Regional stocks had started the day mostly with firm footing after the European Central Bank President Mario Draghi surprised investors on Thursday by announcing that it had cut its benchmark interest rate to a record low and planned to purchase asset-backed securities in an effort to stimulate the region's ailing economy. Investors were also cheered by some encouraging reports on the U.S. economy.
The ECB lowered its main lending rate by 0.10%age point to 0.05%. It cut a separate rate on bank deposits deeper into negative territory, to -0.2% from -0.1%. In June, the ECB became the largest central bank to experiment with a negative rate on bank deposits, a measure aimed at encouraging banks to lend surplus to other financial institutions rather than paying to park them at the ECB.
The ECB also announced it will purchase covered bank bonds and bundled loans known as asset-backed securities and said further details will be released in October. Mr. Draghi didn't indicate a size for the program, but said the ECB's aim was to get its balance sheet, currently around 2 trillion euro, back to its size at the beginning of 2012, when it was 2.7 trillion euro.
However, the gains didn't hold though and the market fell back during afternoon trading, traders reluctant to place big bets ahead of Friday's closely watched government jobs report.
Investors were standing pat ahead of a U.S. jobs report later Friday. The report is likely to influence market expectations of when the Federal Reserve will raise interest rates. Recent improving U.S. economic data suggests the Federal Reserve will continue to wind down its quantitative easing of monetary policy by the end of this year, and will likely begin to raise interest rates sometime in 2015.
Among Asian bourses
Profit booking weighs down Aussie shares
Australian share market closed down for third consecutive day, as investors booked bit of profit-taking today following the recent rally, with shares of bullion and iron ore mining companies led losses after drop in precious metals and iron ore price. The benchmark S&P/ASX 200 Index and the broader All Ordinaries Index each declined by 0.6% to 5598.70 points and 5598.90 points, respectively.
Materials and resources stocks continued falling streak, with resources giant BHP Billiton down by 1% to A$35.65 and main rival Rio Tinto down by 1.4% at A$61.30 as many commodity prices pulled back. Fortescue Metals fell 3.2% to A$3.92. Iron ore has dropped below $US85 a tonne in China for the first time in five years, to $US84.30. Newcrest Mining, Australia's biggest gold producer, shares fell 3.2% to A$3.92 after the price of bullion fell.
Australian dollar appreciated against the euro, greenback and other major currencies on Friday, following the surprise announcement by the European Central Bank to cut its benchmark interest rate. The Australian dollar was quoted at 0.9349 against US dollar and 0.7227 against the euro.
Nikkei drops on profit booking
Japanese share market closed marginally down after erasing intraday gain, amid caution ahead of the US payroll data, scheduled to be release later on global day. The benchmark Nikkei 225 index ended 0.05%, or 7.50 points, down at 15668.68, after hitting an intraday high of 15792.64 spurred by yen depreciation to six-year low against the dollar and the European Central Bank's surprise rate cut. The Topix index of all first-section shares dropped 0.25%, or 3.18 points, to 1293.21.
Artiza Networks Inc., which makes testing systems for phone networks, plunged 7.3% to 1,111 yen after projecting a slump in net income, capping a 25% decline on the week.
Sekisui House rose 2.2% to 1,338.50 yen after the homebuilder reported first-half net income increased to 42.2 billion yen ($401 million) from 34 billion yen a year ago.
Shanghai Composite climbs to 19-month high
Mainland China shares advanced for sixth consecutive session, buoying up the benchmark indices to highest level in 19-months, amid speculation the government would accelerate measures to support the economy. The benchmark Shanghai Composite advanced 19.57 points, or 0.85%, to 2326.43, the highest level since 3rd March 2013 when index closed at 2347.18. For the week, the benchmark index gained 4.9%. Turnover increased to 185.84 billion yuan from Thursday's 179.38 billion yuan.
Property developers stocks extended gain in the Shanghai on media reports that China is relaxing its financing rules for listed property firms by allowing those that qualify to sell medium-term notes in the interbank market. Money raised from the sale of notes can be used to fund new residential housing projects, supplement companies' operating cash flows and repay bank loans, the report said. China Vanke, the biggest developer, rose 1.7% to 9.83 yuan. Poly Real Estate Group Co., the second largest, added 0.2% 5.92 yuan. Gemdale Corp added 1% to 9.29 yuan.
Shares of media companies declined on profit booking following recent rally. The media stocks gained in recent session after the official Xinhua News Agency cited President Xi Jinping as saying last month that China will create several media groups that are strong, influential and credible while promoting the integration of new and traditional media. Anhui Xinhua Media Co. slid 0.9% to 16.47 yuan and People.cn Co., the online unit of the Communist Party's newspaper, lost 1.2% to 49.84 yuan.
CSR Corp. and China CNR Corp., the nation's two biggest train makers, jumped 2.1% to 5.33 yuan and 2.5% to 5.25 yuan, respectively, after a Caixin report the government wants them to merge. The two companies said no plans had been submitted.
Profit taking takes toll on Hang Seng shares
Hong Kong share market has closed lower second straight day in volatile trade, as investors continued exercising caution ahead of a key U.S. jobs report later in global day. The Hang Seng Index ended 57.77 points, or 0.23%, down at 25240.17. Market turnover declined to HK$83.96 billion from HK$86.22 billion on Thursday.
HSBC Holdings shares edged up 0.4% to HK$83.6. The HSI Company will lower its weighting in the benchmark index from 14.22% to 14% after market close today.
New World shares gained 2.2% to HK$10.32 after announcing it has launched its residential project "The Wings IIIA" with 206 units available for sales. It received 4,700 applications from buyers, or 22x subscription.
Solar players were mixed as the NEA published new policies for the industry. Singyes (00750) soared 6.5% to HK$14.5. Junyang (00397) shot up 12.5% to HK$0.225. But GCL-Poly (03800) softened 1% to HK$2.89.
China Hongqiao Group tumbled 6.6% to HK$6.36 after the aluminum-products maker said it plans to sell new shares to its controlling stockholder.
Sensex down on weak global cues
Indian stock market ended in the red for a second consecutive session due to selling by funds and retail investors in select stocks amid weak global cues. At provisional close, the 30-share BSE index Sensex was at 27026.70, down by 59.23 points or 0.22%. The 50-share NSE index Nifty was at 8086.85, down 9.10 points or 0.11%.
ICICI Bank provisionally fell 1.6% while Housing Development Finance Corp (HDFC.NS) ended 2.1% lower.
L&T has gained 1.3% after the company secured a turnkey order worth Rs 5,100 crore for setting up a 1320 MW supercritical thermal power plant project at Shree Sinaji TPP (Stage-II) on complete engineering-procurement construction basis from the state utility MP Power Genertaing Company.
The Indian rupee edged lower against the dollar on dollar's broad strength. The partially convertible rupee was hovering at 60.45, compared with its close of 60.36 during the previous trading session.
Elsewhere in the Asia Pacific region-- Taiwan's Taiex index declined 0.22% to 9407.94. South Korea's KOSPI index fell 0.33% to 2049.41. Singapore's Straits Times index fell 0.14% to 3341.73. Malaysia's KLCI has lost 0.04% to 1868.46. New Zealand's NZX50 rose 0.48% to 5253.87. Indonesia's Jakarta Composite index added 0.23% to 5217.33.
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