Asia Pacific share market dropped on Wednesday, 06 August 2014, on risk aversion selloff following rekindled Ukraine tensions and potential interest rates hikes in the US. The MSCI Asia Pacific Index decreased 0.4%.
Stocks were weaker from the start as overnight Wall Street shares tumbled in reaction to heightened Ukraine tensions. Investors dumped risker assets amid fears of rising geopolitical tensions after Poland's foreign minister warned Russia is poised to invade or militarily pressure Ukraine's eastern border.
News reports stated Russian president Putin has ordered Kremlin to prepare retaliatory measures against US and Europe on the sanctions imposed on Russia last week. The developments come after the most recent round of sanctions imposed on Russia by the U.S. and Europe. Russia has reportedly called for a meeting of the U.N. Security Council.
Selloff pressure mounted further amid renewed concerns of funds outflow from emerging markets after speculation that stronger US growth will lead to sooner-than-expected increase in US interest rates.
A recent spate of strong US economic data has revived investor concerns that the Federal Reserve may move to tighten monetary policy sooner than previously believed. A slight shortfall in July employment numbers was balanced by upward revisions for May and June, Labor Department data showed Friday, indicating that the U.S. economy continues on a recovery path. US manufacturing, meanwhile, grew at its fastest pace in more than three years last month, and second-quarter economic growth came in above expectations, further bolstering the case for the Fed to increase interest rates. Higher interest rates would turn overseas investment less attractive.
Among Asian bourses
Nikkei declines 1.05%
Japanese share market stumbled for fifth consecutive session, on yen's rise against major rivals and rising geo-political tensions in Ukraine. The benchmark Nikkei 225 index dropped 160.52 points to close at 15159.79, while the Topix index fell 12.24 points to 1251.29.
SoftBank fell 3.5% to 6972 yen on reports Sprint ended talks to acquire T-Mobile US, as regulatory concerns outweighed the potential benefits of combining the third- and fourth-largest U.S. wireless carriers. Other media news stated Sprint plans to name Marcelo Claure, the founder of mobile-phone distributor Brightstar Corp., as its new chief executive officer.
Toyota Motor Corp lost 0.9% to 5989 yen despite booking a record April-June results reported after the Tuesday market close. Its net profit totaled 587.7 billion yen, helped by sales in its key North American market. For the full fiscal year, Toyota said it still expects profits before taxes to drop 2%, a move seen by many analysts as conservative.
Air conditioner maker Daikin Industries lost 4.6% to 6708 yen despite logging a record consolidated net profit of Y35.6 billion for its April-June period. Traders still saw the results as a sell opportunity after shares hit consecutive 2014 highs in recent days.
Pacific Metals Co shares slumped 16.1% to 418 yen after stainless steel maker forecasted a full-year loss of 415 million yen and its rating was cut to underperform at Mizuho Securities Co.
Showa Shell Sekiyu K.K. shares plunged 6.7% to 1127 yen, after the oil refiner said net income fell to 14 billion yen in the first quarter, missing its projection of 15 billion yen.
Kubota Corp shares rose 8.9% to 1406 yen after industrial machinery manufacturer reported first-quarter net income advanced 8.4% to 33.4 billion yen ($326 million), outpacing market expectation of 30.2 billion yen.
Australia stocks fall on Ukraine woes
Australian stock market extended falling streak for fourth consecutive session, on tensions over the situation in Ukraine, with technology, energy and financial stocks being the biggest losers. However, gain in the mining stocks capped downfall. The benchmark S&P/ASX 200 Index and the broader All Ordinaries Index both declined by 0.1% to 5512 and 5504, respectively.
Treasury Wine Estates shares lost 1.2% to A$5.11 as both J.P. Morgan and UBS came out with notes highlighting downside risks for the vintner, particularly in terms of KKR's sweetened bid for the company.
Shares of Telstra Corp rose 0.4% to A$5.43 as CIMB said the telecom could buy back close to $1.9 billion of its stock.
