Asia Pacific share market finished higher after recouping early losses on Wednesday, 09 October 2013, as appetite for risk assets underpinned by reports that US President Barack Obama will today nominate Federal Reserve vice Chair Janet Yellen to be the next head of the US central bank.
Yellen would be the first woman to head the powerful Fed, taking over at a pivotal time for the economy and the banking industry. Both Yellen and Bernanke are scheduled to appear with Obama at the White House on Wednesday for a formal announcement. Yellen is widely perceived as being more dovish on monetary policy and investors expect her to take a slower path towards a reduction of the Fed's bond-buying program.
However, market movement on the upside were limited as investors hesitant to take aggressive position following Wall Street's overnight sell-off amid rising concerns over a U.S. credit default with only nine days left for Congress to raise the debt limit. At a press conference on Tuesday, President Obama repeated that negotiations on spending could only begin once Republicans raise the debt limit with no conditions.
Further, risk sentiments were also weak after the International Monetary Fund lowered growth forecasts for China and warned that a U.S. government default could seriously damage the global economy.
The Washington-based International Monetary Fund (IMF) on Tuesday trimmed China's forecast for economic expansion to 7.6% this year from a 7.8% estimate in July, saying growth would slow considerably without reforms to spur consumption. Growth worldwide will be 2.9% this year and 3.6% next year, the IMF said, compared with July predictions of 3.1% for 2013 and 3.8% for next year.
Among Asian bourses, Japanese benchmark indices climbed up for second day in row, with export related stocks were leading the way up, thanks to yen weakening against the greenback to the mid-97 yen range. The Nikkei Stock Average advanced 1.03% while the broader Topix index rose 1.46%.
Export related stocks jumped in Japan as the yen fell against most of its 16 major counterparts. A weaker yen enhances the value of overseas earnings at Japanese companies. Toyota gained 3% to 6,230 yen. Komatsu, a maker of construction machinery that gets 30% of its sales in the Americas, added 2.4% to 2,316 yen.
Mizuho Financial Group lost 1% to 204 yen after Chief Executive Yasuhiro Sato said on Tuesday that the bank's former head knew about loans to people connected to organized crime three years ago, contradicting earlier remarks by bank officials who said top management wasn't alerted. On Sept. 27 the Financial Services Agency slapped Mizuho with an operations improvement order on shady loans. Mizuho engaged in dozens of transactions with criminal groups totalling about Y200 million, according to the agency and the bank.
SoftBank fell 5.6% to 7,000 yen after Citibank cut its rating to Neutral from Buy, citing weakening growth in its mobile phone operations.
Honda Motor Co jumped 1.9% to 3790 yen after its new car sales in China for September more than doubled on year, recovering from a fall caused by a territorial dispute between Japan and China.
In Australia, Australian share market closed slightly above the neutral line after recouping early losses, with strength in tech, industrials and resources shares helped to offset losses elsewhere. The benchmark S&P/ASX200 index was up 0.07% to finish at 5153, after falling nearly 1.1% in previous three sessions.
Shares of materials and resources companies were major winner in the ASX, with BHP Billiton higher by 0.4% to A$34.83 but Rio Tinto shed 0.1% to A$60.20. Fortescue Metals Group rose1.9% to A$4.78. Newcrest Mining climbed up 0.9% to A$10.93 after announcing the departures of its chairman and chief executive, following this year's disastrous writedowns.
WorleyParsons lost 2.9% to A$22.10, reversing earlier gains of 2.2%, after saying earnings in fiscal 2014 will be more heavily weighted to the second half than in recent years.
The Westpac Melbourne Institute Index of Consumer Sentiment fell by 2.1% in October from 110.6 in September to 108.3 in October. The modest fall in the Index is probably due to an expected retreat following the positive expectations around the election result. Other factors that might have weighed on the Index were the steady fall in the share market through the survey week (down 2%) and the steady rise in the Australian dollar (up from USD 0.93 to 0.94) through the survey week. The shutdown of the US government and media speculation around a US government default would also have unnerved respondents.
