Asia Pacific share market ended softer after traded in narrow range on Thursday, 03 December 2015, as investor sentiment was stifled by sharp declines in U.S. equities overnight, albeit with losses limited by hesitance ahead of the European Central Bank's policy decision due later in the day and U.S. jobs data on Friday.
Regional Stocks got off to a weaker start after the US market retreated on Wednesday due to investor cautiousness about an interest rate hike by the U.S. Federal Reserve following remarks of Fed Chair Janet Yellen. In a speech the same day, Yellen expressed her confidence in the strength of the U.S. economic recovery, reinforcing the case for an interest rate hike later this month. The Fed is widely expected to announce an increase of 25 basis points in the federal funds rate after a regular monetary policy review scheduled during the middle of this month.
Federal Reserve Chair Janet Yellen is increasingly confident the U.S. economy is growing, intensifying speculation that the Fed will tighten policy just as the European Central Bank seems poised to expand stimulus. Investors are awaiting Friday's jobs report, the last major U.S. data before the Fed decision on Dec. 16.
Investors in emerging markets, including India are worried that once the Fed starts raising interest rates, it will drain liquidity from global emerging markets and redirect it to developed economies. The Fed has held its benchmark short-term interest rate near zero since December 2008. The ultra-loose monetary policy in the US has encouraged heavy investment in higher-yielding emerging markets.
Investors are also opted wait-and-see mood ahead of the European Central Bank's policy-setting meeting later on Thursday.
Among Asian bourses
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Australia market falls on profit taking
The Australian share market ended down, with materials and energy stocks leading losses after 5% drop in crude oil prices and plunge in iron ore to a new 10-year trough of $40.60 a tonne. At the close, the benchmark S&P/ASX 200 index ended 30.60 points, or 0.58%, down at 5227.70 points, while the broader All Ordinaries index de-grew 28 points, or 0.53%, to 5276.70 points.
Shares of materials and energy sectors suffered heavy losses among ASX 10 industry groups, weighed by 5% drop in crude oil prices and plunge in iron ore to a new 10-year trough of US$40.60 a tonne. Global miner BHP Billiton was off 3% to A$18.19, while Rio Tinto had fallen 2.1% to A$45.59. Oil and gas producer Woodside Petroleum dropped 3.8% to A$29.46, Oil Search retreated 2.2% to A$8.10, and Origin Energy was down 1.8% to A$5.55. Santos shares lifted 1.7% to A$4.13 after completing its retail shortfall bookbuild.
Shares of banks and financials were also moved into negative territory after a number of days of strong buying this week. Australia & New Zealand Banking Group fell 0.3% to A$27.81, Commonwealth Bank of Australia 0.3% to A$81.50, and Westpac Banking Corp 0.6% to A$32.91. National Australia Bank was up 0.1% at A$30.04
Shares of retailers also endured a tough session after the Australian Industry Group performance of services index fell 0.7 points to 48.2 points in November. The data suggested growth remained patchy and fragile and heralded a disappointing start to the Christmas trading season. Woolworths fell 1.3% to A$23.97, while Wesfarmers dipped 0.5% to A$38.91. JB Hi-Fi was down 1.1% to A$17.80, while Myer was off 2.1% at A$1.155.
Nikkei ends flat
The Japanese share market ended virtually flat after traded in narrow range, as a wait-and-see mood prevailed ahead of the European Central Bank's policy decision due later in the session and U.S. jobs data on Friday. Total 21 out of 33 TSE industry group advanced, with the day's notable gainers comprised Oil & Coal Products, Mining, and Insurance issues, while notable losers were Electric Power & Gas, Services, and Pulp & Paper issues. The Nikkei 225 index at the Tokyo Stock Exchange rose marginal 0.01%, or 1.77 points, to 19939.90. The wider Topix index of all first-section shares edged up 0.04%, or 0.68 point, to 1602.94.
Oil producers and explorers were top gainers among the 33 Topix industry groups, after West Texas Intermediate oil rose 1.7% to trade at $40.61, erasing some of Wednesday's 4.6% drop, after Energy Intelligence reported that Saudi Arabia will propose an eventual 1 million barrel a day cut in OPEC output. Explorer Inpex Corp. added 2.1%, reversing a 1.6% decline, while Japan Petroleum Exploration Co. jumped 2.2%.
Shares of JX Holdings Inc. and TonenGeneral Sekiyu K.K. ended the day 2.7% and 1.1% higher, respectively, on news that the two companies plan to merge. JX Holdings and TonenGeneral said they have agreed to merge by April 2017 and aim to improve profitability by Y100 billion ($811 million) annually within five years.
Fast Retailing Co. dropped 1.6%, after saying same store sales at its Uniqlo brand shops in Japan slumped 8.9% in November from a year earlier.
China Market extends gain
The Mainland China stock market ended stronger for fourth straight session, due to continued expectation for stimulus measures from government, brushing aside a weak November service sector performance. The market rally was also supported by return of some of the roughly 2 trillion yuan ($312.7 billion) locked up in Tuesday's initial public offerings back into equities. The Shanghai Composite Index ended 1.35%, or 47.92 points, up at 3584.82 points. The Shenzhen Composite Index, which tracks stocks on China's second exchange, added 2.5%, or 54.63 points, to close at 2243.94. The ChiNext Index, which tracks China's NASDAQ-style board of growth enterprises, surged 3.63%, or 94.86 points, to close at 2708.12.
