Minutes from the Federal Reserve's Open Market Committee meeting last month (July 25-26) showed a divided Fed. Some members of its policy committee think interest rates should stay about where they are because inflation is still low. Others felt that rates should be raised because delays might lead to dangerously high inflation later. The U.S. central bank's preferred inflation measure has remained below its 2% target for more than five years.
The account of the ECB's own meeting also showed caution about inflation and the concern that investors might be expecting a shift away from stimulus programs sooner than warranted by economic conditions.
COMMODITIES: Benchmark U.S. crude fell 17 cents to $46.61 per barrel in electronic trading on the New York Mercantile Exchange. It lost 77 cents, or 1.6%, to $46.78 a barrel in New York. Brent crude, used to price international oils, shed 11 cents to $50.16 per barrel. It dipped 53 cents, or 1%, to $50.27 a barrel in London.
Gold prices generally firm up when it looks as though US rates might not rise as sharply as markets thought and sure enough prices inched higher on Thursday.
Among Asian bourses
Australia Market closes in negative territory as Telstra drags
Australian equity market finished session down, snapping three sessions of gains, after mixed earnings reports from market heavyweights Telstra's offset most of the gains by materials shares. At the close, the S&P/ASX index was 0.1%, or 5.9 points, lower to 5779.2, while the broader All Ordinaries index also finished down 0.1%, or 3.6 points, to 5827.2.
Telstra was the biggest drag on the index, plummeting 9.7% to A$3.87 in their worst fall since the GFC after the company cut its year-ahead dividend forecast and revealed a reduced full-year profit. Telstra said it is facing headwinds from a new state-owned National Broadband Network, which will replace the telecom giant's copper lines by about 2020.
Financials were down, with QBE falling down 8% to A$11.17 after Australia's biggest insurer said its overall payout ratio worsened due to a claims blowout in its emerging markets unit. Elsewhere in the finance sector, CBA lost 0.4% to A$79.55, Westpac 0.1% to A$32.72, ANZ 0.2% to A$30.36, while NAB 0.1% to A$31.29.
Wesfarmers closed up 0.3% on $41.87 as its full-year results revealed a jump in full-year profit, strength in its Bunnings Hardware arm offsetting competitive headwinds battering Coles.
Resource stocks firmed as base metals rallied in overnight trade, with BHP jumped 1% to A$25.95,Rio Tinto 1.4% A$63.61, and Fortescue Metal 0.9% to A$5.55. Woodside Petroleum shares shed 2% to A$29.28.
Evolution Mining jumped 5% after it vowed to return 50pc in after-tax profits to shareholders, while Whitehaven Coal ended 2% lower on the release of its full-year report card.
Treasury Wines shares leapt 3% after growth in North America and Asia sealed a 50% lift in earnings, Cochlear jumped 7% on its report card, while Blackmores added over 4%% after it announced the succession of COO Richard Henfrey to chief executive.
Nikkei closes lower
The Japan share market finished down for straight second session, weighed down by the yen's strengthening against the dollar after the minutes of the U.S. Federal Reserve's July policy meeting signaled that interest rate hikes would proceed at a slower pace. But individual players actively bought small- and mid-cap issues, supporting the market's downside. The 225-issue Nikkei average shed 26.65 points, or 0.14%, to end at 19,702.63. The Topix index of all first-section issues closed down 1.18 points, or 0.07%, at 1,614.82. Rising stocks outnumbered declining ones on the Tokyo Stock Exchange by 1925 to 1243 and 282 ended unchanged. The Nikkei Volatility, which measures the implied volatility of Nikkei 225 options, was down 3.34% to 15.35.
Shares of financial sector were broadly lower. Major bank Mitsubishi UFJ fell 0.8% and rival Mizuho was down 0.2%. Japan's top brokerage Nomura lost 0.8%.
The stronger yen hit export-oriented names, with Nissan dropping 0.3% and Toyota falling 0.1%. A stronger yen is a negative for Japanese shares because it hurts the profitability of major exporters.
By contrast, Toho Zinc jumped 11.8% after zinc prices hit their highest in about 10 years on the London Metal Exchange on Wednesday.
China Market gains on industrial and material stocks strength
The Mainland China equity market ended higher, on the back of strength in industrial and material stocks, but weakness in technology and consumer non-cyclicals kept a lid on gains. Shanghai Composite adding 0.68% or 21.98 points to 3,268.43 while the CSI 300 - which tracks the large caps listed in Shanghai and Shenzhen - increased 0.54% or 19.86 points to 3,721.28. The Shenzhen Composite Index tacked on 0.58% or 10.99 points to 1,909.38.
Late on Wednesday, China's cabinet said the country will become more open for global investors, citing sectors of new-energy vehicle manufacturing, ship design, aircraft maintenance and railway passenger transportation. The measures to ease foreign investment restrictions came after the US announced its probe of China's intellectual property practices, and the prospect of lifting foreign investment is having a significant effect on the market.
Shares of industrials were up, with China Nuclear Engineering Corp leading rally, up by the daily limit of 10%. On Wednesday, the company said that newly signed contracts in the first seven months increased 17.2% from the previous year.
