Asia Pacific share market declined on Friday, April 05, 2013, as risk adverse investors continued offloading stocks on concern over U.S. jobs and China's newest strain of avian flu.
Risk aversion selloff triggered as an unexpected jump in US weekly jobless claims by 28,000 to 385,000 stoked worries ahead of US employment data later in the day. The Labor Department delivers the March non-farm payroll report and U.S. unemployment rate Friday before the open of U.S. markets.
Meanwhile selling pressure mounted further after European Central Bank President Mario Draghi said the euro-zone economy was at risk of a deeper recession. Speaking at the ECB's monthly news conference, Mr. Draghi acknowledged that the recovery in the second half of the year is still at risk of being thrown off course.
Also adding to the downbeat sentiment, China's newest strain of avian flu, which has killed at least six people, has sent stock markets downhill.
Central banks grabbed most of the attention prior day. Both the European Central Bank and the Bank of England kept rates at record lows, but the Bank of Japan unveiled a broad and surprisingly aggressive easing plan. The ECB left rates at 0.75%, while the BOE maintained a 0.5% lending rate, as expected.
As the first meeting under new Governor Haruhiko Kuroda concluded, the BOJ decided to launch an aggressive new easing campaign, providing the Tokyo market with incentives to outperform the region for the second straight session. The central bank pledged to achieve a 2% inflation target in about two years, while taking additional easing action, such as increasing Japanese government bond holdings at an annual pace of Y50 trillion, with JGB holdings to double in two years. The bank will terminate its asset-purchase program, with asset purchases to be absorbed with JGB purchases, under its new easing scheme called "Quantitative and Qualitative Monetary Easing."
Back to country wise, Australian shares declined for third day in row, dragging the benchmark S&P/ASX200 index 22.10 points down from prior day to finish at 4891.40, while broader All Ordinaries index lost 20.10 points to close at 4899.20. The benchmark fell 1.5% for the week, a fourth consecutive week of losses. Investors continued offloading defensive and high yielding stocks after the federal government proposed to impose a 15% tax on pension fund earnings greater than A$100,000 starting July 1, 2014. Currently all earnings from assets that support retired Australians, such as dividends and interest, are exempt from tax.
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Tokyo share market rallied for third straight day, as improved risk sentiments following yen depreciation to multi-month low against basket of major currencies, thanks to Bank of Japan's (BoJ) pledge to massively expand its balance sheet. Meanwhile central bank upward revision of economic assessment also fueled buying appetite. The Nikkei Stock Average spurted 99.10 points, or 1.58%, to end the day at 12,833.64, surpassing its previous year-to-date high logged on March 21 and reached its highest close since Sept. 1, 2008.
The Bank of Japan decided to implement bolder monetary easing steps at its two-day policy board meeting that ended on Thursday. In the first policy meeting led by Governor Haruhiko Kuroda, the central bank decided to introduce a new phase of easing scheme called Quantitative and Qualitative Monetary Easing.
The Bank of Japan raised its assessment of the nation's economy for the fourth straight month, citing the world's third-largest economy emerges from last year's slump amid bright signs in overseas economies and a weakening of the yen. The BOJ said in its monthly report for April that Japan's economy has stopped weakening and has shown some signs of picking up. In March, the central bank said Japan's economy has stopped weakening. The BOJ upgraded its assessments on consumption, overseas economies, exports and output. The report comes out after the BOJ policy board decided Thursday to introduce a slew of unexpectedly aggressive easing steps and radically overhaul the bank's monetary-policy program
Hong Kong shares tumbled, dragging the benchmark Hang Seng index 610.59 points or 2.73% down from previous session to finish at 21,726.90 on trading volume turnover of HK$77.22 billion. Risk aversion selloff triggered broadly, with shares in travel- and leisure-related stocks suffered most damages on concern of a bird flu outbreak in China.
HK airline shares dropped amid concerns about the impact of bird-flu deaths in China on air travel. Cathay Pacific Airways dropped 4.1% to HK$12.28, Air China 9.8% to HK$6.05, China Eastern Airlines Corp 8.3% to HK$3.10, and China Southern Airlines Co 8.5% to HK$3.87.
Indian share market fell for a third consecutive session after provisional data showed that foreign funds remained net sellers of Indian stocks on Thursday, 4 April 2013. Weakness in European stocks also weighed on sentiment. The barometer index, the S&P BSE Sensex, was provisionally down 86.41 points or 0.47%, off close to 100 points from the day's high and up about 35 points from the day's low.
Elsewhere, New Zealand's NZSE 50 ended edge 0.06% higher while Singapore's Straits Times Index lost 0.24%. South Korea's Kospi plunged 1.64%, highlighting a now familiar inverse correlation between that country's stocks and a weaker yen. Stock markets on mainland China and in Taiwan remained shut for holidays.
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