Asia Pacific equities ended mostly higher after fluctuating in tight range on Friday, 31 July 2015, as investors took heart from better than expected earnings from blue chip companies and US GDP data that showed the US economy picked up its pace in the second quarter.
However, gain on the upside capped amid tepid lead from Wall Street overnight and falling commodity prices. Meanwhile, risk sentiments are also in cautions ahead of massive week of key economic data globally including Chinese official manufacturing data on Saturday and comments from the central banks next week.
Wall Street ended narrowly mixed on Thursday, as investors digested U.S. second-quarter gross domestic product (GDP) that showing 2.3% seasonally adjusted annual rise, bolstering expectations that the central bank will be confident enough to raise interest rates as early as September. The blue-chip Dow and the S&P 500 ended near the flatline, while the Nasdaq Composite added 0.3%.
In the commodity space, U.S. crude futures slipped for a second session to trade around $48 a barrel in Asian trade today. Spot gold hovered near five-and-a-half-year lows on Friday.
Yesterday, FOMC made some changes on its assessment of the current economic conditions. There was only subtle adjustment in the forward guidance. The FOMC suggested that it will be appropriate to increase the policy rate when it has seen 'some further improvement in the labor market and is reasonably confident that inflation will move back to its 2% objective over the medium-term'. The word 'some' did not appear in this phrase in the June statement.
Among key domestic data, the Nikkei India Manufacturing PMI data for the month of July 2015 is due on Monday, 3 August 2015. Growth in India's manufacturing sector output eased in June 2015 as new orders rose at weaker rate. The seasonally adjusted Nikkei India Manufacturing Purchasing Managers' Index (PMI) dropped to 51.3 in June 2015 from 52.6 in May 2015. The Nikkei India Service PMI data for the month of July 2015 is due on Wednesday, 5 August 2015. The seasonally adjusted Nikkei Services Business Activity Index declined to 47.7 in June 2015 from 49.6 in May 2015. Among global news, Eurozone Markit Manufacturing PMI data for the month of July 2015 is scheduled to be released on Monday, 3 August 2015. Eurozone Markit Services PMI data for July 2015 is scheduled to be released on Wednesday, 5 August 2015. In United States, the crucial US non-farm payrolls data for the month of July 2015 is slated for release on Friday, 7 August 2015.
Among Asian bourses
Nikkei jumps 0.3%
Japanese share market ended slight higher in quiet trade, as investors took heart from better than expected corporate earnings. However, market gain was limited as due to yen appreciation against greenback after a batch of weak data. The Nikkei Stock Average advanced 62.41 points, or 0.3%, to end at 20585.24 points. The broader Topix index ended 0.75%, or 12.31 points, higher at 1659.52 points. For the week, the Nikkei index rose 0.2% while it added 1.7% in July 2015.
Investors focused on earnings results from key Japanese corporates. More than 300 companies in the Topix scheduled to report quarterly results today. Of the 690 firms that have reported this season, 61% exceeded profit expectations, an improvement from the 48% that beat forecasts in the previous quarter.
Nihon Inter surged 13% after Kyocera began a tender offer at a 9.4% premium to yesterday's closing price. Shares of Nihon Inter closed at 203 yen, above the offer price of 197 yen per share. Kyocera added 0.5%.
Sony lost 1.5% despite reporting quarterly net income that tripled from last year as higher sales of camera sensors used to take selfie photographs.
The core consumer price index - excluding volatile perishables - rose 0.1% on year in June, according to data released from the Ministry of Internal Affairs and Communications on Friday. The pace of increase was the same as in May. The core CPI for central Tokyo fell 0.1% on year in July, posting the first drop in more than two years after rising 0.1% in June.
Japan's seasonally adjusted average unemployment rate rose to 3.4% in June from 3.3% in May, according to data released from the Ministry of Internal Affairs and Communications on Friday.
Japan's average household spending unexpectedly dropped a real 2% on year in June, after rise of 4.8% in May. Rain storms dampened spending on home repairs and automobiles while a slow start to summer sales at department stores delayed purchases of seasonal clothing.
Healthcare stocks leads Australia market rally
The Australian share market advanced for third successive session on the back of strong performance from health care stocks that helped offsetting weakness in the major resources stocks. The benchmark S&P/ASX 200 Index and the broader All Ordinaries Index both advanced by 0.5% to 5699.20 and 5681.70, respectively. The S&P/ASX 200 VIX, which measures the implied volatility of S&P/ASX 200 options, declined 3.9% to 14.55, suggesting a 4.2% swing in the equity benchmark index in the next 30 days.
Health care sector jumped 2.3% after a string of positive announcements from medical giants ResMed, CSL and Vision Eye Institute. Shares of ResMed jumped 6.4% to A$8 after sleep disorder device supplier recorded small lift in full-year profit. The company revenue rose 9% or 17% excluding the effect of currency fluctuations to US$453.1 million in the three months ended June. ResMed's full-year net profit rose 2% to US$352.9 million. Meanwhile, CSL shares jumped 2.7% to A$98.96 after the company announced it won the necessary approvals for its US$275 million acquisition of Novartis' influenza vaccine business, with the purchase to become a new subsidiary called Seqirus.
