Weaker-than-expected U.S. job creation in September was a mixed cue for Asian markets. On the plus side, it boosted the case for a full-strength continuation of the Federal Reserve's super-easy monetary policy that has boosted investment in stocks worldwide. On the downside, it suggests U.S. demand for the region's exports will continue to be subdued, which could hurt company earnings.
The Labor Department reported that 148,000 jobs were created in September. Following revisions to back data, it means that the U.S. economy added an average of 143,000 jobs a month from July through September, down from 182,000 from April through June.
Sentiment in the regional market was also hurt by reports the China's central bank refrained from injecting funds into money markets, pushing up short-term lending rates. The seven-day repurchase rate, a gauge of funding availability in the Chinese banking system, traded at a weighted average of 4.05% by late afternoon, compared with yesterday's average of 3.570%. Spike in money rate came amid speculation Chinese authorities would withdraw liquidity from the system and cool down this shadow banking system of theirs and the property market.
European stocks dropped on Wednesday, 23 October 2013, as investors digested more quarterly earnings and new ECB stress tests on euro-zone banks. Key benchmark indices in France, Germany and UK were off 0.49% to 0.77%.
The Bank of England on Wednesday lifted its growth estimates for the second half of the year, as a "robust" recovery in the U.K. continues to gather pace and unemployment looks set to fall faster than expected. The central bank said in its minutes from its policy-setting meeting earlier in October that growth in the second half would remain around 0.7% a quarter or a little higher, stronger than expected at the time of the August Inflation Report. In September, the BOE upgraded the growth expectations for the third quarter to 0.7% from the 0.5% forecast in August. "The recovery in growth since the end of 2012 appeared in part to reflect a dissipation of uncertainty -- for example, as the perceived tail risks in the euro area had receded -- against the backdrop of considerable monetary stimulus," the BOE said in the minutes, released on Wednesday. It also said that surveys indicate the joblessness rate for the rest of the year likely will fall faster than it anticipated in August. The U.K.'s third-quarter gross-domestic-product number will be released on Friday.
The European Central Bank in November will begin a thorough review of the balance sheets of 130 financial institutions from Latvia to Germany, opening a year-long process aimed at removing doubts about the strength of European banks and restoring credit to the private sector. As part of the asset-review exercise, and subsequent stress tests of bank balance sheets, the ECB said Wednesday it will ask all banks included in the assessment to set aside 8% of their risk-adjusted capital as a buffer against losses on loans and other parts of their balance sheets. The central bank, which assumes a new role as single supervisor of euro-zone banks at the end of next year, said the asset review will include on-balance sheet and off-balance sheet exposures such as credit derivatives. The ECB will examine the banking and trading books of financial institutions. The euro bloc consists of 17 countries and will rise to 18 in January when Latvia adopts the euro.
Trading in US index futures indicated that the Dow could fall 74 points at the opening bell on Wednesday, 23 October 2013. US stocks gained on Tuesday, 22 October 2013, further propelling the S&P 500's record rise, as the September nonfarm-payrolls report supported the notion that the Federal Reserve's monthly bond purchases would continue into next year.
Among Asian bourses, Japanese financial market stumbled, as investors were opting for cashing out recent gains off the table after the key indices climbed to one-month peak yesterday. Meanwhile, selling pressure intensified after the yen appreciated to upper 97-level from lower 98-yen level at the open. The benchmark Nikkei Stock Average declined 1.95% to 14426.05, while the broader Topix index sank 1.5% to 1196.
Shares of Japanese blue-chip exporters declined the most, as rise in the yen against the U.S. dollar rekindled fears it can hurt sales and profits at Japanese exporters. Fujitsu declined 1.9% to 409 yen, Sony Corp 2% to 1896 yen, Canon Inc 2.2% to 3135 yen and Pioneer Corp 3.2% to 181 yen. Shares of Honda Motor Corp dropped 2.8% to 3850 yen and Toyota Motor Corp 0.8% to 6320 yen.
Tokyo Electron shares finished steady at 5560 yen in Tokyo after a Nikkei report said the semiconductor company likely will post a 3 billion yen operating loss in the six-month period that ended in September. This was less than half the amount forecast.
Jtekt sank 5.2% to 1325 yen after saying its group net profit for the April-September half likely fell 39% on year to 3 billion yen, well short of the projected 12.5 billion gain yen.
Nidec shares jumped 4.5% to 9150 yen after it announced its group net profit for the fiscal year ending March 2014 will likely hit 55 billion yen versus a previous forecast of 53.5 billion yen. The company also said it will increase its annual dividend by 5 yen a share to 90 yen.
In Australia, shares in Sydney market declined for the first time in preceeding seven sessions, weighing the benchmark S&P/ASX200 index lower by 17 points to finish at 5356.10, with major banks dragging the market. Meanwhile, utilities healthcare and consumer-related stocks also came under profit booking pressure. However, gains by some of the miners, particularly BHP Billiton and precious metal stocks, helped to trim losses.
