Asia Pacific market ended lower on Wednesday, August 07, 2013, hit by risk aversion selloff on intensifying US monetary-policy tapering concerns after encouraging economic data and more official comments regarding Fed's tapering.
Heavily-indexed shares were lower across the region as slew of encouraging US economic data including trade data (released on Tuesday) resurfaced speculation that the Fed would start reducing its monthly bond purchases.
The Commerce Department said on Tuesday that the US exports surged to their highest monthly level on record in June, causing the US trade deficit to shrink sharply and pointing to stronger demand in the global economy. Exports rose by 2.2% in June from May to a seasonally adjusted $191.17 billion, the highest on record when adjusted for inflation. Imports fell by 2.5% to $225.40 billion, a sign that demand in the US remains shaky. The net result was a sharp contraction in the U.S. trade gap, which narrowed by 22.4% to $34.22 billion.
Meanwhile, risk off selling intensified after comments from Federal Reserve officials about the start of stimulus tapering. Chicago Federal Reserve Bank President Charles Evans said on Tuesday that the Fed is quite likely to dial back its aggressive monthly bond purchases later this year, and that stronger economic data would be key factor for his voting in favor reducing the size of the program. He also cautioned that the Fed's policymaking Federal Open Market Committee does not necessarily have to wait until a meeting with a news conference scheduled before announcing a major policy action. Evans is a voter on the FOMC this year.
Atlanta Fed Lockhart also said Fed could start dialing back the asset purchase as soon as in September but he's quite prepared to delay or even reconsider the timing if there is deterioration from this point.
In the Asia Pacific region, Japan's Nikkei 225 Stock Average tumbled 576.12 points down to 13,824.94, marking the biggest drop in the regional bourses, as the yen touched a six-week high against the dollar. Meanwhile, speculative futures selling ahead of the calculation for the liquidation price for the August contract for stock index futures and options, scheduled for Friday, intensified selling in cash stocks to unwind arbitrage positions, pushing the Nikkei average down further.
All the 33 TSE sub indexes were ending in negative territory, with shares of retail, foods, nonferrous metals, trading companies and pharmaceuticals suffered the most declines.
The dollar slipped to 97.10 yen in today's trade in Tokyo compared with 97.76 yen in New York on Tuesday and the 98-yen range in Tokyo on Tuesday.
Australian market went lower on heavy selling across the board on worries about tapering of monetary stimulus for the world's largest economy. The benchmark S&P/ASX200 fell 1.85% to 5011.30.
Shares of bullion companies hammered in Sydney after gold prices hit a three-week low. Gold eased for the sixth straight session on Tuesday with the Comex December futures price down by US$19.90 an ounce or 1.5 to $1,282.50 per ounce. Newcrest Mining dropped 4.3% to A$11.27 and Pursues Mining 5.5% to A$0.515.
Australian Bureau of Statistics said on Wednesday that the number of home loan approvals rose 2.7% to 51,001 in June. The figures come after data on Tuesday showed Australian capital city house prices were growing faster than expected.
China stock market declined for the first time in seven sessions in row as investors cashed in recent gains amid cautions before a trade report tomorrow and on speculation that the US central bank will begin to phase out its monetary stimulus next month. The Shanghai Composite Index fell 0.7% to 2,046.78 at the close.
Shares of technology and drug companies tumbled the most in the SSE sectoral pack on profit taking following sharp recent gains. Chengdu Dr Peng slid 4.5% to 16.40 yuan, paring this year's gain to 175%. Tasly declined 5.3% to 45.88 yuan, trimming the 2013 advance to 66%. Shanghai Wangsu Science & Technology Co. fell 4.4% to 52 yuan, while Lepu Medical Technology declined 4.5% to 10.80 yuan.
Chinese property developers stocks gained after official media said on Wednesday the government may gradually lift restrictions on property developers raising capital in the market. The restrictions were set three years ago to cool home prices. But the official China Securities Journal said Beijing may put certain thresholds on applications for financing.
Poly Real Estate advanced 2.3 to 11.07 yuan. Gemdale Corp surged 0.8% to 7.23 yuan. China Vanke Co rose 2.2% after it posted a 22% year-on-year rise in first-half net profit late on Tuesday. China Merchants Property was suspended from trading after saying it plans to buy assets with the share sale.
Hong Kong's share market declined on caution ahead of Chinese trade data for July and fears the US will cut stimulus soon, with miners, banks and realty leading the way down. The benchmark Hang Seng index eased 1.53% while the Hang Seng China Enterprises Index dropped 2.11%
Indian stock market ended lower due to selling by funds on weakening rupee amid a subdued trend in other Asian markets on indications of a possible tapering of US stimulus. The S&P BSE Sensex was provisionally down 86.74 points or 0.46%, up about 100 points from the day's low and off close to 165 points from the day's high.
Tata Power Company recovered after Tuesday's steep losses triggered by the company reporting reverse turnaround in Q1. Metal stocks gained in choppy trade. Lupin declined after reporting strong Q1 results. Index heavyweight Reliance Industries (RIL) gained. Another index heavyweight and cigarette maker ITC declined. Tata Motors declined in choppy trade after weak Q1 result. NMDC shrugged off weak Q1 result.
Elsewhere, New Zealand's NZX50 declined 0.59%, South Korea's KOSPI lost 1.48%, Taiwan's Taiex fell 1.46% and Malaysia's KLSE Composite fell 0.3%. Singapore's Strait Times ended 0.1% up.
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