Regional market shares got a weak lead from offshore after US markets finished lower on Friday. The US markets finished lower on Friday as US company earnings season delivered some disappointing results against a global backdrop of an emerging market rout. India, Turkey and South Africa all hiked interest rates last week in an attempt to stem outflows from their currency markets as the US Federal Reserve continues to reduces its stimulus.
Meanwhile, disappointing Chinese economic data also weighed on the sentiment. China's official non-manufacturing purchasing managers index, a key measure of activity in the construction sector, fell to 53.4 in January from 54.6 in December, the China Federation of Logistics and Purchasing said on Monday. It was the slowest reading in two years. The services subindex declined to 51.5 in January from 52.5 in December and construction fell to 61.0 from 62.6, the federation said. New orders for the entire nonmanufacturing sector dropped to 50.9 from 51.0.
China's official purchasing managers index fell to 50.5 in January, compared with 51 in December, the China Federation of Logistics and Purchasing, which issues the data with the National Bureau of Statistics, said in a statement Saturday. A PMI reading of more than 50 indicates an expansion in manufacturing activity from the previous month, whereas a reading of less than 50 indicates contraction. The HSBC China Manufacturing Purchasing Managers' Index fell to a final reading of 49.5 in January from 50.5 in December, HSBC Holdings PLC said Thursday.
Turnover across the regional bourses were relatively thin, as many market participants opted sideline due to national holiday in most of regional bourses and on caution ahead of three central bank meetings and some important economic data featured.
The RBA will announce rate decision on Tuesday and is expected to keep rates unchanged at 2.50%. BoE will announce rate decision on Thursday, with focus is on whether there will be change in the 7% unemployment threshold in the central bank's forward guidance. Unemployment rate has already dropped to 7.1% in November and markets would need more clarity on when BoE would act after passing through the 7% threshold ahead.
ECB meeting will also be the highlight of the week as there has been speculation of a rate cut as inflation deteriorated further in the Eurozone. Also, ECB could be worried by recent rise in money market rates. While the general consensus is that ECB would keep policies unchanged, there are also speculations for announcement of a cut in refinancing rate, another LTRO, or even a negative deposit rate.
Finally markets will also pay close attention to the non-farm payroll report. December's figure was a major disappointment but that didn't delay Fed's plan of measured tapering. FOMC did cut back the monthly asset purchase size by another USD 10b in the January meeting. And the NFP would be important in deciding whether Fed would continue with the pace and end the bond buying program before the end of the year.
Among regional bourses, Australian share market finished weaker, on tracking negative cues from Wall Street Friday and disappointing China's official manufacturing PMI data for January. The benchmark S&P/ASX 200 index dropped 2.10 points to 5187.90, while the broader All Ordinaries sank 3.20 points to 5201.90.
Shares of Australian materials and resources companies dropped on tracking weakness in base metal prices in the international market. Base metal prices fell nearly 1.3% on the London Metal Exchange on Friday with aluminium leading the declines. But nickel bucked the trend, up 1.2%.
Resources giant BHP Billiton skidded 0.4% to A$36.44, while rival Rio Tinto shed 0.5% to A$65.34. Junior iron ore miner Fortescue Metals Group dropped 1.1% to A$5.27.
JB Hi-Fi shares advanced 3.1% to A$18.55 after the electronics retailer forecasted full-year net profit to rise as much as 10.8% to A$129 million for the 12 months ending June, underpinned by 6 to 8% sales growth. The company confirmed that net profit for the six months ending December rose 10% to A$90.3 million on sales growth of 6.8%.
An ANZ Bank survey showed job advertisements fell 0.3% m/m in January to be down around 3% over the prior 6 months. While job advertising continued to decline in the month, there has been a marked slowing in the pace of deterioration. In trend terms, job ads contracted by a modest 0.3% m/m in January, which is the slowest rate of monthly decline since early 2012.
The TD-MI Monthly inflation index rose by only 0.1% in January after December's big 0.7% jump. The 12-month rate of inflation moderated from 2.7% in December back to the middle of the RBA's band in January.
Australian Bureau of Statistics data showed dwelling approvals rose 1.5% in December 2013, in trend terms, and has risen for 24 months. Dwelling approvals increased in trend terms in December in Queensland (3.8%), South Australia (3.5%), Victoria (2.9%) and Western Australia (0.1%). Dwelling approvals remained essentially unchanged in New South Wales and decreased in Northern Territory (15.8%), Tasmania (3.9%) and the Australian Capital Territory (2.5%) in trend terms. Approvals for private sector houses in trend terms rose 1.1% in December, rising for the thirteenth consecutive month. Private sector house approvals rose in South Australia (3.3%), Victoria (2.6%) and New South Wales (1.5%) but fell in Queensland (0.8%) and Western Australia (0.2%) in trend terms. The value of total building approved rose 3.1% in December, in trend terms, after rising for 23 months. The value of non-residential building rose 4.3% while residential building rose 2.2% in trend terms.