Australian banking and financial stocks finished lower on profit taking, with Australia & New Zealand Banking Group falling 0.8% to A$31.97, Westpac Banking Corp 0.7% to A$33.87, Commonwealth Bank 0.2% to A$74.61 and National Australia Bank 1.7% to A$35.47.
Shares of precious-metal miners were biggest winner in ASX after gold, silver and other metals futures jumped on expectations of further monetary stimulus from the Federal Reserve in the wake of soft U.S. September jobs data. The most actively traded gold contract, for December delivery, on Tuesday rose $US26.80, or two%, to settle at $1342.60 a troy ounce on the Comex division of the New York Mercantile Exchange, the highest since September 19. Among precious metal players, Newcrest Mining rose by 3.6% to A$11.09, Perseus Mining 12.4% to A$0.59 and Kingsgate 1.2% to A$1.655.
BHP Billiton rose 1.2% to A$37.50, extending gains for third consecutive day, after the miner raised its fiscal-year forecast for iron-ore production to 212 million metric tons following record output from its mining site in Australia's Pilbara region.
AGL Energy down by 1.8% to A$15.30 after the company predicted to take A$25-A$30 million hit to its full year profit due to an unusually warm winter. Rival energy provider Origin has gained 1.5% to A$14.46 after announcing its managing director Grant King's tenure had been extended.
The Australia's Consumer Price Index (CPI) rose 1.2% in the September quarter 2013, compared with a rise of 0.4% in the June quarter 2013, according to latest data from Australia Bureau of Statistics.
In China, Chinese financial market declined for second day in row, dragging the benchmark Shanghai Composite index lower by 1.25% to 2183.11. The selloff in the mainland China market came on renewed worries tighter liquidity in the China's banks after a sharp jump in the money market rate. Spike in money rate came amid speculation Chinese authorities would withdraw liquidity from the system and cool down this shadow banking system of theirs and the property market
Shares of information technology and telecom companies declined the most in Shanghai market on profit taking in the Shanghai after running up in the last few months. Yonyou Software slumped 9.0% to 13.88 yuan today but has risen 44% so far this year, while Neusoft Corp. fell 7.5% to 15.15 yuan after doubling in value this year. ZTE lost 6.7% to 16 yuan but is up 64% year-to-date. Leshi Internet Information & Technology (Beijing) Co, the operator of online-video portal LeTV.com, plunged by the 10% daily limit for a second day.
Sichuan province-based companies rallied after the Sichuan Daily said the province plans to unveil investment projects worth 4.3 trillion yuan. Sichuan Road & Bridge Co. (600039) surged by the 10% daily limit to 7.05 yuan. Sichuan Expressway Co. jumped 10% to 3.42 yuan.
Huaneng Power International Inc., the listed unit of China's largest power group, slumped 5.8% to 5.55 yuan after third-quarter earnings missed estimates. The company said it posted third-quarter net income of 3.29 billion yuan.
In Hong Kong, HK shares closed sharply lower, with the benchmark Hang Seng Index ending the day down 316 points to 22,999, as risk aversion selloff across the board was witnessed on tracking fall in Mainland China market. The HSI traded between 22,970 and 23,500 during the day.
Among the 50 HK blue chips, 12 rose and 36 fell, while remaining 2 stocks steady. China Unicom (00762) dipped 4.8% to HK$12.02, while Tingyi (00322) added 1.9% to HK$21.25 on news of 35 production lines addition, making themselves the top blue-chip loser and winner.
In India, Indian benchmark indices trimmed intraday losses in late trade. The barometer index, the S&P BSE Sensex, was provisionally down 135.79 points or 0.65%, up 139.46 points from the day's low and off 193.14 points from the day's high.
Among Indian blue chips, Hero MotoCorp gained in volatile trade after announcing Q2 result during market hours today, 23 October 2013. Hindustan Unilever rose in highly volatile trade. Wipro dropped in volatile trade after announcing Q2 result after market hours on Tuesday, 22 October 2013. GAIL (India) advanced on a media report that the oil ministry has decided to exempt the company from sharing subsidy burden with state-run oil retailers. Cairn India also declined in volatile trade after announcing Q2 result after market hours on Tuesday, 22 October 2013. Telecom stocks edged lower. L&T Finance Holdings declined after declaring Q2 result during market hours today, 23 October 2013.
Elsewhere in the region, New Zealand's NZX 50 index rose 0.92%. Indonesia's Jakarta Composite index added 0.75%. South Korea's KOSPI fell 1%. Malaysia's KLSE Composite added 0.6%. Singapore's Straits Times index sank 0.2%. Taiwan's Taiex index fell 0.3%.
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