Asia Pacific share market declined for second straight session on Tuesday, 29 September 2015, as risk sentiment dented on tracking sharp losses in the European and US markets overnight.
The global selloff triggered on renewed anxiety about a global slowdown with evidence of industrial weakness in China and concerns about potential impact on the timing of a U.S. interest rate increase.
Major U.S. averages closed sharply lower overnight, with the tech-heavy Nasdaq Composite leading losses with 3% slump, after bullish US consumer spending data in August raised concerns the Federal Reserve could hike rates at a time of slackening global growth. The Dow Jones Industrial Average lost 1.9%, while the S&P 500 tumbled 2.6%.
The Fed held off from raising interest rates at its meeting earlier this month, citing worries about the global economy, particularly China. But New York Fed President William Dudley said the central bank remains on track for a likely rate hike this year and could move as soon as next month. John Williams, head of the San Francisco Fed, also signalled support for an interest rate hike this year, though Chicago Fed chief Charles Evans sounded a far more dovish tone.
The concerns about china economic slowdown intensified after official data on Monday showed that China's industrial profits in August had suffered their biggest drop since October 2011. In the previous trading session, official data showed profits earned by Chinese industrial companies fell 8.8% in August from a year earlier, underscoring persistent signs of headwinds in the world's second-biggest economy.
China's is expected to release its September reading on manufacturing activity later this week, providing investors the latest assessment of the world's second-largest economy.
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Commodity shares were among the biggest casualties as fears of weaker Chinese demand sent prices of commodities tumbling. Further adding to the 'risk-off' sentiment was the near 30% slump in the London-listed shares of commodities and mining behemoth Glencore on Monday.
Among Asian bourses
Australia market tumbles 3.8%
The Australian share market ended steeply down, as risk aversion selloff triggered amid a rout in commodity overnight on renewed anxiety about a global slowdown with evidence of industrial weakness in China and concerns about potential impact on the timing of a U.S. interest rate increase. All ASX sectors tumbled, with shares in energy, material, and financial issues being major losers. The benchmark S&P/ASX 200 index tanked 195.10 points, or 3.8%, to end at 4918.40 points, while the broader All Ordinaries index shrank 187 points, or 3.6%, to 4958.10 points.
Shares of energy and material companies were hardest hit in the Australian financial market today, as panic selling triggered by tracking a shock decline in UK-listed mining giant Glencore coupled with a sharp drop in commodity prices. Crude oil posted a sharp fall yesterday with Brent and WTI falling ~2.6% and ~2.8%, respectively, amid concerns over China and elevated US crude oil inventories. Base Metal prices closed lower on Monday after economic data showing a slowdown in China along with a slide in the share price of Swiss mining-and-trading company Glencore PLC. Shares in the UK-listed mining and trading company Glencore fell almost 30% after analysts suggested the stock could be nearly worthless, citing it is not doing enough to cut its debt to withstand a prolonged fall in global metals prices.
Among miners, BHP Billiton tanked 6.7% to end at a seven-year low A$21.61, while Rio Tinto closed 4.6% lower at A$46.52. Fortescue Metals Group finished 6.4% down at A$1.67 and Arrium dived 5.5% to A$0.086.
Among other energy shares, Woodside Petroleum retreated 5.8% to A$28.17, Origin Energy 10.4% to A$6.10, Santos 9.1% to A$4.28, and Oil Search 3.5% to A$7.25. Paladin was down 13.1% to A$0.165, Karoon Gas 11.1% to A$1.67, and AWE 9.2% to A$0.64.
ANZ-Roy Morgan Australian Consumer Confidence declined 3.4% to 110.6 for the last week ended 27 September 2015. This partially retraces the record 8.7% bounce in the previous week in response to the appointment of Malcolm Turnbull as Prime Minister. While this still leaves confidence a solid 5% above the level of two weeks ago, it is now back below its long-run average.
Nikkei falls to 8-month lows
The Japanese share market tanked to eight-month lows on concerns over the Chinese economic slowdown and its impact on global markets. Tuesday's plunge was also spurred by the yen's strengthening against the dollar and large-lot futures-led selling. All 33 first-section sector sub-indexes finished lower, with Marine Transportation, Iron & Steel, Pharmaceutical, Wholesale Trade, Air Transportation, Information & Communication, and Mining issues being major decliners. The Nikkei Stock Average dropped 714.27 points, or 4.05%, to end at 16930.84 points. The broader Topix index retreated 4.39%, or 63.15 points, to 1375.52 at the close in Tokyo, the lowest since 19 January 2015.
Shares of export-oriented companies and China-linked players suffered massive selling on worries about the Chinese economy after official data showing a plunge of Chinese industrial-sector corporate profits for August. China-related issues, such as robot maker Fanuc, automaker Honda and construction machinery manufacturer Komatsu, suffered hefty losses.
Resource-related companies were battered after New York crude oil futures fell back sharply overnight. Among them were trading houses Mitsui, Mitsubishi and Sumitomo, as well as oil companies JX Holdings, Idemitsu Kosan and Showa Shell. Kobe Steel sank after cutting its net income forecast of 25 billion yen for the year to March 2016, 58% lower than its July outlook of 60 billion yen, citing falling sales at its construction machinery unit because of China's slowing economy.
Shares of marine transportation companies tumbled the most in Tokyo, with Mitsui OSK Lines leading retreat after Daiichi Chuo KK said it filed for bankruptcy protection. Mitsui OSK holds a 21.8% stake in the bankrupt company. Mitsui O.S.K. said it plans to post about a Y25 billion ($209.4 million) special loss in an earnings report due Oct. 30. The Tokyo Stock Exchange said the Daiichi Chuo Kisen's shares will be delisted from the bourse's first section on Oct. 30. Trading of its shares was halted for Tuesday.
