Asia Pacific share market closed mixed on Wednesday, 17 August 2016, on tracking weak lead from Wall Street overnight, revived bets on U.S. interest rate rises this year and halt in a red-hot run for oil prices. MSCI's broadest index of Asia-Pacific shares outside Japan dipped 0.3%.
Overnight, U.S. stocks fell out of record territory on Tuesday, as investors eyed the release of the minutes from the Federal Reserve's July meeting, while a key policymaker hinted that it could be appropriate to raise interest rates in the coming months as the economy demonstrates continued improvement.
The Fed left benchmark short-term U.S. rates unchanged at its last meeting in July but said near-term risks to the economy had diminished, leaving the door open for a possible rate hike this year. New York Fed President William Dudley and Atlanta Fed chief Dennis Lockhart both said on Tuesday that the U.S. central bank could raise rates at its September policy meeting. Analysts said traders are positioning for the minutes, due later in global day, for hints on when the Fed would next raise rates.
Crude Oil slipped back from 5-week highs as the dollar's muscle-flexing compounded doubts about whether upcoming talks between top oil exporter countries would result in firm measures to rein in ballooning oversupply. Global benchmark Brent slipped 0.75% to $48.86 a barrel, after climbing 1.8% overnight. U.S. crude futures dropped 0.67% to $46.27, following a 1.8% advance on Tuesday.
On Tuesday, China announced plans to open its Shenzhen stock market to foreign investors, after the State Council said the government had approved plans for the launch of the Shenzhen-Hong Kong Stock Connect. The program, which was modeled after the Shanghai-Hong Kong Stock Connect, would allow Shenzhen-based investors to buy Hong Kong-listed stocks and vice versa. Despite a burst of trading gains in China stocks over several days since chatter over an anticipated announcement began last week, analysts have been skeptical regarding how attractive this link will actually be to foreign investors. Traders can already invest in China's domestic markets through the Qualified Foreign Institutional Investors scheme, or through the Shanghai-Hong Kong Connect, which began trading in November 2014.
Among Asian bourses
ASX200 closes marginally in black
Australian share market finished marginally higher, as gains in energy, materials & resources, consumer discretionary, and consumer staples stocks were more than offset losses elsewhere. At close of trade, the benchmark S&P/ASX 200 index advanced 3 points, or 0.05%, to 5535. The broader All Ordinaries added 2.40 points, or 0.04%, to 5628.10. Falling stocks outnumbered advancing ones on the Australia Stock Exchange by 565 to 505 and 336 ended unchanged. The S&P/ASX 200 VIX, which measures the implied volatility of S&P/ASX 200 options, was down 3.30% to 11.964 a new 52-week low.
Energy stocks led market gains after oil prices on Tuesday rose to a fresh one-month high on news Russia plans to meet with the Organization of the Petroleum Exporting Countries in October, lifting hopes that major oil producers may agree to output limits. Woodside Petroleum and Oil Search each rose 2.4%, and Origin Energy was 1.7% higher ahead of the release of its annual results on Thursday.
BHP shares added 3.2% to $20.91. The strong showing followed the release of miner's saddest profit report in history. Anglo- Australian mining giant BHP Billiton plc reported on Tuesday a hefty loss in its fiscal 2016 amid significantly weaker prices across all major commodities that had a negative impact of $10.7 billion. For the year 2016, BHP Billiton posted a loss before tax of $7.3 billion, compared to profit of $8.1 billion last year. Attributable loss was $6.39 billion, compared to profit of $1.91 billion a year ago. Moody's Investors Service left its rating on the mining company at A3, based on expectations of continued cost reduction and cash flow generation. Among other miners, Rio Tinto rose 2.3%
Westpac and National Australia Bank led gains among the major banks, each gaining 1.5%, while Australia & New Zealand was ahead by 0.7%. However, Commonwealth Bank of Australia fell 2.6%. QBE Insurance Group shares tumbled by 8.3% to A$10.24 after Australia's largest insurer posted a 39% drop in first-half profit and said the insurance industry continued to face headwinds from low interest rates and reduced pricing..
Crown Resorts jumped 4.5% to close at A$13.89 after posting an annual resulted boosted by the sale of shares in its troubled Macau holding. The proceeds pushed net profit to A$948.8 million, up 146.4%.
Nikkei rises 0.9%
The Japan share market finished in positive terrain, snapping two sessions of decline, on the back of halt in yen appreciation against greenback after senior US central banker William Dudley suggested an interest rate hike could possibly come as early as next month. Trading was thin with many investors away for Japans week-long, though unofficial, Obon holiday. Total 24 out of 33 TSE sectors advanced, with Mining, Insurance, Iron & Steel, Oil & Coal Products, Banks, and Nonferrous Metals issues being major gainers. The 225-issue Nikkei stock average advanced 149.13 points, or 0.9%, to finish at 16745.64. The Topix index of all first-section issues ended up 12.66 points, or 0.97%, at 1311.13.
