Asia pacific stock market declined on Monday, 27 July 2015, as market participants' risk-taking sentiment was dampened by tracking selloff in the Wall Street on Friday. Meanwhile, selloff pressure intensified on pullback in commodity prices, disappointing China economic data, and on caution ahead of big events including the Federal Open Market Committee meeting and U.S. gross domestic product data later this week.
In the US, Wall Street stocks fell for the fourth straight session on Friday, after a dramatic slide in oil and gold prices as well as disappointing earnings results from companies such as Caterpillar and Freeport McMoran Inc. The S&P 500 SPX closed 1.1% lower at 2079.65, booking a 2.2% weekly loss. The Nasdaq Composite dropped 1.1% to 5088.63, ending the week with a 2.3% weekly loss. The Dow Jones Industrial Average dropped 0.9% to 17568.53, recording a 2.9% weekly loss.
Commodity prices were remain under pressure, with copper sinking to a six-year low, gold falling to a five-year low, and U.S. oil prices pushing further below $50 a barrel. Crude oil for September delivery was down 0.22% to $48.03 a barrel. Brent oil for delivery in September fell 0.02% to hit $54.61 a barrel, while the December Gold contract rose 1.6% to $1103.40 a troy ounce.
Disappointing Chinese economic data renewed worries that the world's second largest economy is heading for a sharp slowdown. Today, data showed industrial profits in China falling 0.3% in June from a year ago, after rising the previous two months. On Friday the preliminary reading of Caixin's Purchasing Managers' Index (PMI),an independent survey of manufacturing activity, came in at 48.2 for July, the weakest reading since 48.1 in April 2014.
Investors largely opted for a wait-and-see mood ahead of the U.S. Federal Reserve's policy-setting meeting this week. A two-day policy meeting of the Federal Reserve Open Market Committee (FOMC) has been scheduled on Tuesday, 28 July 2015, and Wednesday, 29 July 2015, to decide on interest rates in the United States.
Among Asian bourses
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Nikkei falls on weak offshore lead, stronger yen
Japanese share market declined on first trading session of the week, on tracking losses on the US stock markets last Friday and yen appreciation yen appreciation against the greenback. The Nikkei Stock Average declined 194.43 points, or 0.95%, to end at 20350.10 points. The broader Topix index lost 1.08%, or 17.96 points, to close at 1637.90 points.
Japanese currencies continued to feel the pressure of a strong U.S. dollar as investor flight to perceived safety of the Japanese currency amid sluggish global stocks and ahead of Federal Open Market Committee meeting this week.
Total of 30 out of 33 TSE sectors declined, with Other Financial Business issues being top loser, erasing 2.4% followed by Chemicals (down 2%), Pulp & Paper (down 2%), Electric Power & Gas (down 1.9%), Pharmaceutical (down 1.9%), Securities & Commodities Futures (down 1.6%), Land Transportation (down 1.6%), Precision Instruments (down 1.6%), and Glass & Ceramics Products (down 1.6%).
Shares of SoftBank fell 0.6%, following an unflattering forecast by Morgan Stanley MUFG Securities of the company's upcoming first quarter earnings numbers. The brokerage projected the telecom giant's operating profit at Y296.4 billion, down Y41.2 billion on year, hurt by a weak performance in its Sprint unit.
Kyowa Hakko Kirin surged 4.6% after substantially raising its first quarter and full-year earnings forecasts. Its Fujifilm Kyowa Kirin Biologics unit also announced the establishment of a joint venture with AstraZeneca to develop and commercialize an antibody with potentially lucrative sales potential. Nomura Securities subsequently upped its target price on Kyowa Hakko Kirin by 15% to Y2,300.
Nippon Yusen rose 1.8% after the Nikkei business daily reported that the shipper's pretax profit for the April-June quarter likely jumped 70% on the year to about 20 billion yen. Probable drivers include strong showings in the tanker and car carrier businesses, yen depreciation, and a decline in fuel costs.
Bargain hunting spurs Australia Market
The Australian share market ended higher on first trading session of the week, snapping a three-day losing streak, on the back of bottom fishing in oversold material and resources stocks. But, market gain were limited amid concerns about China's economic growth after weaker-than-expected economic data and on caution ahead of closely-watched events later this week including the Federal Open Market Committee meeting and U.S. gross domestic product data. The benchmark S&P/ASX 200 Index and the broader All Ordinaries Index each gained by 0.4% to 5589.90 points and 5579.20 points, respectively. Last week, the S&P/ASX200 benchmark erased 1.8% and the All Ordinaries lost 1.7%.
The S&P/ASX 200 VIX, which measures the implied volatility of S&P/ASX 200 options, was down 0.7% to 15.831, suggesting a 4.4% swing in the equity benchmark index in the next 30 days.
Shares of material and resources companies were sharp higher, with BHP raising 1% to A$25.52 on bottom fishing after plunging almost 7% last week. Fortescue Metal jumped 3% to A$1.71. Australia's biggest gold miner Newcrest Mining rebounded 4.5% to A$11.78 while Perseus Mining added 6.3% to A$0.34.
Banks and financial shares were mostly higher, with Australia & New Zealand Banking Group added 0.2% to A$32.11, Westpac Banking Corp 0.4% to A$34.36, and Commonwealth Bank of Australia 0.3% to A$86.0, while National Australia Bank erased 0.4% to A$34.36.
