Asia Pacific share market submerged in negative turf on Thursday, 10 September 2015, snapping two sessions of winning streak, amid persistent concerns over China's economy and the timing of a U.S. rate rise.
Regional stocks remained unstable because of uncertainty over the timing of the Federal Reserve's potential rate increase and further evidence of China's slowing economy. The immediate concern for investors is a Fed meeting next week, when officials are expected to debate the timing of the first U.S. interest rate rise in nearly a decade. Recent comments suggest Fed board members are divided about a September rate increase, and the recent selloff in global markets has fueled expectations of a delay.
China's Producer Price Index, the factory-gate measurement of inflation and a harbinger for future prices at the consumer end, declined 5.9% in August, down further from the drop of 5.4% in July and extending the decrease stream to the 41st consecutive month, according to the National Bureau of Statistics today. Whilst, the Consumer Price Index, the main gauge of inflation, rose 2% from a year earlier last month, accelerating from the pace of 1.6% in July and 1.4% in June. It was the highest since August of last year and more than earlier market expectations of around 1.8%. Factory deflation is pushing up real borrowing costs for the industrial sector, compounding challenges for policy makers as the growth outlook dims.
Among Asian bourses
Australia market crashes on weak offshore lead
The Australian share market crashed after two days of gains, as investors were booking recent gains after heavy losses on Wall Street overnight and pullback in commodity prices. Meanwhile, lacklustre Chinese and Japanese economic data and the RBNZ rate cut also sapped investors' appetite for riskier assets. All ASX sectors ended down, with shares of energy, materials, financials, utilities and telecom companies being major losers. The benchmark S&P/ASX 200 index stumbled 126.10 points, or 2.42%, to 5095 points. The broader All Ordinaries index ended down 119.90 points, or 2.29%, up at 5117.
The Australian Bureau of Statistics has released labour force data on Thursday, showing Australia's estimated seasonally adjusted unemployment rate for August 2015 was 6.2 per cent, a decrease of 0.1 percentage points.
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Resource stocks top losers in the ASX index, with the materials sector erasing 2.1% and energy tumbling 3.8%. Among the big miners, Rio Tinto lost 0.5% to A$51.27. BHP Billiton extended losses, down 3% at A$23.92, after going ex-dividend on Wednesday. Among the big oil explorers, Oil and gas heavyweight Woodside Petroleum dropped 2.6% to A$29.13, Oil Search 3.6% to A$7.57, Origin Energy 6.7% to A$7.42 and Santos 5.1% to A$4.43.
Banks and financial stocks also suffered heavy losses, with top four lenders leading retreat. National Australia Bank led losses among major banks, down 3.5% to A$30.18, meanwhile Australia & New Zealand Banking Group declined 3.1% to A$27.65, Commonwealth Bank 2.1% to A$75.13, and Westpac Bank 3.3% to A$30.76. Regional lender Bendigo & Adelaide Bank dropped 2.4% to A$10.30 and Bank of Queensland sank 2.1% to A$12.28.
Nikkei tumbles 2.5%
The Japanese share market declined, as investors opted to book part profit after a surprise miss in core machinery orders rekindled concerns about Asia's second-biggest economy. Meanwhile, heavy losses on Wall Street overnight and yen appreciation against greenback also weighed down investors' sentiments. Total 30 out of Topix's 33 industry groups declined, with Mining, Insurance, Oil & Coal Products, Foods, Transportation Equipment, and Pharmaceutical sectors being major losers. The Nikkei Stock Average dropped 470.89 points, or 2.51%, to end at 18299.62 points, following a 7.7% gain on Wednesday, the biggest daily gain since October 2008. The broader Topix index declined 1.85%, or 27.85 points, to 1479.52 at the close in Tokyo.
Machinery orders data from the Cabinet Office released on Thursday, showing Japan's core private-sector machinery orders unexpectedly fell 3.6% on the month to an eight-month low of Y805.6 billion in July for the second straight monthly drop after 7.9% decline in June amid sluggish exports and consumption.
Weak machinery orders add to the list of recent data that indicate a rebound in GDP for the July-September quarter may not be so strong as expected before after the economy contracted for the first time in three quarters in April-June. Companies may be becoming more cautious about implementing business investment plans in light of a slowdown in China other emerging economies. The Cabinet Office has projected that core machinery orders will post a fifth straight quarter-on-quarter rise in July-September but the pace of increase will decelerate to +0.3% from +2.9% in April-June and +6.3% in January-March.
Japan shares returned to losses, despite encouraging comments from Bank of Japan Governor Haruhiko Kuroda that the government would continue with its current easing program until inflation stabilized at 2%. He said that inflation may not reach that level until around autumn next year, depending on oil price
Ruling Liberal Democratic Party lawmaker Kozo Yamamoto said that the Bank of Japan should expand its monetary easing program by at least 10 trillion yen ($83 billion). The central bank's Oct. 30 policy meeting would be a "good opportunity" to add stimulus, he said.