Exporters rose as the yen's rally fizzled, with Toyota tacking on 1.66% to 5,973 yen and Uniqlo operator Fast Retailing, a market heavyweight, jumping 0.82% to 36,800 yen.
Stronger oil prices gave crude-linked shares a boost with energy explorer Inpex soaring more than five% to 880.9 yen and refiner JX Holdings jumping 2.25% to 385.7 yen.
Banking giants Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group gained 2.39% to 530.4 yen and 2.10% to 3,399 yen.
China Market closes marginally in red
Mainland China stock market closed marginally in red after paring early losses, after authorities approved the launch of a long-awaited scheme to allow stock trading between Shenzhen and Hong Kong. The CSI300 index of the largest listed companies in Shanghai and Shenzhen fell 0.15%, to 3373.05. The Shanghai Composite Index edged down 0.02%, to 3109.55 points while the Shenzhen Composite index closed 0.32% up at 2043.27 points.
Property developers, brokerage houses, and banks were among the biggest losers, pulling back after recent gains. China Vanke skidded 6.2% to 25.85 yuan in Shenzhen. Before Wednesday, the stock had surged by its daily increase limit of 10% for three days in a row.
Hong Kong Stocks falls on profit booking
The Hong Kong stock market closed down after erasing gain late afternoon, as investors took profit after China's State Council turned green light to the long-awaited Shenzhen-Hong Kong Stock Connect. Also, lingering worries over a possible US interest rate rise as soon as September weighed down sentiments. The benchmark Hang Seng Index fell 111.06 points, or 0.48%, to 22799.78 points. The Hang Seng China Enterprises Index, benchmark measure of performance of mainland China enterprises, dropped 66.23 points, or 0.68%, to 9641.76.
Citi Research said SZ-HK connect will not turn around HKEx's (00388) profitability. It believes the bourse operator is overvalued. HKEx (00388) slid 5% to HK$191.2. Other brokerages were also weaker. First Shanghai (00227) and Haitong Int'l (00665) plunged 7% to HK$1.37 and HK$5.09.
Stocks that are also listed on Shenzhen bourse saw profit taking pressure. Zhejiang Shibao (01057) declined 11% to HK$10.38. Shandong Molon (00568) dropped 10% to HK$3.4.
China Unicom (00762) edged up 0.1% to HK$8.4 ahead of its earnings release later today. Ping An (02318) fell 1% to HK$39.7. Tencent (00700) softened 1% to HK$197.9.
Cathay Pacific (00293) dived 7% to HK$11.92 becoming the worst blue-chip loser. The local carrier said its interim earnings declined 82% to HK$353 million.
HSBC (00005) put on 1% to HK$54.6 as the global banking group yesterday spent GBP14.51 million buying back 2.67 million shares of itself in London stock exchange.
Indian indices register small losses
IT stocks and index heavyweight Reliance Industries (RIL) led losses for key benchmark indices. Losses for Asian and European stocks weighed on the domestic bourses. The barometer index, the S&P BSE Sensex, fell 59.24 points or 0.21% to settle at 28,005.37. The Nifty 50 index fell 18.50 points or 0.21% to settle at 8,624.05.
Infosys edged lower, with the stock extending previous trading session's decline triggered by the company's announcement that it had lost a contract from Royal Bank of Scotland. Reliance Industries moved lower, with the stock extending losses registered during the previous trading session triggered by media reports that the petroleum ministry has slapped a penalty of nearly $250 million on the company. Tata Motors eked out small gains after global credit rating agency Standard & Poor's Global Ratings upgraded its long-term corporate rating on Tata Motors to 'BB+' from 'BB' earlier, citing improvement in the company's competitive position following the better performance of its 100% subsidiary, Jaguar Land Rover Automotive PLC (JLR).
Piramal Enterprises gained after the company's announcement that its wholly owned US subsidiary has entered into an agreement to acquire 100% stake in Ash Stevens Inc, a US-based contract development and manufacturing organisation (CDMO), in an all cash deal. InterGlobe Aviation edged higher on reports that a foreign brokerage has upgraded its rating on the stock to buy from neutral. Shares of Zee Learn and Tree House Education & Accessories both surged after the board of directors of both the companies approved revised scheme of merger.
Elsewhere in the Asia Pacific region: New Zealand's NZX50 rose 0.6% to 7355. South Korea's KOSPI index dropped 0.2% to 2043.75. Taiwan's Taiex index added 0.1% to 9117.70. Malaysia's KLCI was down 0.3% to 1694.32. Singapore's Straits Times index fell 0.5% to 2843.35. Indonesia's Jakarta Composite index closed for public holiday.
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