In China, Chinese share market rose for second day in row, with Tianjin-related shares were leading the way up on speculation the northern Chinese port city may soon get approval for a free trade zone. The benchmark Shanghai Composite index jumped 0.62% to 2211.77 while the CSI 300 Index rose 0.48% to 2453.58.
Shares of Tianjin-related counters were sharp higher, with Tianjin Marine Shipping and Tianjin Port both locked 10% upper circuit after local media reported over the Golden Week holiday that the Tianjin government is awaiting central government approval for a free trade zone.
Airlines shares climbed up in Shanghai on news that the number of passengers flying during the holidays exceeded the 7.2 million estimates by China's aviation regulator. China Eastern Air led gains by nearly 3%.
China's economic slowdown has had little impact on demand for air travel, particularly during the weeklong National Day holiday, when more than 7.7 million passengers took to the air at home and abroad. The number of passengers flying during the seven-day vacation exceeded the 7.2 million passenger estimate by China's aviation regulator. The number was up 15.8% from a year ago, indicating strong demand despite a new law that forbids travel agencies from offering cut-rate package tours to boost travel demand. Flights to popular domestic tourist spots the Tibetan capital, Lhasa, and Haikou and Sanya on China's resort island of Hainan recorded a load factor of almost 90%, the Civil Aviation Administration of China said on its website yesterday. Meanwhile, load factor on flights to airports in the nation's five major cities Beijing, Shanghai, Guangzhou, Chengdu and Shenzhen stayed at more than 85% during the holiday.
In Hong Kong, HK shares declined, with the benchmark Hang Seng index falling 0.63% to finished at 23033.97 on Wednesday, October 09, 2013, as the U.S. government shutdown continued to drag on investor sentiments.
Among the 50 HK blue chips, 10 rose and 39 fell, with 1 stock remaining steady. PetroChina jumped 2.4% to HK$8.89 on BofAML's coverage with a buy rating, while Tencent dipped 2.9% to HK$413.8, making themselves the top blue-chip gainer and loser.
Geely dropped 3.4% to HK$4.26. A unit of Goldman Sachs raised $309 million selling 578 million shares of the carmaker at HK$4.15 each, a 5.9% discount to yesterday's close.
In India, Indian benchmark indices extended intraday gains in late trade as European stocks reversed intraday losses and trading in US index futures pointed to a recovery on the Wall Street later during the global day on news that known-dove Janet Yellen is expected to be named chairman of the Federal Reserve today, 9 October 2013. The 50-unit CNX Nifty moved past the psychological 6,000 mark. The Nifty and the barometer index, the S&P BSE Sensex, both hit their highest level in more than 2-1/2 weeks. Indian stocks got additional boost from the latest data which showed India's trade deficit narrowed sharply in September 2013 from August 2013. The data helped ease worries about the country's high current account deficit. The Sensex was provisionally up 275.80 points or 1.38%, up 432.45 points from the day's low and off 18.33 points from the day's high.
Among the 30-share Sensex pack, 24 stocks gained and rest of them declined. Bajaj Auto (up 2.79%), HDFC Bank (up 2.53%) and Bhel (up 2.28%) edged higher from the Sensex pack. Wipro (down 1.58%), M&M (down 0.95%) and Cipla (down 0.59%) edged lower from the Sensex pack.
Elsewhere in the region, New Zealand's NZX 50 Index fell 0.6%. Taiwan's Taiex index dropped 0.4%. Malaysia's KLSE Composite fell 0.47%. Singapore's Straits Times index was up 0.27%. Indonesia's Jakarta Composite Index gained 0.56%, a day after Indonesia's central bank left its benchmark reference rate unchanged for the first time in five months. South Korea's markets were closed today for a holiday.
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