Headline equities of the Asia Pacific market closed mixed on Thursday, 05 February 2015, as early excitement from the latest easing measure by China's central bank offset by mounting concerns over debt negotiations in Greece and volatile oil prices. The MSCI Asia Pacific Index fell 0.1% to 141.68.
Shares in the regional market advanced in morning trade as investors welcomed the Chinese central bank's announcement late Wednesday to cut reserve requirement ratio by 50 basis points to stimulate the slowing economy, joining more global counterparts in easing monetary policy this year.
China's central bank announced yesterday to cut the amount of cash that banks must hold as reserves, the first industry-wide cut in more than 2-1/2 years, as it increased efforts to shore up flagging growth in the world's second-largest economy. The reserve requirement ratio, or RRR, would be lowered by 50 basis points, the People's Bank of China (PBOC) said in a statement on its website. The cut is effective from today and will take the RRR for big banks to 19.5%.
However, the early bout of excitement quickly faded amid mounting concerns over Greece's debt talks with its creditors after the European Central Bank (ECB) said it would no longer accept Greek sovereign bonds as collateral.
The ECB said on Wednesday it will no longer accept junk-rated collateral from Greece, citing doubt over the new government's commitment to previous reform pledges. The decision will force the country's lenders to seek more-expensive emergency funding from their own central bank.
Meanwhile, oil prices remained a source of market volatility with Brent crude swinging between gains and losses in the Asian session. Benchmark U.S. crude was back below $50 a barrel after its recent rebound fizzled out. The contract was up 25 cents at $48.70 a barrel in electronic trading on the New York Mercantile Exchange. It plunged $4.60, or 8.7%, to settle at $48.45 a barrel in the previous trading session after the U.S. government reported an increase in crude inventories last week. Brent crude, a benchmark for international oils, was up 50 cents at $54.66 in London.
Among Asian bourses
Nikkei falls 1%
Japanese share market finished the session down, dragged down by profit booking amid mounting concerns over Greece's debt talks with its creditors after the European Central Bank said it would no longer accept Greek sovereign bonds as collateral. Meanwhile, lower oil prices, a weaker dollar, and disappointing earnings report from Hitachi also weighed heavily on the market. The benchmark Nikkei Stock Average declined 1% to close at 17504.62, while the broader Topix has lost 0.5% to close at 1410.11.
Exporters took the brunt of the sell pressure, with Fanuc dropping 2.5% to 19780 yen, Daikin Industries down 2.1% to 8003 yen, and TDK Corp off 1.7% to 7660 yen.
Oil-related shares gave back a large chunk of gains made over the past two days after global crude prices slid, with Inpex Corp shedding 4% to 1360.50 yen and Japan Petroleum Exploration Co down 3% to 3670 yen.
Hitachi declined 9.9% to 781 yen after the company reported a drop in quarterly profit. The Company reported 1% drop in operating profit and a 12% drop net profit in third quarter ended December 2014.
Sony Corp shares surged 12% to 3101.50 yen after the electronic maker revised up operating-profit forecast for the fiscal year to show a profit, rather than a loss as previously projected. The company projected profit of Y20 billion for the current fiscal year ending March, reversing from its earlier forecast for a Y40 billion loss. For its third quarter, operating profit doubled on year to Y178.3 billion, well above expectations.
Australia market climbs to seven-year peak
The Australian share market advanced for eleventh consecutive session, closing at highest level since May 2008. The investment sentiments underpinned amid optimism from China's latest move to boost its economy and expectation the Reserve Bank of Australia to continue cutting interest rates in the first half of 2015. The benchmark S&P/ASX 200 Index and the broader All Ordinaries Index each gained by 0.6% to 5811 and 5765.50, respectively. Since the start of the rally on January 21, the ASX200 index has surged 9.5% higher.
Financial markets expect the RBA to continue cutting interest rates in the first half of 2015. The central bank is expected to publish downgraded growth and inflation forecasts on Friday, paving the way for at least one more cut by June. Resource-rich Australia's economy slowed sharply in late 2014 as falling commodity prices shook confidence and critical investment outside the mining industry remained weak.
Financial stocks advanced, with top four lenders leading the ride. Commonwealth Bank of Australia advanced 2.7% to A$93.27, ANZ Banking Group 1% to A$34.98, National Australia Bank 1.3% to A$36.97 and Westpac Banking Corp 0.6% to A$36.44.
Energy stocks suffered heavy losses, amid profit taking after Crude oil plunged overnight. U.S. crude closed down 0.3% at $48.31 a barrel after sinking as much as 9% on Wednesday. Woodside Petroleum dropped 1.7% to A$35.26, while Origin Energy climbed 2% to A$11.86, Santos dived 3.2% to A$8.09 yuan, and Oil Search sank 3.2% to A$8.23.
