The U.S. ended the nation's fiscal impasse as the Senate and the House of Representatives voted to halt the government shutdown and raise the U.S. debt limit as the deadline loomed today. President Barack Obama has signed a measure into law reopening the federal government and averting a potential default, ending a two-week partial shutdown of public services.
The deal concludes a fiscal standoff that began with Republicans demanding the defunding of Obama's 2010 health-care law and objecting to raising the debt limit and funding the government without attaching policy conditions. They achieved almost none of those goals in the agreement.
The deal, however, does not resolve the fundamental issues of spending and deficits that divide Republicans and Democrats. The deal extends the US government's borrowing authority until February 7 and funds government agencies until January 15. The Office of Management and Budget said previously furloughed federal workers should report to work Thursday morning and Congressional leaders began to appoint budget negotiators to find a longer term budget solution.
U.S. economic data released Wednesday had little impact on markets as focus was on the U.S. budget and debt ceiling talks. The Federal Reserve's beige book released yesterday showed that policy-makers saw modest to moderate growth in the nation led by steady consumer spending and business investment. However, they felt that the uncertainty on account of the fiscal impasse was likely to weigh on business and consumer confidence.
However, gains on the upside were limited across the region as a deal was already priced in. Investors now turned focus to when will the next batch of US economic data releasing as the government is set to reopen. The key October employment reports, among many other economic reports, were postponed the past 16 days due to the US government shutdown.
Investors were also locking some of recent gain on caution ahead of a reading of the China's third-quarter gross domestic product (GDP) and September industrial production tomorrow.
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Among Asian bourses, shares in the Japanese market finished higher, with the benchmark Nikkei Stock Average rising 0.83% to 14586.51 while the broader Topix index gained 0.8% to 1206.25, as sigh of relief after President Barack Obama declared a deal had been done to lift the government's borrowing limit and avoid a historic default.
Kansai Electric Power Co shares jumped 2.8% to 1327 yen after the utility swung to a first-half pretax profit of 31 billion yen ($314 million), crawling out from under a 171.9 billion yen loss for the same period a year earlier and trouncing the 40 billion yen loss it had forecast. The power producer sales rose 15% on the year to 1.61 trillion yen, beating the estimate by 30 billion yen, as the summer sizzle fuelled heavier air conditioner use. Net profit totalled 15 billion yen, exceeding its guidance calling for a 32 billion yen loss and a sharp reversal from a year-earlier 116.7 billion yen loss. Stronger sales of higher-priced household electricity gave earnings a boost.
In Australia, the Australian financial market advanced, with the benchmark S&P/ASX200 index rising 0.38% to 5,283.1 and the broader All Ordinaries index gaining 0.33% to 5281.9, on a surprise rally in the face of an agreement among U.S. lawmakers on a budget/debt ceiling deal that will reopen the government. Meanwhile, the release of positive local business confidence data had also buoyed investors.
The National Australia Bank released September quarter business survey on Thursday, indicating businesses become more confident in the September quarter. This fundamentally appears to be driven by political factors - albeit the lower AUD and rates, together with stronger asset markets would have helped. But these factors have not yet boosted business conditions, which tracked lower to the weakest level in four years. Forward indicators remain subdued. Capex expectation is also weak especially in the mining sector. Prices growth implies soft underlying inflation in Q3.
Shares of banks and financials were biggest winner in Sydney market, on tracking rally in the US financial peers. Australia & New Zealand Banking Group rose 0.7% to A$31.69, National Australia Bank 1.5% to A$35.64, Westpac Banking Corp 1.2% to A$33.62 and Commonwealth Bank 0.9% to A$73.43. Insurance Australia Group added 0.2% to A$5.85, AMP 0.7% to A$4.63 and QBE Insurance Group0.2% to A$14.78.
Shares of materials and resources companies finished mixed in Sydney, with Rio Tinto's falling 0.6% to A$63.71. Iron ore producer Fortescue Metals (FMG) fell 3% to A$5.24. The larger BHP Billiton (BHP), which would issues its September quarter production figures on 22 October, was up 0.1% to A$35.80.