China's services purchasing managers' index released by Caixin Media and Markit Economics slowed to 51.2 in November, from 52 a month earlier. While the gauge indicates China's efforts to shift to a consumption-based economy are working, other recent data showing a decline in exports, weakening industrial output and falling producer prices suggest further stimulus may be required to lift the country out of its worst slowdown in a quarter of a century.
Shares of technology sector jumped the most among SSE industry groups. Leshi Internet Information & Technology Corp. soared by the 10% daily limit.
Shares of energy producers advanced as West Texas Intermediate oil rose 1.7% in Asian trade, after Energy Intelligence reported that Saudi Arabia will propose an eventual 1 million barrel a day cut in OPEC output. PetroChina Co. added 2.1%.
Shares of financial and realty continued uptrend as fears arising from the government's crackdown on brokerages receded. Bargain buying largely supported by reports that the government may allow mortgage interest to be deductible. Bottom fishing in realty sector was aided by expectations that China's home prices would rise slightly in the coming year on the back of Beijing's support. China Vanke Co advanced 5%.
Hong Kong stocks fall
The Hong Kong stock market declined for the first time in three days in row, as profit booking triggered on tracking sharp declines in U.S. equities overnight and on caution ahead of a European Central Bank policy meeting later in the day. Decliners were led by properties, utilities, and financial issues. The benchmark Hang Seng Index declined 62.68 points, or 0.28%, to 22417.01 points. The Hang Seng China Enterprises Index, benchmark measure of performance of mainland China enterprises, declined 62.52 points, or 0.62%, to 9987.84 points. Turnover reduced to HK$66.49 billion from HK$79.2 billion on Wednesday.
Shares of Mainland property developers listed in the Hong Kong market were top losers after Jefferies turned cautious on mainland property market, in spite of a research unit under China's Ministry of Finance is studying to include mortgage interests as tax deductible items. China Vanke (02202) soared 6% earlier but pared its gains to 0.2% and ended at HK$21.3. CR Land (01109) was the top pick of the research house, but it fell 1% to HK$22.55. COLI (00688) also softened 0.2% to HK$27.35.
HK developers were pressured on rising hopes of rate hike. Henderson Land (00012) slipped 2% to HK$48. It was the worst performing blue chip. K Wah (00173) dipped 3% to HK$3.34. Swire (00019) declined 1% to HK$85.98.
Energy producers shares soared after market talks that members of OPEC are still in discord in the upcoming meeting (scheduled on 4 December) regarding output reduction. NYMEX crude oil futures plunged 4% overnight, but in Asian hours oil price rebounded 1% on newswire reports that Saudi Arabia would propose the OPEC to cut output by 1 million barrels per day next year. CNOOC (00883) rose 1% to HK$8.92. But Sinopec (00386) and PetroChina (00857) fell 2% and 1% to HK$4.82 and HK$5.67.
Sensex dives 0.9%
Prospects of increase in interest rates in the United States and data showing slowdown in India's services sector growth weighed on Indian stocks, with barometer index, the S&P BSE Sensex, falling below the psychological 26,000 mark. The Sensex lost 231.23 points or 0.89% to settle at 25,886.62. The Nifty 50 index shed 67.20 points or 0.85% to settle at 7,864.15. Stocks of metal and auto companies, public sector banks and index heavyweight ITC led losses for the key benchmark indices.
The seasonally adjusted Nikkei Services Business Activity Index fell to 50.1 in November from October's eight-month high reading of 53.2, pointing to slowdown in growth in India's services sector. The reading of 50 separates contraction from expansion. Services companies displayed a lack of optimism with regards to the 12-month outlook for activity, as sentiment dropped to the lowest in the ten-year survey history. Difficult economic conditions and weak demand reportedly hit confidence.
Eicher Motors gained 2.18%. The company disclosed that due to heavy rains in Chennai, the company has shut down its manufacturing plants in Thiruvottiyur and Oragadam and its offices in the city since 1 December 2015. The company suffered a production loss of 4,000 motorcycles last month due to heavy rains. The company is monitoring the situation closely and hoping for normalcy to return soon.
Bhushan Steel jumped 12.44% after reports the company is in the process of getting Rs 3000 crore from sale and lease-back arrangements for two of its assets in Odisha. With debt of Rs 40000 crore, Bhushan had become a worry for banks.
Visa Steel rose by its maximum permissible daily limit of 20% to Rs 18.44 after Cresta Fund bought 33 lakh shares of the company at an average price of Rs 15.10 per share from Visa Infrastructure in a bulk deal on the NSE yesterday, 2 December 2015. Promoter group entity, Visa Infrastructure held 45.58% stake in Visa Steel as per the shareholding pattern as on 30 September 2015. Cresta Fund held 3.79% stake in Visa Steel as per the shareholding pattern as on 30 September 2015.
Elsewhere in the Asia Pacific region: Taiwan's Taiex index slid 0.02% to 8456.06. South Korea's KOPSI slipped 0.8% to 1994.07. Malaysia's KLCI sank 0.17% to 1673.92. Singapore's Straits Times index edged up 0.01% at 2883.89. Indonesia's Jakarta Composite index fell 0.19% to 4537.38. New Zealand's NZX50 fell 0.29% to 6125.67.
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