Asia Pacific share market closed mostly softer on Tuesday, 02 June 2015, as risk aversion selloff triggered after an encouraging reading on US manufacturing activity in May increased the likelihood that the US Federal Reserve will raise interest rates this year. Meanwhile, selloff pressure intensified amidst doubts about Greece's ability to make debt payments and stay in the euro currency bloc.
Greece's cash-strapped government faced fresh dissent from within the ruling Syriza party after failing to deliver on a promise to reach an agreement with rescue lenders over the weekend. Greece's lenders held an emergency mini-summit yesterday, 1 June 2015 and are preparing a draft text for an agreement, according to reports.
Greece is due to repay 300 million euro to the International Monetary Fund on coming Friday, 5 June 2015. and a total of 1.6 billion euro due by the end of the month when the official bailout expires and the country's banking system could lose the backstop of the European Central Bank. Greece is struggling to reach a deal with eurozone creditors to unlock a 7.2 billion euro bailout payment to avoid default.
US stocks ended with modest gains yesterday, 1 June 2015, recovering part of last week's losses in a session marked by cautious trading as investors reacted to mixed economic data. Among macro data in US, a report from ISM showed the pace of manufacturing growth rose in May. Other data showed construction spending surged in April but consumer spending was unexpectedly flat in April.
Among Asian bourses
Nikkei closes softer on profit booking
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Japanese share market closed weaker after fluctuating in tight range, sapping twelve sessions of straight gains, as investors opting to withdraw some profit off the table on tracking weak trade on the other regional bourses which declined amid doubts about Greece's ability to make debt payments and stay in the euro currency bloc. The Nikkei Stock Average declined 26.68 points, or 0.13%, to end at 20543.19. The Topix index of all Tokyo Stock Exchange First Section issues dropped 0.26%, or 4.35 points, to 1674.21. Both measures have rallied for 12 days.
Shares of export-related companies advanced, boosted by the weaker yen. The US dollar rose to 124.85 yen today, from 124.26 yen on the previous day. Hitachi advanced 0.3% to 846.40 yen and Nidec Corp rose 1.1% to 9162 yen. TDK Corp added 0.8% to 10070 yen and Trend Micro Inc rose 0.5% to 4390 yen.
NTT DoCoMo Inc rallied 3.9% to 2337 yen after reports that the wireless telecom hopes to lift return on equity to at least 10% by the fiscal year ending in March 2018, up from 7.4% currently.
Shares of ANA Holdings Inc declined 2.7% to 331 yen after reports that a creditor of bankrupt Skymark Airlines Inc. had called for a restructuring proposal without ANA as the sponsor.
Shares of Japan Tobacco Inc. lost 1.8% to 4532.50 yen after a court in Canada ordered its Canadian unit and two other companies to pay a combined $12.4 billion to plaintiffs of two class action lawsuits.
Australia market tanks 1.73%
The Australian share market saw another day of heavy selling, due to doubts about Greece's ability to make debt payments and after the Reserve Bank of Australia decision on Tuesday to leave the cash rate unchanged at 2%. The benchmark S&P/ASX 200 Index dropped 99.40 points, or 1.73%, to 5636, while the broader All Ordinaries Index dropped 94.10 points, or 1.64%, to 5639.90. Market turnover was relatively light, with 1.5 billion shares changing hands worth of A$3.38 billion.
The Reserve Bank of Australia on Tuesday left the cash rate at record-low 2%. The RBA has lowered rates twice this year, reacting to a slowdown in economic growth and benign inflation risks. At the start of May, it lowered its growth forecasts further, warning the economy was being hit hard by a fall in the price of iron ore, the country's biggest export.
The Australia Bureau of Statistics said on Tuesday that Australia's current account deficit widened to a seasonally adjusted A$10.7 billion in the first quarter of 2015 from the fourth quarter of 2014. The fourth-quarter deficit was revised upwards to A$10.2 billion from the A$9.6 billion figure initially reported. Australia's net foreign debt rose by 3% in the first quarter from the fourth to A$954.7 billion.
Financial stocks closed down, with top four lenders being top losers after the RBA left the cash rate steady at 2%. The Commonwealth Bank of Australia fell 1.3% to A$83.37, Westpac Banking Corp 2.1% to A$32.43, National Australia Bank 1.7% to A$33.46, and ANZ Banking Group 1% to A$32.40.
Shares of materials and resources companies closed down, with BHP Billiton down by 2.6% at A$28.44 after Deutsche Bank downgraded the stock to hold. Rio Tinto lost 1.6% to A$56.51. Fortescue Metals Group rose 0.2% to A$2.385. Building-materials maker CSR dropped 4.7% to A$3.89 as its shares traded without rights to the latest dividend.
The energy players were also down, on tracking a solid loss for Brent crude-oil futures overnight, with Oil Search down 3.8% to A$7.42, WorleyParsons down 2.7% to A$10.44, and Beach Energy down 2.3% to A$1.05.
