The decline in the Asia Pacific market, exception being China, largely came on renewed worries about US monetary stimulus tapering by the end of the year after St. Louis Fed President James Bullard told on media that a small tapering of bond purchases is possible at the Fed's October meeting, if the economic data was strong enough.
Mr Bullard said the Fed was looking for signs of further strength in US payroll and employment figures. ''To the extent that these two important labour market indicators continue to show improvement, the likelihood of tapering policy action will continue to rise,'' he said.
Meanwhile, profit taking pressure also intensified mounting uncertainty over United States debt ceiling negotiations. Risk off selling in the market also fuelled by on-going concerns about the US debt ceiling, which Congress must decide on mid next month
President Barack Obama on Saturday insisted that he won't negotiate with House Republicans over the debt ceiling, accusing them of threatening to plunge the U.S. into default and back into recession by tying the debt limit to their effort to defund his health-care law.
Investors, meanwhile, are poised for fresh market turmoil as politicians hurtle toward the latest budget-related showdown. In his weekly radio and Internet address, Obama said that won't happen and they know it's not happening. Obama has vowed to veto a bill passed by the House of Representatives Friday that would keep the government open through mid-December while also eliminating funding for the health-care law. House lawmakers approved the bill in a 230-189 vote, mostly along party lines.
However, regional market trimmed losses late afternoon after an election triumph for Angela Merkel and some upbeat China and euro zone data.
German Chancellor Angela Merkel won a third term to lead Europe's biggest economy. German Chancellor Angela Merkel's Christian Democratic bloc won 41.5% of the vote in yesterday's election. After Merkel's Free Democratic allies failed to take any seats in the lower house of parliament, her possible coalition partners are the main Social Democratic opposition or the Green party. Negotiations to form German governments usually last from four to six weeks.
Markit/HSBC report showed on Monday that the euro-zone recovery gathered pace during September, with the preliminary composite purchasing managers' index rising to the highest level in 27 months, boosted by activity in the service sector. The index rose to 52.1 from 51.5 in August, signalling the largest rise in business activity since June 2011. The manufacturing PMI meanwhile slipped to a two-month low of 51.1, after coming in at 51.4 in August. A level above 50 signals expansion.
Meanwhile, data from China also supports sentiments. The HSBC flash PMI manufacturing index rose to 51.2 in September, up from final reading of 50.1 in August. That's also the highest reading in six months. . Numbers above 50 indicate an expansion in activity. The flash PMI gives the earliest reading of China's monthly economic performance, and should cheer investors worried about a sharp economic slowdown after a previous rebound in activity proved short-lived. Notably, new export orders jumped to a ten-month peak of 50.8, up sharply from August's 47.2. HSBC chief China economists noted that the firmer footing was supported by simultaneous improvements of external and domestic demand conditions. And, the data provided further evidence to China's on-going growth rebound.
Among Asia Pacific bourses, Australian financial market fell down further from five year peak, weighing the benchmark S&P/ASX 200 lower by 0.46% to 5252.50 while the broader All Ordinaries lost 0.47% to 5245.80 on Monday, 23 September 2013, as investors indulged into profit taking for second straight session. The decline in Australian market came on rising speculation the Fed will begin tapering stimulus in October, but the market has trimmed some of its losses after stronger than expected Chinese manufacturing data.
Shares of precious-metal miners tumbled sharply in Sydney. Newcrest lost 8.2% to A$12.03 after the company issued a dour annual report. Last month, the company posted A$5.8 billion net loss for the year amid slumping gold prices. Kingsgate Consolidated lost 5.3% to A$1.70.
Perseus Mining dropped 15.7% to A$0.565 after two of the company's founding directors announced they will depart in November. Rhett Brans and Neil Fearis will leave their positions at Perseus' annual general meeting on November 15, each ending a decade on the board.
In New Zealand, NZ shares declined, with the NZX 50 falling 29 points, or 0.6%, to 4701.374, extending its drop from a record, as investors prepare for the Meridian Energy sale and mull the potential end of US monetary stimulus. Sky Network Television and Fonterra Shareholders' Fund paced the slide.
The New Zealand government is expected to raise between NZ$1.9 billion and up to NZ$2.3 billion from the sale of 49% of Meridian, its largest electricity company, next month in what will be the nation's largest ever initial public offering.
Sky TV fell 0.2% to NZ$5.56 and was the most heavily traded stock by value, with about NZ$39 million of shares changing hands.
In China, China's market rallied sharply, sending the benchmark Shanghai Composite index 1.33% higher to 2221.04 on Monday, September 23, 2013, after a preliminary survey from HSBC indicating growth in China's factory sector accelerated to a six-month high in September.
Shares of technology companies climbed up sharply, with the information technology issue rose 3.9%, biggest winner of the SSE sectoral peers, after data showing a gauge of manufacturing in the world's second-largest economy rose to the highest level in six months. GoerTek Inc, an Apple Inc. supplier, increased 6.2% to 40.48 yuan on reports of record opening-weekend sales for the new iPhones. Zoomlion Heavy Industry Science & Technology Co added 1.5% to 5.94 yuan.
In Hong Kong, HK share market declined as wave of profit taking. The Hang Seng Index dropped 0.56% to 23371.54 and the Hang Seng China Enterprises Index lost 0.48% to 10717.72.
Local market commenced trading after 1 p.m. local time. Trading on Hong Kong market was suspended for the morning session because of powerful Typhoon Usagi, which brushed past the city overnight.
Among the 50 HK blue chips, 36 stocks fell and 10 stocks rose, while remaining 4 stocks were steady. Want Want China Holdings was top blue-chip gainer, adding 4.9% to HK$12.42. New World Development Co was the top blue-chip loser, dipping 2.9% to HK$12.14.
In India, Indian benchmark indices dropped for the second straight day today, after Federal Reserve Bank of St. Louis President James Bullard said on Friday, 20 September 2013, that the Federal Reserve could make a small stimulus reduction at its next meeting in October 2013. Fed's bond-buying program has been a source of liquidity for most Asian and emerging markets this year. The market sentiment was also hit by the Reserve Bank of India's hawkish tone at its latest monetary policy review on Friday, 20 September 2013. The barometer index, the 30-share S&P BSE Sensex, fell below the psychological 20,000 mark. The 50-unit CNX Nifty fell below the psychological 6,000 level. The Sensex was provisionally down 380.64 points or 1.88%, up close to 60 points from the day's low and off about 315 points from the day's high.
Interest rate sensitive banking and realty stocks extended Friday's losses in Indian market as the Reserve Bank of India, in a surprise decision, raised its key policy rate viz. the repo rate by 25 basis points (bps) to 7.5% from 7.25% after a monetary policy review on Friday, 20 September 2013, and as the central bank retained hawkish tone at the latest monetary policy review. Most pharma stocks declined.
Elsewhere, Indonesia's JKSE Composite dropped 0.46%, Singapore's Straits Times Index lost 0.72% and Malaysia's KLSE Composite fell 0.3%. South Korea's KOSPI added 0.19% and Taiwan's Taiex gained 1.02%. Japan share market closed for holiday.
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