Resources stocks ended softer, as investors pocket profits after a strong session on Thursday, and after a weakening of commodities overnight. Iron ore fell below $US55 in offshore trade, retracing some recent gains after having recovered from a 10-year low. BHP Billiton lost 0.2% to A$26.45, while Rio Tinto gave up 0.3% to A$52.86. Fortescue Metals Group lost 2.1% to A$1.855.
Origin Energy shares ended 0.1% down at A$11.34 after energy generators and retailers reported 23% drop in revenue to A$215.6 million for fourth quarter ended June 2015, due to a fall in prices, despite a step-up in production. For financial year ended June 2015, revenue was 20% lower at A$900.7 million.
China market extends rout
Mainland China's stock market ended lower in volatile trade, as investors close out positions to mitigate risk on caution ahead of Chinese official manufacturing data on Saturday after early gauge of manufacturing indicated hit a lowest level in 15 months, throwing doubt on the health state-owned enterprises. The benchmark Shanghai Composite Index ended 42.04 points, or 1.13%, down at 3663.73 points. The Shenzhen Composite Index, which tracks stocks on China's second exchange, dropped 0.82%, or 17.53 points, to 2110.62 points. For the week, the benchmark Shanghai index has lost 10%. For the month, it was off 14%.
China's securities regulator has launched a probe into automated trading and restricted 24 stock accounts suspected of influencing securities trading prices on Friday. The investigation seeks to root out possible causes of the recent volatility that has rattled China's stock market. Also, Chinese regulators asked financial institutions in Singapore and Hong Kong for stock-trading records as part of efforts to track down investors betting against shares in China. The CSRC asked for the records to try to identify investors who took net short positions against China's stock markets.
Shares of energy and industrial companies declined the most among 10 industry group in Beijing. PetroChina sank 5.29% to 11.09 yuan and Sinopec Shanghai Petrochemical slid 4.42% to 8.00 yuan. Air China tumbled by its 10% daily limit to 11.75 yuan and China Southern Airlines slumped 6.26% to 11.69 yuan.
Hong Kong market ends higher
The Hong Kong stock market closed higher in quiet trade, as investors took heart from less volatile share moves in the mainland. However, gains were limited as the Shanghai Composite index finished in negative territory for the second straight session and on the back of negative factors such as an uninspiring lead from the U.S. overnight and weak commodity prices. The benchmark opened 152 points higher but fell 30 points at one stage in afternoon session on weakened Shanghai market, which recovered its losses by late trade. The benchmark index fell around 2% on the week and slumped 6.1% for the month of July
Casino operators saw buying orders on hopes of better gaming industry operating figures. Macau government will announce July's operating data of gaming industry early August. Galaxy Entertainment jumped 5.6% to HK$35.7 on news it had bought a five% stake in Societe des Bains de Mer et du Cercle des Etrangers a Monaco. Sands China (01928) shot up 4.3% to HK$34.3.
However, China-based firms listed in Hong Kong mostly fell. Energy giant CNOOC shed 1.13% to HK$9.61, insurer Ping An dropped 0.34% to HK$44.60 and Air China was off 2.50% at HK$7.79.
Sensex spurts as DIPP notifies composite cap for foreign investment
Indian benchmark surged on the last trading session of the week, with shares of state-run banks and pharma stocks leading rally after the Department of Industrial Policy & Promotion (DIPP) issued a notification yesterday, 30 July 2015, introducing composite caps for simplification of the foreign direct investment (FDI) policy for attracting foreign investments in the country. The Sensex provisionally rose 389.04 points or 1.4% at 28,094.39.
The notification from DIPP follows a decision by the Union Cabinet on 16 July 2015 allowing clubbing of foreign direct investment, foreign portfolio investment and investments by non-resident Indians in companies into a composite cap. However, DIPP has clarified that foreign portfolio investment by FIIs/FPIs/QFIs will remain at 49% of the total paid up capital for private sector banks. In the defence sector, foreign portfolio investment will remain at 24% of total paid up capital of the company. Portfolio investment in the defence sector will be under automatic route.
Titan Company tumbled after weak Q1 outcome. Shares of Dr Reddy's Laboratories edged higher, with the stock extending gains registered yesterday, 30 July 2015, triggered by good Q1 earnings.
Foreign portfolio investors sold Indian shares worth a net Rs 170.68 crore yesterday, 30 July 2015, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) bought shares worth a net Rs 499.65 crore yesterday, 30 July 2015, as per provisional data released by the stock exchanges.
Elsewhere in the Asia Pacific region: Taiwan's Taiex index rose 0.16% to 8665.34. South Korea's KOSPI added 0.55% to 2030.16. New Zealand's NZX50 rose 0.49% to 5920.96. Singapore's Straits Times index lost 1.5% at 3202.50. Indonesia's Jakarta Composite index added 1.9% to 4802.53. Malaysia's KLCI rose 1.4% to 1723.14.
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