China stocks extend gain
Mainland China share market continued its northward journey, amid optimism of government stimulus measures after the latest reading on Chinese manufacturing presented a mixed picture in May with the official gauge recording modest gains and a private index pointing to continued sluggishness. The market gains led by new-economy stocks on hopes their earnings will be solid and faster than those in traditional industries. The Shanghai Composite Index advanced 81.79 points, or 1.7%, to end at 4910.53, after yesterday's 4.7% rally. The gauge has rallied 52% in 2015, the most among global benchmark indexes, as the government cut interest rates and margin debt climbed to a record.
All 10 SSE industry groups ended higher, with consumer discretionary issue being top gainer, with rise of 3.9%, followed by energy up 6.5%, information technology up 3.6%, consumer staples up 3.2%, utilities up 2.9%, materials up 2.4%, telecommunication services up 2.2%, healthcare up 1.6%, industrials up 1.5%, and energy 1.5%.
Shares of technology companies advanced the most among SSE industrial group, amid optimism government stimulus measures will buoy the economy and boost earnings. Yonyou Network Technology Co., a software maker, locked 10% upper circuit at 70.85 yuan and Searainbow Holding Corp. jumped 9.8% to 75.38 yuan.
Shares of vaccine producers climbed as concerns mounted over the Middle East Respiratory Syndrome. Kangmei Pharmaceutical Co rose 7.8% to 47.95 yuan and North China Pharmaceutical Co 8.8% to 12.55 yuan.
Hong Kong market falls 0.51%
The Hong Kong stock market pulled back, on catching weak cues from other regional markets. The Hang Seng Index ended down 139.77 points or 0.51% to 27457.39, off an intra-day high of 27602.88 and day low of 27348.13. The Hang Seng China Enterprises Index, benchmark measure of performance of mainland China enterprises, lost 97.82 points, or 0.68%, to 14201.63 points. Turnover reduced to HK$146.49 billion from HK$164.84 billion on Monday.
Hong Kong index top-weighted stocks suffered the most losses, with HSBC Holdings down 0.4% on reports that the Sino-British banking giant may announce next week a plan for 10,000 to 20,000 job cuts globally. China Construction Bank Corp and China Construction Bank Corp both lost 0.5%, but Tencent Holdings rose 0.7%.
Hong Kong listed Chinese banks were mostly lower, with Bank of Communications Co down 1.6% and Industrial & Commercial Bank of China off 0.6%.
Construction equipment manufacturer Zoomlion Heavy Industry Science & Technology Co spurted 12.3% as it resumed trading after announcing plan to join Mandarin Capital Management in the purchase of a 75% stake in Italian environmental company Ladurner Ambiente.
Property developer Guangzhou R&F Properties Co inclined 5.4% after the company restarted its plan for an initial public offering on the mainland stock markets.
Perfect Shape PRC Holdings jumped 6.3% after saying it expects to a significant increase in net profit for the year that ended March 31.
Sensex dives as IMD downgrades of monsoon forecast
Banking stocks led losses as key benchmark indices slumped after Minister for Earth Sciences Dr Harsh Vardhan said the India Meteorological Department (IMD) has prepared the 2nd stage long range forecast of monsoon which indicates that rainfall for the country as a whole is likely to be deficient this year. The Sensex was provisionally off 682.96 points or 2.45% to 27,166.03.
Dr Harsh Vardhan said that the IMD has downgraded this year's monsoon forecast to 88% of the long period average with a model error of plus/minus 4%, from April forecast of 93% of the long period average with a model error of plus/minus 5%. His comments came shortly after the Reserve Bank of India (RBI) Governor Dr. Raghuram G. Rajan said the RBI decided to front-load a rate cut at today's policy and wait for more certainty on both the monsoon outturn as well as the effects of government responses if it turns out to be weak. The RBI cut its benchmark lending rate viz. the repo rate by 25 basis points to 7.25% after a monetary policy review today, 2 June 2015. The RBI's announcement came at 11:00 IST.
Today's decline on the domestic bourses was broad based, with more than two losers against every gainer on BSE. The BSE Mid-Cap index was off 2.26%. The BSE Small-Cap index was off 2.11%. A number of stocks which are the constituents of the BSE Small-Cap index fell 2% to 20%.
Shares of two-wheeler makers and tractor major Mahindra & Mahindra edged lower after the downgrade in monsoon forecast. Bank stocks edged lower after the Reserve Bank of India (RBI) cut its benchmark lending rate viz. the repo rate by 25 basis points to 7.25% after a monetary policy review today, 2 June 2015, matching market expectations.
Foreign portfolio investors bought shares worth a net Rs 113.47 crore yesterday, 1 June 2015, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) bought shares worth a net Rs 49.34 crore yesterday, 1 June 2015, as per provisional data released by the stock exchanges.
Elsewhere in the Asia Pacific region: Taiwan's Taiex index fell 0.1% to 9614.26. South Korea's KOSPI added 1.1% to 2078.64. New Zealand's NZX50 grew 0.3% to 5863.74. Singapore's Straits Times index fell 1.3% to 3346.57. Malaysia's KLCI added 0.1% to 1745.22.
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