Gold miner Newcrest lost 0.6% to A$10.14 despite beating expectations to produce 586573 ounces of gold during the September quarter, a 27% improvement on this time last year. Its cost-cutting program continues, however margins continue to be squeezed. The price of gold has slumped by 23% since January. NCM has added US$450 million worth of additional debt facilities, which could trouble markets considering NCM is already highly leveraged.
Ten Network Holdings lost 1.7% to A$0.285 after its full-year loss blew out to A$285 million amid one-off writedowns and falling revenues. The result was driven by A$336 million of one-off charges, including restructuring costs and $300 million of impairments, plus a slide in revenues. It follows A$12.9 million loss in 2012. Its underlying loss attributable to members was A$5 million.
Shares in Australian building products maker Boral rose 5.9 to A$5.03 after it entered into a partnership with a US firm to create a US$1.6 billion ($A1.68 billion) plasterboard and ceilings joint venture. Building products group Boral will receive US$575 million from the planned merger of all of its plasterboard interests with USG, as part of a merger of the two group's non-US and European plasterboard interests. The venture will hold all Asia, Pacific and Middle East plasterboard interests of the two companies in 50:50 joint ventures. The negotiations include Boral receiving US$575 million from USG to equalise the two group contribution to the venture, with Boral set to receive US$599 million up front. The venture will have manufacturing and distribution spread across 12 countries. The decision to form the venture follows ongoing rationalisation of Boral's operations, which included taking full control of a gypsum venture over the past few years. The venture will gain access to technology of USG, a large US gypsum and plasterboard group.
Energy giant Woodside fell 1.4% to A$38.00 after posting 27% drop in third-quarter sales after a temporary interruption at its Pluto liquefied natural gas project. Revenue declined to A$1.34 billion, from A$1.83 billion a year earlier. Production in the quarter fell 17% to 21.9 million barrels of oil equivalent from 26.5 million barrels a year earlier. Woodside earlier this year cut its full-year production forecast after an unplanned shutdown at its $15 billion Pluto LNG plant in Western Australia.
In China, shares in Chinese market finished lower after wiping out gains late afternoon, as investors sold stocks to book profit on caution ahead of slew of important economic data tomorrow. Meanwhile, selling pressure fuelled further on concerns a potential flood of new shares may dilute market value. The benchmark Shanghai Composite index finished 4.53 points or 0.21% down at 2188.54, after touching an intraday peak of 2183.25.
Shares of Shanghai's free-trade zone companies continued falling for second day in row amid concern recent rally in the stocks exceeds actual valuations. Shanghai, the nation's commercial hub, last month inaugurated an 11-square-mile trade zone as a testing ground for free-market policies. Shanghai's related stock jumped sharply in recent month boosted by speculation the city's free-trade zone will attract foreign companies and allow for financial liberalization.
Shanghai Lujiazui plunged 6.2% to 21.38 yuan. Shanghai Oriental Pearl, operator of China's tallest television tower, slumped 10% to 11.06 yuan. Shanghai AJ Corp, an investment holding company, lost 6.1% to 11.73 yuan.
Shares of coal producers went higher on tracking rally in the coal price index. The Bohai-Rim steam coal price index, which tracks power-station coal prices at six Chinese ports, rose 0.2% in the week from Oct. 9 to yesterday, according to Qinhuangdao Seaborne Coal Market's website. The measure earlier fell for a 16th week since Jun. 19. Among Coal miners, China Coal climbed 2.1% to 5.44 yuan. Datong Coal Industry Co jumped 2.3% to 6.60 yuan. Shenhua rose 1.7% to 16.74 yuan after saying coal sales increased 40% in September.
In Hong Kong, HK shares finished lower after erasing intraday gains, as investors continued locking in profit in the cash segment on tracking fall in futures index. Meanwhile, decline in the Mainland Chinese bourses and weaker opening of the European market also triggered selloff in the local stocks The Hang Seng Index closed today at 23094.88, down 133.45 points or 0.57%, after touching a highest of 23357.16 during the day.
