Blue chips shares of the Asia Pacific market declined on Tuesday, June 11, 2013, due to profit taking pressure in tandem with a weak global trend and sharp rally in prior session.
Investors chose to book gains made prior day on renewed jitter about Federal Reserve policy stance after the Standard & Poor's credit ratings agency hiked the sovereign credit outlook for the United States to stable from negative.
A decision by the S&P's to raise its outlook Monday for its credit rating on the U.S. government's long-term debt stirred up more worries that the Federal Reserve could soon end its massive bond buying spree due to a string of positive economic data. Investors have grown fearful that the Federal Reserve will reduce the amount of financial assets it buys in the markets _ so-called tapering.
S&P's on Monday removed the near-term threat of another credit rating downgrade for the United States by revising its outlook to stable from negative, citing an improved economic and fiscal outlook. The change effectively means there is less than a one-third chance of a downgrade in the next two years.
S&P said a key factor to its revision in the U.S. rating outlook was the agreement reached by the U.S. Congress to avoid the 'fiscal cliff', which had threatened some $600 billion in automatic tax increases and spending cuts. S&P cut the U.S. sovereign credit rating in August 2011 to AA-plus from the highly coveted top grade of AAA, citing political brinkmanship and gridlock in Washington that delayed an otherwise routine raising of the nation's debt ceiling.
In the Asia pacific region, shares in Tokyo market ended steep lower as disappointment over Bank of Japan policy statement triggered selling across the board. Meanwhile uncertainty over US Fed's stimulus tapering intensified profit booking. The benchmark Nikkei Stock Average closed at 13317.2, down by 196.58 points from prior day or 266.69 points lower from today's intraday peak.
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Tokyo investors chose to book prior day gains after the Bank of Japan decided to keep the target for the expansion of the monetary base unchanged at JPY 60-70 trillion annually, disappointing some investors who had hoped for more easing. Some market participants had speculated that the BoJ would extend the length of fixed-rate loans to banks to two years or more from the current one year so that the lenders would buy more Japanese government bonds, which have seen recent volatility.
In Australia, the Australian share market closed modest higher, registering first gain in four sessions in row, led by drug makers after a strong debut by IVF company Vitrus. The benchmark S&P/ASX200 index advanced 0.4% to finish at 4757.10. Australian market closed on Monday for a public holiday, getting its first chance to react to the events that influenced the previous session namely, last week's forecast-beating US nonfarm payrolls data and disappointing Chinese economic data that came out over the weekend.
The Virtus IPO has been the highlight of the session as market got an IPO since long time. Investors watched closely as other companies out there wait to see if the market is ready for IPOs again and some feel this has helped bolster some confidence in a market which is desperately in need of some bright spots.
Health care was the biggest riser among the Australian sectors, gaining 2.1% on the back of a strong debut by IVF company Vitrus. The Virtus closed at A$6.20, 9.1% up from IPO listing price. ResMed rose 1.2% to A$4.90, Cohlear 2.7% to A$57.13, Sonic Healthcare 3.3% to A$14.38, CSL 1.4% to A$58.62 and Primary Healthcare 1.9% to A$5.005.
In South Korea, shares in Seoul fell down, dragging the Kospi Composite 0.62% lower. The index heavyweight Samsung Electronics Co stumbled 2.53% on concerns that its Galaxy S4 smartphone may not be selling as well as expected.
In Hong Kong, city shares fell sharply, led by Chinese companies listed in the city after poor economic data out over the weekend renewed concerns about China's shaky economic recovery. The Hang Seng China Enterprises Index was down 1.65% and the Hang Seng Index was off 1.2%. Market heavyweights were lower. China Mobile edged down 0.06% to HK$78.55, while HSBC Holdings fell 1.1% to HK$83.6. Mainland banks were weaker. Bank of China fell 3% to HK$3.26. ICBC and CBC dropped 1.3% to HK$5.17 and HK$6.05. Realty stocks declined with New World China lost 8.5% to HK$2.58, Evergrande 5% to HK$2.88, Agile Property 4.3% to HK$8.84 and Country Garden 4.2% to HK$47.12. China Resource Land lost 3.4% to HK$21.60.
In India, weakness prevailed in the Indian market with the key benchmark indices continued trading lower in the afternoon trade. At 13:20 IST, the S&P BSE Sensex was down 279.02 points or 1.44% to 19,162.05. The index declined to 19,121.18 in early afternoon trade, its lowest level since 23 April 2013. Today's decline on the bourses was broad based. A run on the rupee and weakness in global stocks weighed on sentiment.
The partially convertible rupee was trading at 58.84 after hitting record low of 58.96 versus Monday's close of 58.15/16 per dollar. The rupee had lost 1.9% on Monday, 10 June 2013, weighed down by broad gains in the dollar. A weak rupee makes imports costlier, stoking inflation concerns, thereby capping the Reserve Bank of India's scope to extend monetary easing and counter the slowest economic growth in a decade.
Foreign institutional investors (FIIs) sold shares worth a net Rs 114 crore on Monday, 10 June 2013, as per provisional data from the stock exchanges.
Jindal Steel & Power dropped on heavy volumes after media reports the Central Bureau of Investigation (CBI) has registered an FIR against Congress MP and company's Chairman Naveen Jindal in the coal scam case. Shares of other metal stocks extended intraday losses. Shares of power generation companies fell across the board.
Elsewhere, New Zealand's NZX50 lost 0.22%, Taiwan's Taiex fell 0.54%, Malaysia's KLSE shed 0.46% and Singapore's STI declined 0.94%. Chinese stock market remained closed for a public holiday.
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