Materials and resources stocks advanced. Aluminum Corp of China (Chalco) shares finished up 1.1% on tracking strength in aluminum prices. Aluminium prices have reached multi-year highs on expectations of supply curbs as China reforms its metals industry.
Shipping and shipbuilding companies were also higher, with their prospects lifted as the Baltic Exchange's main sea freight index rose for a 13th straight session. COSCO Shipping Holdings Co gained 5% and China CSSC Holdings surged 6%.
China Life Insurance gained 1%, after the insurer said it will buy a 10.22% stake in China Unicom as part of a deal that saw the telecom firm receive US$11.7 billion from 14 private and state investors. China Unicom said Wednesday that 14 investors will acquire a combined 35.2% stake in the company's Shanghai-listed unit, China United Network Communications, for 78 billion yuan. China Unicom is among the first group of state-owned enterprises that Beijing has given approval to for a pilot run for mixed ownership reform. Shares of China Unicom were suspended from trading on Thursday.
Hong Kong Stocks end down
The Hong Kong stock market finished softer, as better-than-expected earnings from market heavyweight Tencent was tempered by concern equity valuations were turning expensive. Market was also dragged down by Chinese commercial banks. The Hang Seng Index slipped 0.2% to 27,344.22 at the close after changing direction a few times. The H-shares index lost 0.15%, or 16.46 points, to 10,801.42 points. Turnover increased to HK$96.4 billion from HK$81.8 billion on Wednesday.
Hang Seng Indexes Company yesterday announced its quarterly review for the benchmark index. It decided to include WH Group (00288) into its HSI. WH shot up 2.8% to HK$8.2. Sunny Optical (02382), which was tipped but failed to join the HSI, slipped 2.7% to HK$107.2.
Shares of Tencent advanced 1.92% to HK$329.4, after briefly surging 5.3% to an all-time high of HK$340.4. The company reported late Wednesday that its net income increased 64% to 32.7 billion yuan (US$4.9 billion) for the first six months of the year, well above consensus estimates. Revenues gained 57% to 106.2 billion yuan, fuelled by growth in smartphone game and advertising businesses.
Hong Kong's flagship carrier Cathay Pacific stock advanced 0.86% to HK$11.80 on Thursday despite the disappointing results. The company's posted a HK$2.05 billion loss for the first half.
Shares of Chinese commercial banks were lower. China Construction Bank declined 0.60% to HK$6.62 and ICBC lost 0.89% to HK$5.60.
Swire Properties' shares lost 1.88% to HK$78.5 despite the company reporting that its interim earnings beat analysts' forecasts.
Tian Ge Interactive, a Hangzhou-based live social video platform, was suspended from trading after sinking as much as 9.2%. The losses came after Emerson Analytics issued a report that alleged Tian Ge had exaggerated its user base by about six times and inflated its revenue by more than 100%.
Indian Market settles with minuscule gains
Indian benchmark indices settled with minor gains after a volatile trading session. The barometer index, the S&P BSE Sensex, rose 24.57 points or 0.08% to settle at 31,795.46. The Nifty 50 index advanced 6.85 points or 0.07% to settle at 9,904.15. Weakness in European stocks and subdued trading on Asian bourses kept investors' risk-appetite in check.
Stocks of public sector banks edged higher. Stocks of private sector banks declined. IT major Infosys advanced after the company announced that its board will consider a proposal for buyback of equity shares at a meeting to be held on 19 August 2017.
United Bank of India rose 0.54% at Rs 18.60. The bank said that it has reduced deposit rates for deposit upto Rs 1 crore from 6.25% to 6.1% per annum. Deposit rate for more than Rs 1 crore has been reduced from 4.5% to 4.35% and amount upto Rs 50 lakh has been revised downwards from 4% to 3.5% effective 18 August 2017. The announcement was made after market hours yesterday, 16 August 2017.
HDFC Bank declined 0.86% at Rs 1,765. The bank during trading hours today, 17 August 2017, announced a revision in its savings bank interest rate effective 19 August 2017. Post revision, customers maintaining savings bank account balance of Rs 50 lakh and above will continue to earn interest at 4% per annum. Customers maintaining account balance of below Rs 50 lakh will earn interest at 3.5% per annum. The revised rates will be applicable to both resident and non-resident customers.
Yes Bank lost 1.28% at Rs 1,738.95. The bank with effect from 1 September 2017 has revised its savings account interest rate slabs for resident & non-resident customers. The new slabs were: 5% per annum for savings balances less than Rs 1 Lakh, 6% (unchanged) for balances of Rs 1 lakh to less than Rs 1 crore and 6.25% per annum for balances above Rs 1 crore. The announcement was made after market hours yesterday, 16 August 2017.
IT major Infosys advanced 4.54% at Rs 1,021.15 after the company announced that the board of directors of the company will consider a proposal for buyback of equity shares at its meeting to be held on 19 August 2017. The announcement was made after market hours yesterday, 16 August 2017.
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