Asia Pacific share market mostly advanced on Monday, 02 March 2015, as boost from an interest rate cut in China on Saturday offset a weaker finish on Wall Street last week and data indicating shaky growth in the world's top two economies.
China's central bank cut interest rates for the second time in less than four months, in a fresh sign that the country's leadership is becoming more aggressive in trying to arrest flagging economic growth. The People's Bank of China, the central bank, cut the benchmark one-year lending rate by 25 basis points to 5.35% and the one-year benchmark deposit rate by the same amount to 2.5% on Saturday night, effective from midnight. The PBoC cut rates for the first time in more than two years on November 22.
Meanwhile, HSBC's final reading of China's manufacturing sector in February came in at 50.7, much higher than the flash reading of 50.1 and the official February reading announced over the weekend, which showed a second straight month of contraction due to unsteady exports and slowing investment. The official manufacturing Purchasing Managers' Index was at 49.9 last month, compared with 49.8 in January, the statistics bureau and the China Federation of Logistics and Purchasing in Beijing said Sunday.
U.S. equities ended lower last Friday as economic growth in the world's biggest economy slowed more sharply than initially thought in the fourth quarter. The Commerce Department said on Friday that the economy as measured by the gross domestic product grew at an annual rate of 2.2% in the October-December quarter, weaker than the 2.6% first estimated last month.
Among Asian bourses
Australia stocks rise ahead of RBA rate decision
The Australian share market advanced, with realty, financial, utilities and mining blue chips supporting the advance a day ahead of a Reserve Bank of Australia policy decision. The benchmark S&P/ASX 200 Index advanced 30.10 points, or 0.51%, to 5958.90, while the broader All Ordinaries Index was up 27.80 points, or 0.47%, to 5936.30. Market turnover was relatively thin, with 1.53 billion shares changing hands worth of A$3.99 billion.
Financial stocks were higher, with the big four banks leading the rally on speculation the RBA to follow up its surprise February rate cut with another 25 basis point cut to a new record low of 2% when it meets on Tuesday. Commonwealth Bank of Australia lifted up 0.7% to A$92.55. Westpac Banking Corp rose 0.8% to A$38.29 and ANZ Banking Group added 1% to A$35.70. National Australia Bank was up 1.1% to A$38.32.
Materials and resources stocks also went higher, on tracking strength in iron ore prices. The spot price for iron ore, landed in China, edged slightly higher over the weekend to $US62.56 a tonne. BHP Billiton was up 1.4% to A$34.12, while main rival Rio Tinto added 1.9% to A$65.60. Fortescue Metals Group declined 3.6% to A$2.45. Also in the mining space, U.S.-based Boart Longyear rallied 20% to A$0.24, on reports saying more job cuts could follow 22 layoffs reported last week.
Among individual performer- Myer Holdings declined 10.8% to A$1.66 after the unexpected news that the retailer's chief executive officer and chief financial officer had both left the company.
Woolworths dropped 4.6% to A$29.29 as both UBS and J.P. Morgan cut their price targets for the stock in the wake of the company's fiscal first-half earnings.
Shares of rail operator Aurizon Holdings fell 0.9% to A$4.69 after it warned that the hit from a recent Queensland cyclone and from a labor strike could cost it as much as US$23 million in all.
Nikkei gets weak-yen boost
Japanese share market ended slight higher in volatile trade, as risk sentiments improved by a surprise interest rate cut in China over the weekend and yen depreciation against the dollar. The Nikkei Stock Average ended higher by 28.94 points, or 0.15%, to 18826.88, off an intra-day high of 18939.17 and day low of 18775.23. The broader Topix index grew by 1.12 points, or 0.07%, to 1524.97, the highest level since December 2007. The gauge gained 1.6% last week to cap a 7.7% jump in February, the most since September 2013.
The greenback kicked off the Asia session on a strong tone, sending the dollar to as high as Y119.95, up from late Friday's 119.34 yen, in the wake of the better-than-expected U.S. economic growth for the October to December quarter. But it was unable to break above the psychologically-important Y120-mark with investors wary about a slew of U.S. economic indicators and events later this week.
The currency-sensitive tech and industrial stocks gained the most in Tokyo market, with Komatsu up 0.6% to 2504.50 yen and Murata Manufacturing Coup 1% to 14885 yen. Panasonic Corp climbed up 1.5% to 1517.50 yen after hiking its year-end dividend. Nintendo Co. added 1.5% to 12,975 yen. Tokyo Disney Resort operator Oriental Land Co. jumped 4.1% to 33,555 yen.
Shares of Nippon Telegraph & Telephone Corp advanced 2.6% to 7614 yen on reports that one of its units was in late-stage talks to buy German data-center operator E-Shelter for about $830 million.
