Headline equities of the Asia Pacific market closed mostly down on Tuesday, 25 November 2014, as investors largely took their foot off the pedal following stellar gain prior day that came on the back of China's surprise decision last week to slash interest rates for the first time in two years and dovish comments from European Central Bank President Mario Draghi Friday night.
The People's Bank of China surprised the market after market hour on last Friday by cutting its benchmark lending rate by 0.40% to 5.6%, the first reduction since July 2012, in a bid to kick-start growth. The deposit rate was cut by a smaller 0.25% to 2.75%.
The market participants are in caution before the U.S. economic data and an OPEC meeting outcome. The U.S. Commerce Department is scheduled to release its second of three estimates of how fast the U.S. economy grew in the July-September quarter. The outcome of the Organization of Petroleum Exporting Countries meeting in Vienna on Thursday is eagerly awaited to check for a possible agreement to cut production to shore up prices.
Among Asian bourses
Aussie market slips 0.5% on profit booking
Australian share market closed down, as investors booked part profit following strong gain yesterday. Most of the ASX sectoral indices declined, with shares mining and energy players declined the most amid worries about weaker commodity prices, while banks mixed on caution ahead of release of the Murray Inquiry. The S&P/ASX 200 index and broader All Ordinaries index both closed 0.5% to 5334.80 and 5320.90, respectively.
Shares of mining and energy companies stumbled as soft iron ore futures prices pointed to the price of the commodity falling to below $US70 a tonne, and as oil prices were trading weak ahead of an Organisation of the Petroleum Exporting Countries (OPEC) meeting on Thursday. Resources giant BHP declined 2.4% to A$32.41, while Rio Tinto, Australia's biggest iron ore miner, fell 1.5% to A$57.41. Fortescue Metals Group, the third-largest exporter of the steel-making commodity, tanked 5.7% to A$2.81. ARRIUM slipped 5.7% to A$0.25.
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The major banks were mixed on caution ahead of release of the Murray Inquiry. Global credit rating agency Fitch Ratings said the big four banks could be forced to increase their capital buffers by up to $53 billion if the Financial System Inquiry took aggressive measures to shore up the banking system. The capital shortfall is almost double the combined $29 billion of profits of the big four banks.
Westpac Banking Corp rose 0.3% to A$32.60 and ANZ Banking Group climbed up 0.7% to A$32.10, while Commonwealth Bank of Australia fell 0.3% to A$80.17 and National Australia Bank slipped 0.8% to A$32.15. Global insurer QBE shares edged up 0.28% to $10.95 after news the company raised $US700 million through the issue of 30 year "Tier II" capital securities. The raising formed part of QBE's capital plan and will be used to pay down senior debt, a company statement said.
Nikkei rises 0.33%, catching up after holiday
Japanese share market finished modest higher, catching up gain in the global market yesterday on the back of a surprise rate-cut from China and dovish comments from European Central Bank President Mario Draghi. Market interest was also seen boosted by the listing debut of the JPX-Nikkei Index 400 futures contract. The Nikkei 225 Stock Average gained 0.3% to 17407.62. Japanese stock markets were shut yesterday for a holiday.
The Bank of Japan kept a pledge to expand the monetary base at an annual pace of 80 trillion yen ($677 billion). The BOJ is committed to achieving its target of 2% inflation and that will make it costly for companies to hoard cash, central bank Governor Haruhiko Kuroda said in a speech to business leaders in Nagoya today.
The Osaka Securities Exchange launched JPX-Nikkei Index 400 futures as a listed product on Tuesday, to popular success. Volume for the near-term December contract totalled over 70,000 contracts, almost double the Nikkei 225 December futures' tally.
Shares of insurance companies and tyre makers gained the most in Tokyo market today. Dai-ichi Life Insurance added 2.6% to 1,747 yen. Bridgestone rose 1.6% to 3,980.5 yen.
Sony Corp shares jumped 6.1% to 2582.50 yen after Jefferies Group raised its share price forecast target 29% to 3,520 yen, citing CFO Kenichiro Yoshida's efforts to reduce the company's exposure to low-profit-margin consumer electronics.