The Hang Seng index futures for expiring October contract quoted at 22961, trading at discount of 134 points from the spot.
Financial shares declined the most in Hong Kong, with Chinese lenders led retreat amid liquidity crunch woes as China's central bank ready to take out 44.5 billion yuan from the banking system this week though regular open-market operations. Shares of China Merchants Bank Co lost 0.8% to HK$15.12, Bank of China 0.8% to HK$3.59, and Agricultural Bank of China 1.36% to HK$3.63.
Shares of coal producers climbed in HK on tracking rally in the coal price index. China Shenhua jumped 4.7% to HK$24.4, China Coal added 4.2% to HK$4.91. Yanzhou Coal jumped 4.3% to HK$7.95. Winsway gained 3.3% to HK$0.63.
In South Korea, shares in Seoul market rose, with the Kospi index advancing 0.3% to 2040.61 after official data showed foreign investors were net buyers of the local stocks 35 consecutive sessions, bringing their total purchases for the period to a net 12.123 trillion won ($11.38 billion) worth.
The Bank of Korea said today that the nation's producer prices index dropped 1.8% in September from a year earlier, after falling 1.3% in August.
In Singapore, shares in Singaporean market rallied to almost highest in nearly three weeks after U.S. legislators reached a last-minute deal to avoid a debt default by the government. The benchmark Straits Times Index climbed 0.4% to 3186.62.
Global Logistic Properties was one of the biggest gainers in Singapore with a rise of around 3% after the warehouse operator signed 5 new lease agreements totalling 55,000 square metres across China.
Shares of Keppel Land jumped nearly 2% in Singapore after the property developer announced its third-quarter net profit rose 70% to $126.4 million from a year earlier, lifted by property trading, more project completions in China and progressive recognition from Singapore projects.
In India, Indian benchmark indices finished lower as intense volatility was seen in late trade. Sentiment was impacted by negative European stocks and trading in US index futures indicating a lower opening of US stocks later in the global day as US lawmakers failed to come up with a longer-term solution for the country's finances after sealing a last-minute deal on Wednesday, 16 October 2013, to temporarily raise the nation's debt ceiling and reopen government after a 16-day shutdown. The Sensex was provisionally down 136.81 points or 0.67%, off 218.99 points from the day's high and up 35.39 points from the day's low.
IT stocks were lower in the Indian market as the rupee firmed against the dollar. A firm rupee adversely affects operating profit margins of IT firms as the sector derives a lion's share of revenue from exports.
HCL Technologies declined 7.1% to Rs 1,078, with the stock extending initial losses on profit booking after reporting strong Q1 results. The company before trading hours today, 17 October 2013, said its consolidated net profit as per US accounting standards jumped 18.7% to Rs 1416 crore on 14% growth in revenue to Rs 7961 crore in Q1 September 2013 over Q4 June 2013. Earnings before interest, taxation, depreciation and amortization (EBITDA) jumped 29.5% to Rs 2093 crore in Q1 September 2013 over Q4 June 2013. EBITDA margin rose to 26.3% in Q1 September 2013 from 23.1% in Q4 June 2013.
Indian index heavyweight Reliance Industries (RIL) rose 1.42% to Rs 879. The stock hit high of Rs 887.70 and low of Rs 865.25. The company early this week reported 1.5% growth in net profit to Rs 5490 crore on 14.2% growth in turnover to a record Rs 106523 crore in Q2 September 2013 over Q2 September 2012. Net profit rose 2.6% on 17.6% growth in turnover in Q2 September 2013 over Q1 June 2013. RIL's gross refining margin (GRM) declined to $7.7 per barrel in Q2 September 2013, from $8.4 a barrel in Q1 June 2013 and $9.5 a barrel in Q2 September 2012.
Elsewhere in the region, Taiwan's Taiex gained 0.51%. New Zealand's NZX 50 Index rose 0.36%. Indonesia's Jakarta Composite Index jumped 0.59%. Malaysia's KLSE Composite rose 0.34%.
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