Japan's Ministry of Finance said Monday on that business investment in Japan remained sluggish in the December quarter, as the economy struggles to gain momentum following a tax-induced recession last year. The quarterly survey of about 23,000 Japanese firms showed that capital expenditure edged up 0.6% from the previous quarter. That compares with a 0.1% increase given in preliminary gross domestic product data last month. Compared with the previous year, the survey showed capital expenditure grew 2.8%. The survey also showed that firms' aggregate profits jumped 11.6% in the quarter from the previous year, with sales also rising 2.4%. The data showed that the ratio of firms' net worth to total assets stood at 39.7%, near a record high of 40.2% in April-June, indicating that Japanese companies are still busy repaying debt rather than expanding their operations.
China stocks up after rate-cut
Mainland China share market advanced, in the wake of central bank lowering interest rates over the weekend for a second time in three months due to increasing downward pressure facing the Chinese economy. The CSI300 index, the largest listed companies in Shanghai and Shenzhen, rose 28.42 points, or 0.8%, to 3601.26, while the Shanghai Composite Index gained 25.98 points, or 0.78%, to 3336.28.
The impact of the latest rate cut was, however, limited as the market already priced in expectations of further monetary easing. China's main stock indexes staged a seven-day rally ahead of the Lunar New Year holiday and continued rising last week.
All ten SSE industry groups advanced, with information technology issue leading rally, up by 3.3%, followed by material (up 2.2%), utilities (up 1.9%), consumer discretionary (up 1.6%), consumer staples (up 1.1%), energy (up 1.1%), telecommunication service (up 1%), healthcare (up 0.9%), industrials (up 0.3%), and financial (up 0.1%).
Hang Seng up 0.26%
Hong Kong share market finished session on a positive note, as an interest rate cut in China on Saturday offset a weaker finish on Wall Street last week and data indicating shaky growth in the world's top two economies. The Hang Seng Index ended up 64.15 points or 0.26% to 24887.44, off an intra-day high of 24997.83 and day low of 24715.38. Turnover increased to HK$79.7 billion from HK$76.6 billion on Friday.
Shares of Major mainland Chinese banks advanced broadly, with China Merchants Bank Co adding 0.9%, Bank of Communications Co up 1.2%, and Industrial & Commercial Bank of China higher by 0.5%.
Shares of major mainland Chinese property developers also gained, with China Resources Land gaining 0.5%, while Evergrande Real Estate Group moved 1.8% higher. Also, Hong Kong-based real-estate stocks mostly higher following selloff in prior session after the Hong Kong Monetary Authority announcement of several measures to cool the local housing market. New World Development Co grew 0.7% and Henderson Land Development Co jumped 0.2%, while Pacific Century Premium Developments dropped 0.5%.
Nifty gains outweigh gains in Sensex
Cement, construction and capital goods led rally on the bourses after the government provided a thrust on the infrastructure sector and sharply increased the government's capital expenditure for 2015-16 in Union Budget 2015-16 tabled by Finance Minister Arun Jaitley in parliament on Saturday, 28 February 2015. As per provisional closing, the S&P BSE Sensex was up 105.99 or 0.36% to 29467.49. The CNX Nifty was up 54.90 points or 0.62% at 8,956.75, as per provisional closing.
Index heavyweight L&T hit record high on strong infrastructure push in the Union Budget 2015-16. ITC extended steep losses registered during the previous trading session triggered by the government raising excise duty on cigarettes in the Union Budget 2015-16. Shares of public sector oil marketing companies (PSU OMCs) edged higher after the companies announced increase in petrol and diesel prices with effect from midnight of 28 February 2015/1 March 2015. Aviation stocks edged lower after jet fuel price was hiked by a steep 8.2% on 1 March 2015. Bajaj Auto tumbled after weak sales in February 2015.
Global credit rating agency Standard and Poor's reportedly said today, 2 March 2015, that a relatively heavy general government debt burden and large budgetary subsidies could constrain its sovereign credit ratings on India. The rating agency said that India's budget for 2015/16 highlighted the government's commitment to keeping the fiscal deficit low.
Meanwhile, the Government of India and the Reserve Bank of India (RBI) have signed an agreement on monetary policy framework whereby the two sides have officially decided inflation targeting by the RBI.
Elsewhere in the Asia Pacific region: South Korea KOSPI rose 0.55% to 1996.81. Taiwan's Taiex fell 0.22% to 9601.36. New Zealand NZX50 added 0.24% to 5892.67. Indonesia's Jakarta Composite index grew 0.33% to 5468.46. Singapore's Straits Times index declined 0.17% at 3397.22. Malaysia's KLCI was down 0.22% to 1817.13.
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