Asia Pacific share market closed mostly higher on Monday, 06 June 2016 on expectations that the Federal Reserve is less likely to raise interest rates soon in the wake of weaker-than-expected jobs data.
The probability of a June rate hike implied by Fed fund futures fell to 4% from a high of 34% last week following the release of a surprisingly weak jobs report. ay, nonfarm payrolls increased by 38,000 from the previous month, far weaker than the consensus market estimate of an increase of 164,000 and representing the smallest growth since September 2010.
Investors in emerging markets have been worried that higher interest rates in the US will drain liquidity from emerging markets and redirect it to developed economies. The Federal Open Market Committee (FOMC) next undertakes monetary policy review at a two-day meeting on 14-15 June 2016. The Fed has kept the benchmark fed funds rate unchanged after raising it for the first time in nearly a decade in December 2015.
All eyes will be on Federal Reserve Chair Janet Yellen as she speaks overnight on the topic of 'The Economy and Monetary Policy. Ms Yellen could spark fresh market volatility if she backs away from a near-term interest rate increase.
Among Asian bourses
Australia Market gains as miners
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Australian share market started a new week with firm footing, on the back of strong gains in mining stocks, after surprisingly weak U.S. jobs growth knocked up the U.S. dollar and sent gold and metal prices higher. At close of trade, the benchmark S&P/ASX 200 index advanced 41.50 points, or 0.78%, to 5360.40. The broader All Ordinaries grew 38.50 points, or 0.71%, to 5431.
Shares of gold miners surged after gold hit a two-week high. Australia's No. 1 gold miner Newcrest Mining rose 11.6% to A$22.06 and Perseus Mining gained 10.2% to A$0.54. Similarly, copper and zinc prices jumped as the US dollar fell, boosting top global miners BHP Billiton and Rio Tinto around 4% to A$19.22 and A$45.22, respectively.
Shares of Australia's big insurers came under pressure in the wake of fierce rain storms that left a trail of damage along the east coast over the weekend. QBE Insurance Group fell 1.6% to A$12.21 and Insurance Australia Group dropped 2.2% to A$5.72.
Contractor UGL slumped 33.3% to A$2.30 after warning it may have to book a provision for a loss of up to A$200 million on its work for the huge Ichthys liquefied natural gas project off northwestern Australia, on top of a A$175 million provision already booked.
Nikkei ends 0.37% down
The Japan share market finished first trading session of a new week with sour note, hurt by yen appreciation to below 107 level against greenback after weaker-than-expected U.S. government jobs data for May receding expectations of an early interest rate hike by the U.S. Federal Reserve. The 225-issue Nikkei average slumped 62.20 points, or 0.37%, to end at 16,580.03. The Topix index of all first-section issues lost 4.80 points, or 0.36%, to 1,332.43. Falling issues outnumbered rising ones 1,233 to 595 in the TSE's first section, while 128 issues were unchanged. Volume increased to 1.870 billion shares from Friday's 1.670 billion shares.
Export-oriented automakers Toyota, Honda and Nissan were battered. But technology giants Sony and Hitachi erased early losses to close higher. Domestic demand-oriented issues attracted purchases, with Japan Tobacco, confectionery maker Meiji Holding and beverage manufacturer Morinaga Milk Industry all ended higher.
General contractor Kajima plunged 5.32% after a foreign brokerage firm revised down its investment rating and stock price target on the firm.
Shares of Softbank ended up 1.21% after the Japanese internet and telecom giant said it will sell most of its stake in GungHo Online Entertainment in a deal valued at 73 billion yen. That follows Softbank's announcement last month that it would sell at least $7.9 billion worth of its stake in Chinese internet giant Alibaba to raise capital.
China Stocks closed down
Mainland China stock market declined for the first time in three sessions in row, as investors preferred to book gains made last week on caution before release of key economic data, with foreign reserves, trade and inflation data to be announced from Tuesday through Thursday. But losses were capped by growing hopes that MSCI will include Chinese shares in its emerging market index in a decision next week, which could spark foreign buying. Total 7 out of 10 SSE sectoral indices declined with consumer staples, financial, and energy issues being major losers. The CSI300 index of the largest listed companies in Shanghai and Shenzhen declined 0.33%, to 3178.79, while the Shanghai Composite Index dropped 0.16%, to 2934.10 points. The gauge jumped 4.2% last week for the first weekly advance in two months.