China market tumbles 2%
The Mainland China's stock market ended down on deepening worries about domestic economic slowdown after industrial profits in August suffered biggest drop since October 2011. All 10 SSE sectors declined, with energy and material issues leading retreat, on fears of a sharp slowdown in the world economy. The Shanghai Composite Index tumbled 2.02%, or 62.62 points, to 3038.14 points. The Shenzhen Composite Index, which tracks stocks on China's second exchange, dropped 1.51%, or 26.20 points, to 1711.71. The ChiNext Index, which tracks China's NASDAQ-style board of growth enterprises, declined 1.12%, or 23.69 points, to close at 2098.57.
Market volume turnover was relatively thin, ahead of official September purchasing manufacturing managers' index (PMI) and the final Caixin/Markit PMI, due on Thursday as well as a seven-day National Day Holiday that starts on Thursday. The PMI reports will be closely watched after Caixin's preliminary reading for September touched a six-and-a-half-year low of 47, well below the key 50-level.
Chinese industrial profits declined 8.8% on year in August, their sharpest pace since 2011, according to the National Statistics Bureau.
Margin traders reduced holdings of shares purchased with borrowed money on Monday, with the outstanding balance of margin debt on the Shanghai Stock Exchange dropping 0.2% to 578.1 billion yuan
Shares of energy and commodity-related companies were among the biggest casualties in Beijing, on fears that economic weakness would sap demand for raw materials. Anhui Conch Cement Co. retreated 4.4%. Yanzhou Coal Mining Co. slid 5.5%.
Hong Kong market slide 3%
Hong Kong stock market joined a global selloff amid deepening worries about the world economy. The benchmark Hang Seng Index (HSI) opened down 607 points and fell as much as 818 points at one stage, hitting a two-year low of 20,368. The Hang Seng Index declined 629.72 points, or 2.97%, at 20556.60 points. The Hang Seng China Enterprises Index, benchmark measure of performance of mainland China enterprises, lost 281.76 points, or 2.96%, to 9230.50 points. Turnover increased to HK$84 billion from HK$69 billion on Friday. The local market was closed on Monday due to a public holiday.
Blue chips fell across the board, with 10 stocks hitting new 52-week lows. Sinopec (00386) and PetroChina (00857) dived 7.3% and 6.5% to HK$4.48, HK$5.19. Both stock briefly hit two-year lows. CNOOC (00883) also plunged 7.7% to HK$7.44. It saw a six-year low at one point.
Macau gaming counters led the HK market decline. Galaxy Ent (00027) declined 7% to HK$19.86. Sands China (01928) also dropped 9.4% to HK$24.25.
Standard Chartered (02888) slipped 6.8% to HK$72.85. HSBC (00005) slid 2.9% to HK$57.05 as the global bank was investigated by Swiss competition authorities for illegal trading of precious metals.
Glencore (00805) plummeted 29% in London market. It then dived the same scale in local market to HK$8.4.
Shares of Tingyi (00322) declined 2.6% to HK$12.20 after HSBC Global Research cut its target price for the company to HK$13.2 from HK$14.3, and maintained its "hold" rating. The research house cited news reports saying that Tingyi plans to raise the retail prices of selected packet and bowl noodles by 6-20%. While a price hike would be positive for noodle margins, the benefits would likely to be offset by beverage weakness.
Sensex rebounds after RBI cuts key interest rates
Indian stock markets ended higher after reversing losses of more than 1% earlier in the session, thanks to the Reserve Bank of India (RBI) surprise decision with a bigger-than-expected rate cut. The barometer index, the S&P BSE Sensex, rose 161.82 points or 0.63% to settle at 25,778.66. The 50-unit CNX Nifty rose 47.60 points or 0.61% to settle at 7,843.30.
The Reserve Bank of India (RBI) surprised the financial markets by announcing a steeper-than-expected cut in the policy repo rate under the liquidity adjustment facility by 50 basis points to 6.75% at its fourth bi-monthly monetary policy review for the year 2015-16 today, 29 September 2015. The RBI has kept the cash reserve ratio (CRR) of scheduled banks unchanged at 4% of net demand and time liability (NDTL). The RBI marked down slightly the FY16 gross domestic product (GDP) growth target to 7.4% from 7.6% earlier as global growth and trade were slower than initial expectations, a continuing lack of appetite for new investment in the private sector, the constraint imposed by stressed assets on bank lending and waning business confidence. Inflation has dropped to a nine-month low in August, and despite the monsoon shortfall and the uneven distribution of seasonal rains, food inflation pressures have been contained by the government's supply-management policies, the RBI said.
Bank and realty stocks gained in volatile trade after the RBI surprised the financial markets by announcing a steeper-than-expected cut in repo rate by 50 basis points to 6.75% at its fourth bi-monthly monetary policy review for the year 2015-16 today, 29 September 2015.
Elsewhere in the Asia Pacific region: New Zealand's NZX50 fell 1.5% to 5612.32. Singapore's Straits Times index slipped 0.1% at 2787.94. Indonesia's Jakarta Composite index rose 1.4% to 4178.41. Malaysia's KLCI sank 0.3% to 1603.32. Financial markets in South Korea remain closed due to celebrations for the Chuseok holiday. Taiwan, which was supposed to reopen on Tuesday, got an additional day-off after Typhoon Dujuan hit the island on Monday.
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