In Japan, shares in Tokyo market stumbled today, on tracking negative offshore cues and sharp appreciation of yen against basket of major currencies.
The benchmark Nikkei-225 index retreated 295.40 points to 14619.13, while the Topix index of all first-section shares tanked 24.32 points to 1196.32.
In forex trading, the dollar rose to 101.98 yen from 102.03 yen in New York Friday, after a report showed that housing starts in Japan advanced 18% (YoY) in December, far above market expectation and compared to a 14.1% rise recorded in November. Separately, another report revealed that construction orders rose 4.9% (YoY) in December, following a 2.2% (YoY) increase witnessed in the previous month. .
In India, key benchmark indices edged lower on the first trading session of the week and the month after the government revised downwards the GDP growth rate for the year ended 31 March 2013 (FY 2013) to 4.5% from 5% reported earlier. The market sentiment was affected adversely by data showing that foreign funds were net sellers of Indian stocks on Friday, 31 January 2014. Weakness in Asian and European stocks also dampened sentiment on the domestic bourses.
The S&P BSE Sensex lost 304.59 points or 1.48% to settle at 20,209.26, its lowest closing level since 13 November 2013. Except BSE Healthcare index all the other sectoral indices on BSE dropped.
Jindal Steel & Power shed 3.16%. The company after trading hours on Friday, 31 January 2014, said that the company has utilized more than 50% of the amount earmarked for share buyback as specified in the resolution passed by the Board of Directors at its meeting held on 30 August 2013, i.e., the minimum buy-back size of Rs 500 crore.
Maruti Suzuki India (MSIL) fell 1.43%. The company reported 10.3% decline in total sales at 102,416 vehicles in January 2014 over January 2013. Domestic sales declined 6.3% to 96,569 units in January 2014 over January 2013. Export sales declined 47.7% to 5,847 units in January 2014 over January 2013. The company unveiled January sales numbers on Saturday, 1 February 2014.
Mahindra & Mahindra (M&M) declined 0.45% after the company reported weak auto sales in January 2014. M&M on Saturday, 1 February 2014, said its total auto sales declined 13.77% to 42,685 units in January 2014 over January 2013. Domestic sales declined 15.71% to 40,324 units in January 2014 over January 2013. Exports surged 42.05% to 2,361 units in January 2014 over January 2013.
Tata Motors lost 3.57%. The company on Saturday, 1 February 2014 said its total sales (including exports) in January 2014 stood at 40,481 vehicles. The company's domestic sales of Tata commercial and passenger vehicles for January 2014 were 36,657 units. The company's sales from exports were 3,824 units in January 2014.
Ashok Leyland lost 3.04% after the company said its total sales declined 26% to 7,847 units in January 2014 over January 2013. The sales numbers were announced during trading hours today, 3 February 2014. Ashok Leyland's sales of medium & heavy commercial vehicles (M&HCV) declined 19% to 5,530 units in January 2014 over January 2013. Sales of light commercial vehicles (LCVs) dropped 37% to 2,317 units in January 2014 over January 2013.
Bajaj Auto lost 3.8%. The company said during market hours that its total sales fell 8% to 3.18 lakh units in January 2014 over January 2013. Exports rose 7% to 1.37 lakh units in January 2014 over January 2013. Motorcycle sales declined 7% to 2.81 lakh units in January 2014 over January 2013. Commercial vehicles sales dropped 20% to 36,781 units in January 2014 over January 2013.
Coal India lost 0.46%. Coal production of Coal India and its subsidiary companies was 96% of targeted production at 47.38 million tonnes in January 2014. The coal offtake of Coal India and its subsidiary companies was 94% of targeted offtake at 44.44 million tonnes in January 2014. Coal India announced the production and sales data during trading hours today, 3 February 2014.
Lupin rose 4.52% on strong Q3 results. The company's consolidated net profit jumped 42% to Rs 476.10 crore on 20.8% growth in total income from operations (net) to Rs 3022 crore in Q3 December 2013 over Q3 December 2012. The result was announced during market hours.
United Spirits rose 2.73% to Rs 2542 after Relay B.V., an indirect wholly owned subsidiary of Diageo Plc, increased its stake in the company to 28.77% from 26.37%. On Friday, 31 January 2014, Relay B.V. bought 35 lakh shares of United Spirits (USL) at Rs 2,474.45 each on the BSE, whereas Oppenheimer Funds Inc sold 36.42 lakh USL shares at Rs 2,474.25 each via block deals.
Elsewhere in the Asia Pacific region, New Zealand's NZX50 index sank 0.51%. South Korea's KOSPI dropped 1.09%. Indonesia's Jakarta Composite index shed 0.74%. Singapore's Straits Times index fell 1.09%. Financial markets of Hong Kong, China, Taiwan and Malaysia closed for Lunar New Year holidays.
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