China market tumbles on talks of govt support measures exit, economy fears
Mainland China's stock market suffered their biggest one-day decline in more than eight years, pressured by concern about exit in government new capital inflows as well as disappointing industrial data figures. Risk off selloff also fueled by tracking losses in the U.S. market on Friday, pullback in commodity prices, and amid expectations for U.S. interest rates to rise later this year. The benchmark Shanghai Composite Index tumbled 345.35 points, or 8.48%, to finish at 3725.56 points. The Shenzhen Composite Index, which tracks stocks on China's second exchange, declined 7%, or 162.61 points, to 2160.09 points.
Investors fear about removal of support measures from authorities intensified after reports stated that the International Monetary Fund has urged China to eventually unwind its support measures. The Chinese benchmark gauge has rebounded 16% from its July 8 low through Friday, as officials went to extreme lengths to halt a rout that erased $4 trillion from the nation's equities. Officials have unveiled a range of measures, including a police crackdown on short-selling and a six-month ban on big shareholders selling stock, to avert a slump which began in mid-June.
Shares of securities firms lost ground. Industrial Securities plunged by its 10% daily limit to 10.38 yuan and Dongxing Securities also slumped 10% to 21.92 yuan.
Toll road-related shares also fell. In Shanghai, Hubei Chutian Expressway dropped by its 10% daily limit to 6.26 yuan and Shandong Hi-speed lost 10% to 7.49 yuan.
Hong Kong market slumps on weak China A-shares
The Hong Kong stock market tumbled, following the negative close of Wall Street on Friday and sharp pullback in Mainland China A-share bourses. The benchmark opened 221 points lower on tracking weak offshore lead an extended retreat of more than 800 points at one stage to an intra-day low of 24,282 following the decline of the A-share market, which registered the biggest single-day losses in more than 8.5 years. The Hang Seng Index ended down 776.55 points, or 3.09%, to finish at 24351.96 points. The Hang Seng China Enterprises Index, benchmark measure of performance of mainland China enterprises, decreased 448.35 points, or 3.84%, to 11230.67 points. Turnover increased to HK$116.24 billion from HK$78.4 billion on Friday.
Chinese developers were lower despite news that the government may exempt part of the property tax. Vanke (02202) dived 6.4% to HK$18.46. COLI (00688) tumbled 4.5% to HK$25.25. Sino-Ocean Land (03377) plummeted 8% to HK$5.13.
Brokerage counters could hardly immune from selling on the plunge of Shanghai equity market. Haitong Int'l (00665) crumbled 11% to HK$4.5. Haitong Sec (06837) slumped 10.7% to HK$13.66. CITIC Sec (06030) and GF Sec (01776) collapsed nearly 9% to HK$21 and HK$15.18. Ping An (02318) declined 2.2% to HK$47.15 after going ex-dividend and ex-bonus shares. China Taiping (00966), NCI (01336) and China Life (02628) all dropped more than 5% to HK$24.65, HK$35.7 and HK$29.05 respectively.
Hong Kong's value of total exports of goods (comprising re-exports and domestic exports) dropped 3.1% in June over a year earlier to HK$299.5 billion, after a year-on-year decrease of 4.6% in May, according to the Census and Statistics Department.
Sensex tumbles on China jitters; P-note worries
A sharp setback in Chinese stocks and fears that the stock market regulator Securities and Exchange Board of India (Sebi) may tighten rules on Participatory Notes (PNs) in the wake of a report by a special investigations team on black money hit sentiment on the domestic bourses adversely. PNs are a popular offshore derivative instrument used by foreign portfolio investors to invest in Indian stocks. The barometer index, the S&P BSE Sensex, hit four week low and the 50-unit CNX Nifty hit its lowest level in more than two weeks as these two key benchmark indices extended intraday losses in late trade. The Sensex fell below the psychological 28,000 mark. The market breadth indicating the overall health of the market was weak. The Sensex was provisionally off 550.93 points or 1.96% at 27,561.38. All the 12 sectoral indices on BSE ended lower today, 27 July 2015.
Reliance Industries' (RIL) fell 2.15% at Rs 1,003. The company's consolidated net profit rose 4.44% to Rs 6222 crore on 25.93% decline in total income to Rs 78962 crore in Q1 June 2015 over Q1 June 2014. Decline in revenue was led by the 43.5% decline in benchmark (Brent) oil price in Q1 June 2015 over Q1 June 2014.
Shares of state-run defence equipment maker Bharat Electronics rose 0.32% at Rs 3,685.35. The company announced on Saturday, 25 July 2015, that its board approved the proposal for issue of bonus shares to the existing shareholders of the company in the ratio of 2:1 (2 bonus shares for every share held). Net profit of Bharat Electronics rose 137.02% to Rs 60.70 crore on 7.27% rise in net sales to Rs 1069.21 crore in Q1 June 2015 over Q1 June 2014.
Elsewhere in the Asia Pacific region: Taiwan's Taiex index fell 2.4% to 8556.68. South Korea's KOSPI declined 0.4% to 2038.81. New Zealand's NZX50 dropped 0.4% to 5872.06. Singapore's Straits Times index declined 1.2% at 3352.65. Indonesia's Jakarta Composite index lost 1.8% to 4771.29. Malaysia's KLCI fell 0.6% to 1709.76.
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