Sanix surged 20% to 604 yen on a report utilities will resume buying power produced from renewable sources, with Kyushu Electric Power Co. planning to resume purchases as early as this year.
Shanghai Composite hits fresh three-year high
Mainland China share market advanced to three year high, as appetite for risk assets continued to cheer for second straight day after surprise interest rate cut by China's central bank last week. The Shanghai Composite spurted 34.72 points, or 1.37%, to 2567.60 at the close, adding to yesterday's 1.9% advance. Full-day turnover was strong, with 314.32 billion shares changed hand worth of 282.16 billion yuan.
Shares in interest rate linked companies climbed up as the rate cut could reduce their borrowing costs. Zijin Mining Group Co. jumped 5.6% and Aluminum Corporation of China added 2.7%. Poly Real Estate rose 1.4% while Shanghai Wanye Enterprises Co. surged 10%. Gree Electric Appliances Inc. added 3.4%.
Stocks in the consumer discretionary and technology companies also ended higher. Car maker SAIC Motor Corporation added 2.8% and Founder Technology Group rose 1.5%.
Securities companies stocks mixed on part profit booking after a strong rally over the last two sessions. Citic Securities Co. lost 0.5% while Haitong Securities Co. rose 0.2%.
HK Stocks down in narrow and subdued trade
Hong Kong share market closed edge below neutral line after swung between small gains and losses, on part-profit booking following stellar gain prior day after the Chinese central bank announced a surprise rate cut Friday night. The Hang Seng Index ended down by 49.23 points, or 0.21%, to 23843.91, off an intra-day high of 23935.07 and low of 23809.51. Turnover declined to HK$89.04 billion from HK$105.25 billion on Monday.
Shares of banks and property developers pulled back from their recent gains, with China Minsheng Banking Corp down 2.1%, Bank of China down 0.3% and China Citic Bank Corp down 0.8%. Property shares also included some underperformers, with China Vanke Co down 3.6%, Sunac China Holdings down 3.7%, China Resources Land down 1.5%, Sino-Ocean Land Holdings down 2.8%, Shimao Property Holdings down 3% and Poly Property Group Co down 5.5%.
Sensex snaps 3-day winning streak
India's equity markets fell as investors booked profits after the benchmark indices hitting new highs in previous two consecutive days, and as the stock market regulator Securities and Exchange Board of India (Sebi) imposed restrictions on issue of Offshore Derivative Instruments (ODIs) by foreign portfolio investors (FPIs). Index heavyweight ITC led the decline. The Sensex provisionally closed 0.57%, or 161.49 points, lower at 28338.05 points, while the National Stock Exchange's broader barometer 50-share CNX Nifty fell 0.79%, or 67.05 points, to end at 8463.10 points.
Cigarette maker ITC shares dropped 4.99% to Rs 355.70. The stock hit high of Rs 378.80 and low of Rs 348.60. Health Minister J P Nadda stated in a written reply in the Rajya Sabha today, 25 November 2014, that the Ministry of Health & Family Welfare has accepted recommendations of a committee that has suggested prohibition on sale of loose or single stick of cigarettes, increasing the minimum legal age for sale of tobacco products, increasing the fine or penalty amounts for violation of certain provisions of the Cigarettes and Other Tobacco Products (Prohibition of Advertisement and Regulation of Trade and Commerce, Production, Supply and Distribution) Act, 2003 (COTPA), as well as making such offences cognizable. In this regard, a draft note for Cabinet has been circulated for Inter-Ministerial consultation.
Elsewhere in the Asia Pacific region: Taiwan's Taiex index fell 0.07% to 9116.24. South Korea KOSPI was up 0.08% to 1978.54. New Zealand's NZX50 fell 0.53% to 5442.68. Singapore's Straits Times index grew 0.13% at 3345. Malaysia's KLCI grew 0.26% to 1838.56. Indonesia's Jakarta Composite index sank 0.44% to 5118.94.
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