James Hardie Industries shares added 0.5% to A$13.80 as Morgan Stanley suggested more gains ahead, holding its overweight rating on the shares.
Shanghai Composite falls on Ukraine tensions, weak service data
Mainland China stock market closed softer, as selling was kicked off on rising geopolitical tensions after warning from a Polish official about the potential for Russia to invade Ukraine. Meanwhile, downbeat reading of China's services industries also weighed down investor sentiment. The benchmark Shanghai Composite lost 0.11%, or 2.48 points, to close at 2217.46. Turnover decreased to 140.36 billion yuan from yesterday's 141.47 billion yuan.
Shares of financial and energy companies dropped as profit booking triggered on speculation a recent rally was excessive relative to earnings prospects. Ping An Bank Co. dropped 1.6% to 10.65 yuan and Poly Real Estate Group Co. declined 1% to 5.90 yuan. New China Life Insurance Co slid 1.9% to 24.58 yuan.
Shares of materials and resources companies closed mostly higher, led by Aluminum Corp, raising 10% daily limit to 4.07 yuan after the Ministry of Industry and Information Technology approved its rare earth company plan. Inner Mongolia Baotou Steel Co climbed 7.2% to 4.59 yuan. Xiamen Tungsten Co rose 1.5% to 33.49 yuan.
Hang Seng falls on Ukraine crisis
Hong Kong share market closed lower, as risk aversion selloff flared on possible escalation of conflict in Ukraine and potential interest rates hikes in the US. The benchmark Hang Seng Index declined 64.13 points to close at 24584.13. Market turnover stood at HK$69.70 billion, down marginal from yesterday's HK$70.85 billion.
Chinese developers listed in HK bourse were mixed. COLI (00688) edged up 0.2% to HK$22.95. CR Land (01109) dipped 1.3% to HK$17.1. Sino-Ocean (03377) put on 1.4% to HK$4.36. Sunac (01918) slipped 1.8% to HK$5.94.
China Unicom (00762) plunged 5.2% to HK$13.06 ahead of its earnings report scheduled tomorrow. Brokerages estimated the telecom carrier to report 26%-40% growth in its interim profit. It was the biggest blue-chip loser.
China Mobile (00941) slid 1.3% to HK$94.65 on the news that it plans to buy a minority stake in Axiata Group.
Aluminum Corp. of China soared 9% to HK$3.74 after the Ministry of Industry and Information Technology approved its plan to form a large rare earth group.
Sensex, Nifty fall on profit-booking
Indian stock market was trading lower in late afternoon, as funds and retail investors booked profits on escalating tensions over Ukraine and ears of a sooner-than-expected increase in U.S. interest rates.
At 14:50 IST, the 30-share index was at 25765, down 66143 points or 0.55%. The Nifty was at 7682.50, down 64 points or 0.8%.
Infosys rose on reports that three former executives of the company have suggested the company to buyback shares worth Rs 11200 crore.
Lupin rose slightly after the company announced a strategic distribution agreement with LG Life Sciences of South Korea to launch insulin Glargine, a novel insulin analogue under the brand name Basugine.
Bhushan Steel was locked in 20% lower circuit at Rs 304.60, with the stock resuming fall after a seeing a small recovery on Tuesday, 5 August 2014.
EIH fell after net profit declined 39.2% to Rs 6.41 crore on 5.2% rise in net sales to Rs 280.91 crore in Q1 June 2014 over Q1 June 2013.
Elsewhere in the Asia Pacific region-- South Korea's KOSPI index fell 0.3% to 2060.73. Taiwan's Taiex index edged 0.03% up to 9143.97. Indonesia's Jakarta Composite index dropped 1% to 5058.23. New Zealand's NZX50 slid 0.23% to 5092.23. Singapore's Straits Times index fell 0.21% to 3320.52. Malaysia's KLCI declined 0.4% to 1869.92.
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