Shares of energy and mining companies declined heavily in Tokyo, as West Texas Intermediate crude extended falling streak for a fourth day. Inpex dropped 4.1%, while Japan Petroleum Exploration Co. lost 6.2%.
Fast Retailing Co. tumbled 5.6%, giving back more than half of Wednesday's gain.
Suzuki Motor Corp. sank 6.1% after UBS Group AG cut its rating on the carmaker to sell from neutral.
Mitsubishi Tanabe Pharma Corp. jumped as much as 13% after striking a deal with Biogen Inc. to develop and market a drug for auto-immune diseases.
Shanghai Composite falls after inflation data
The Mainland China's stock market submerged in negative turf, due to profit booking after strong gains in previous two sessions. Selloff pressure arose amid persistent concerns over China's economy after tumble in producer prices reignited concern about a deeper economic slowdown. The declines were also fueled after remarks from Chinese Premier Li Keqiang who said on Thursday that China is not at risk of a hard landing. The Shanghai Composite Index lost 1.39%, or 45.20 points, to 3197.89 points, snapping a 5.3%, two-day advance. The Shenzhen Composite Index, which tracks stocks on China's second exchange, was down 1.58%, or 28.47 points, to 1770.38. The ChiNext Index, which tracks China's NASDAQ-style board of growth enterprises, dropped 1.57%, or 32.60 points, to close at 2039.12.
Shares of commodity producers declined after the biggest tumble in producer prices in six years reignited concern about a deeper economic slowdown. The producer-price index fell 5.9% in August, extending slides to 42 straight months, while consumer prices increased 2%, the fastest pace in a year. Factory deflation is pushing up real borrowing costs for the industrial sector, compounding challenges for policy makers as the growth outlook dims. Yunnan Copper Co. sank by the 10% daily limit for a third straight day, while Jiangxi Copper Co. retreated 3.6%.
Shares of automakers were mixed after data released by an industry association showed auto sales in the mainland fell 3% in August from a year earlier to 1.7 million vehicles. That compares with a 7.1% drop in July and a 2.3% decline in June. Dongfeng Auto closed down 4.2%, while Guangzhou Auto and Shenzhen-listed FAW Car notched up 0.2 and 1.3%, respectively. Hong Kong market joins global slump
Hong Kong stock market has closed weaker, as investors fret over US rate hikes and Chinese volatility. The Hang Seng Index dropped 568.81 points, or 2.57%, at 21562.50 points. The Hang Seng China Enterprises Index, benchmark measure of performance of mainland China enterprises, slipped 195.37 points, or 1.96%, to 9780.16 points. Turnover soared to HK$115.43 billion from HK$82.6 billion on Tuesday.
Shares of Brokerages were among the biggest decliners in Hong Kong. China's campaign to end the equity rout is driving investors away from the brokerage industry. Citic Securities Co. slumped 3.1%, while China Galaxy Securities Co. declined 2.3%.
Hong Kong banks were softer, with BOCHK (02388) falling 3% to HK$24.5. Dah Sin Banking (02356) and BEA (00023) slipped 1% and 2% to HK$14.8 and HK$26.5.
Macau casino operators were lower after Barclays Research said it remains cautious on the magnitude of Macau gaming industry's revenue recovery and, thus, retained its forecasts for gross gaming revenue to fall 32% in 2015. Sands China (01928) declined 5% to HK$27.05. Galaxy Ent (00027) fell 3% to HK$23. Wynn Macau (01128) and MGM China (02282) also slid 5% and 3% respectively.
Sensex recovers from initial sharp slide
After an initial sharp slide, key benchmark indices recovered during the course of the trading session. Trading for the day ended with the barometer index, the S&P BSE Sensex, registering a modest loss of 97.41 points or 0.38% at 25,622.17. The 50-unit CNX Nifty lost 30.50 points or 0.39% to settle at 7,788.10. Trend in overseas stock markets continued to drive sentiment on the domestic bourses. Intraday rebound on the domestic bourses accentuated towards the fag end of the trading session as European stocks recovered and as trading in US index futures indicated a recovery for US stocks from previous trading session's sharp slide. However, by the time trading in India was over, US index futures had trimmed a lion's portion of its gains and intraday recovery in European stocks did not sustain.
Closer home, banking and auto stocks led the recovery for key benchmark indices. The Sensex and the Nifty fell sharply in early trade taking cues from weakness in Asian stocks. The Sensex lost 432.08 points in early trade and the Nifty plunged 140.10 points in initial trade. Stocks in China and Japan led decline in Asian equities after weak Japanese economic data and as a report showing a record rise in job openings in the United States in July sparked worries about a potential interest-rate hike from the US Federal Reserve. Higher US interest rates will reduce the attraction of riskier emerging-markets assets.
Elsewhere in the Asia Pacific region: Taiwan's Taiex index fell 0.2% to 8268.68. South Korea's KOPSI rose 1.4% to 1962.11. New Zealand's NZX50 eased 0.01% to 5670.99. Singapore's Straits Times index lost 1.4% at 2888.03. Indonesia's Jakarta Composite index fell 0.1% to 4343.26. Malaysia's KLCI rose 0.7% to 1614.
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