Shares of financial and consumer-staples companies showed the worst performance among 10 industry groups. Citic Securities, the nation's biggest brokerage, dropped 1%, while Northeast Securities Co declined 1.6%. Kweichow Moutai Co. slumped 2.8%.
China Nuclear Engineering Group Co. rose by the daily trading limit of 44% in its Shanghai debut as a shift by the world's largest energy consumer towards cleaner power generation is expected to expand its business.
Gold producers rallied, on the back of surge in bullion prices as the weak U.S. jobs report signaled that the Fed may delay a rate increase on concerns the economy is faltering. Shandong Gold Mining Co. and Zhongjin Gold Corp. surged 4.5%,
Hong Kong Market ends higher
The Hong Kong stock market finished higher, as weaker-than-expected U.S. nonfarm payrolls data slashing the chances of a June rate hike from the US Federal Reserve. The benchmark Hang Seng Index advanced 82.98 points, or 0.4%, to 21030.22 points. The Hang Seng China Enterprises Index, benchmark measure of performance of mainland China enterprises, rose 55.54 points, or 0.63%, to 8865.35. Turnover sank to HK$51.9 billion from HK$60.1 billion on Friday.
The weaker-than-expected US non-farm payroll data dented expectations on interest rates hike in the near term, driving local property stocks. Wharf (00004) shot up 5.2% to HK$45.55 after Bank of America Merrill Lynch raised its target price of the stock.
Macau gaming stocks dropped broadly after Daiwa Research downgraded the sector to "negative" from "neutral". Galaxy Ent (00027) slid 2.49% to HK$25.5 while Sands China (01928) fell 1.62% to HK$27.25. Wynn Macau (01128) plunged 4.52% to HK$11.82.
Indian Market slips ahead of RBI policy
Trading for the week started on a subdued note as key benchmark indices edged lower as investors maintained caution ahead of the Reserve Bank of India's (RBI) monetary policy meeting. The barometer index, the S&P BSE Sensex, fell 65.58 points or 0.24% to settle at 26,777.45. The Nifty 50 index fell 19.75 points or 0.24% to settle at 8,201.05. The RBI is widely expected to keep its benchmark interest rate viz. the repo rate unchanged at a monetary policy review tomorrow, 7 June 2016, as it awaits the transmission of its previous cuts to the repo rate.
Shares of state-run banks edged higher on comments from finance minister Arun Jaitley that the government will support state-run banks to commercially deal with bad loans. Indian Bank (up 3.09%), Union Bank of India (up 2.52%), Bank of Baroda (up 1.96%), Punjab and Sind Bank (up 1.74%), Andhra Bank (up 1.56%), Allahabad Bank (up 1.38%), State Bank of India (up 1.30%), Syndicate Bank (up 1.26%), Punjab National Bank (up 1.12%), IDBI Bank (up 1.09%), Vijaya Bank (up 0.99%), Canara Bank (up 0.80%), UCO Bank (up 0.59%), Dena Bank (up 0.52%), Bank of India (up 0.48%), Central Bank of India (up 0.18%) and Corporation Bank (up 0.15%), edged higher. Bank of Maharashtra fell 0.88%.
Stocks of public sector oil marketing companies fell on rebound in crude oil prices. Indian Oil Corporation (down 1.37%) and HPCL (down 1.12%) edged lower. Higher crude oil prices could increase under-recoveries of PSU OMCs on domestic sale of LPG and kerosene at controlled prices. On the flip side, a recovery in the rupee against the dollar has eased concerns about higher crude import costs. A weak rupee raises the cost of imports. The government has already freed pricing of petrol and diesel.
Mahindra & Mahindra (M&M) rose 1.19% to Rs 1,369.60, with the stock extending gains registered during the previous trading session triggered by the weather office retaining its forecast of above normal rains for the 2016 monsoon season. Shares of M&M had risen 1.55% to settle at Rs 1,353.45 during the previous trading session on Friday, 3 June 2016, after India Meteorological Department (IMD) retained its previous forecast of above normal rains for the 2016 southwest monsoon season (June to September). Good rains may boost demand for tractors. Mahindra & Mahindra (M&M) is the largest tractor maker in India in terms of market share.
Elsewhere in the Asia Pacific region: New Zealand's NZX50 added 0.3% to 7024.38. South Korea's KOSPI index added 0.04% to 1985.85. Taiwan's Taiex index added 0.06% to 8597.11. Malaysia's KLCI rose 0.77% to 1648.99. Indonesia's Jakarta Composite index added 0.87% to 4896.02. Singapore's Straits Times index rose 0.78% to 2831.28.
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