China stocks fall on deepening growth worries
Mainland China share market ended lower after wiping out initial gain on Thursday, 05 February 2015, as the People's Bank of China reserve-ratio cut failed to impress investors who are worried about an ongoing crackdown on high-leverage trading. The Shanghai Composite Index closed 1.2% down at 3136.53, reversing an advance of as much as 2.4%.
Shares in the Mainland market advanced in morning trade as investors welcomed the Chinese central bank's announcement late Wednesday to cut reserve requirement ratio by 50 basis points to stimulate the slowing economy. However, the early bout of excitement quickly faded as a reserve-ratio cut failed to ease concern the economic slowdown is deepening, weighing down shares of industries that highly correlated with China's overall economic performance. Further, supply pressure from a batch of initial public offerings slated for next week and stubbornly high short-term interest rates in the money market also weakened investors' appetite.
Total of eight out of ten SSE industry groups declined, with industrial issue leading retreat, lower by 2.5%, followed by utilities (down 2.4%), energy (down 2.3%), materials (down 2.1%), consumer staples (down 1.2%), healthcare (down 1.1%), consumer discretionary (down 0.7%), and financial (down 0.4%). Bucking the trend, telecommunication services rose 0.3% and information technology gained 1.6%.
Among the actively traded stocks, Inner Mongolia Baotou Steel Union Co. was down 6.6% at CNY4.98, while China Railway Construction Corp. lost 5% to CNY12.06.
Hang Seng ends 0.35% higher
Hong Kong share market advanced for third consecutive session on Thursday, 05 February 2015, as investors welcomed the Chinese central bank's announcement late Wednesday to lower the reserve requirement ratio (RRR) for the nation's banks by half a percentage point to stimulate lending and the broader economy. However, local market pared its gains by market close as concerns mounted over Greece's debt talks with its creditors after the European Central Bank said it would no longer accept Greek sovereign bonds as collateral. The Hang Seng Index ended up 85.73 points or 0.35% to 24765.49, off an intra-day high of 25048.26 and day low of 24642.81. Turnover rose to HK$100.17 billion from HK$87.3 billion on Wednesday.
Shares of financial and realty developers companies advanced the most in Hong Kong after the PBoC announced a required reserve ratio (RRR) cut last night. Big Four, namely ICBC (01398), CCB (00939), BOC (03988) and ABC (01288) put on 1.6% to 1.9%. Other Chinese banks also performed strongly, with gains ranging from 1.5% to 1.9%. CR Land (01109) jumped 3.4% to HK$20.4. COLI (00688) added 1% to HK$23.7. China Vanke (02202) edged up 0.6% to HK$17.52 after the developer reported that January sales declined 15%.
Shares of utilities companies declined, with CR Power (00836) plunging 6.3% to HK$20, on market talks of potential tariff adjustment and as Deutsche Bank lowered its target prices for the IPPs. Huaneng Power (00902) and Huadian Power (01071) dived more than 10% to HK$9.63 and HK$6.25 respectively.
Sensex, Nifty fall for 5th straight day
Indian equity market failed to hold on to gains made in the earlier part of the day, retreating from a 1.3% rise to close marginally lower, after investors booked profits. The markets fell for the fifth straight day to a two-week low as investors were also cautious ahead of the Delhi Assembly polls which will be held on 7 February. The BSE's 30-share Sensex closed down 0.11%, or 32.14 points, at 28,850.97 points, while the National Stock Exchange's broader 50-share Nifty closed down 0.14%, or 12 points, at 8,711.70 points.
Information technology (IT) companies rose after Cognizant Technology Solutions Corp. beat analysts' sales forecasts in the three months ended 31 December, following strong services demand and a boost in revenue from its recent acquisition of US-based healthcare services provider TriZetto Corp. Public sector oil marketing companies (PSU OMCs) gained on lower crude oil prices. Shares of companies engaged in oil exploration & production (E&P) declined as crude oil prices declined sharply yesterday, 4 February 2015. Telecom stocks declined. Shares of index heavyweights ITC and HDFC edged higher. Shares of public sector banks edged lower. Shares of private sector banks were mixed. HDFC Bank advanced after the bank announced the opening of the issue of shares to qualified institutional investors and also the issue of shares through American Depository Receipts (ADRs). Godrej Consumer Products gained after declaring good Q3 result.
Reserve Bank of India (RBI) Governor Raghuram Rajan said in an interview to a newspaper published today, 5 February 2015, that the RBI still has a way to go in fighting inflation and it is important that the central bank has the credibility to bring down inflation if it picks up.
Elsewhere in the Asia Pacific region: Taiwan's Taiex index dropped 0.02% to 9512.05. South Korea KOSPI shed 0.5% to 1952.84. New Zealand's NZX50 added 0.2% at 5797.59. Indonesia's Jakarta Composite index fell 0.67% to 5279.90. Singapore's Straits Times index was down 0.32% at 3406.58. Malaysia's KLCI edged up 0.01% to 1803.21.
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