% to 9.31 yuan.
Shares of Chinese energy companies went up, with Sinopec, the largest Chinese oil refiner, leading rally, up 2.2% to 4.72 yuan after announcing its parent company bought about 6.1 million shares yesterday and plans to increase its stake in the next 12 months. PetroChina Co, the nation's biggest energy producer, rose 1.3% to 7.91 yuan. Offshore Oil Engineering Co. climbed 4.9% to 9.30 yuan, taking its gain for the week to 14%. Guanghui Energy Co. added 4.6% to 11.75 yuan.
In Hong Kong, HK shares ended weaker in volatile trade, on tracking weak cues from Mainland China bourses. The Hang Seng Index fell 2.01 points to 23036.94 while the Hang Seng China Enterprises Index sank 75.58 points to 10561.57.
Among the HK 50 blue chips, 19 stocks rose and 24 fell, with 7 stocks remaining steady. Want Want China Holdings was top blue-chip loser, falling 2.1% to HK$11.14. Kunlun Energy Co rose 2.3% to HK$13.18, becoming the top blue-chip winner.
HSBC gained 0.3% to HK$86.6. China Mobile jumped 1.1% to HK$81.25. Hong Kong Exchanges & Clearing was up 0.6% to HK$125.0 after the company reported its 3Q net jumped nearly 20%.
Elsewhere, Geely added 1.5% to HK$3.95 after it reported sales growth of 15% in October year-on-year, or 30% month-on-month. Samsonite International SA jumped 6.31% to HK$21.90after posting third-quarter sales that were 17% higher than a year earlier.
Bank of Chongqing closed flat at HK$5.99 after the first Chinese bank to go public in three years started trading in Hong Kong. The fifth-largest bank by assets in the city of Chongqing raised $546 million in an offering that came at a time that fears of bad loans and tighter regulations weigh on sentiment toward the sector.
In India, Indian benchmark indices finished weaker today, as investors continued booking profit for second day on market overheating woes following sharp recent rally. The S&P BSE Sensex was down 79.85 points or 0.38% to 20,894.94.
Bharat Heavy Electricals (Bhel) fell in choppy trade after weak Q2 results. The stock was off 0.6% at Rs 141.35. The scrip hit high of Rs 144.90 and low of Rs 138.70 so far during the day. The company's net profit fell 64.22% to Rs 455.95 crore on 11.31% decline in total income to Rs 9482.25 crore in Q2 September 2013 over Q2 September 2012. The Q2 result was announced during trading hours today, 6 November 2013.
State Bank of India (SBI) dropped 2.22%. SBI today, 6 November 2013, said it has revised upwards the base rate by 20 basis points (bps) from 9.8% to 10% per annum (p.a) and the benchmark prime lending rate by 20 bps from 14.55% to 14.75% p.a with effect from Thursday, 7 November 2013. A bank's base rate is the rate which it charges on floating-rate loans. The prime lending rate is the benchmark for floating-rate loans made before Indian banks shifted to the base rate in July 2010.
Elsewhere in the region, New Zealand's NZX 50 index rose 0.12%. Indonesia's Jakarta Composite index added 0.6%. South Korea's KOSPI fell 0.01%. Taiwan's Taiex index added 0.24%. Malaysia's KLSE Composite shed 0.24%. Singapore's Straits Times index fell 0.01%.
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