Headline shares of the Asia Pacific market declined on Wednesday, June 05, 2013, as investors across the region dumped stocks amid lingering worries over the US Federal Reserve downsizing of monthly bond-buying program.
The potential for the US Federal Reserve to soon rein in its massive monetary-easing program was again in focus today after high-profile Fed's policymaker Esther George reiterated calls for the central bank to pull back on monetary stimulus. In a prepared text of a speech, Ms. George, who has warned about the effects of the Fed's robust liquidity efforts, said that some markets are showing signs of an unwelcome addiction to the central bank's cheap money.
Meanwhile, selloff pressure in the market was also intensified on concerns about China growth trajectory after weaker than expected reading on manufacturing and service PMI data. Data released by HSBC earlier today showed activity in China's services sector remained at sluggish levels, with the headline Purchasing Managers' Index edging marginally up to 51.2 in May from 51.1 in April. HSBC said on Monday that China's factory activity shrank for the first time in seven months in May as both domestic and external demand softened.
A soft patch in manufacturing growth continues to weigh on service industry and adds more downside risks to China's growth in the second quarter, HSBC's chief China economist Hongbin Qu said.
Many of the market participants retreated sideline after withdrawing riskier assets ahead of a busy data day in the US, which includes a key employment indicator, a purchasing managers' survey and the Federal Reserve's Beige Book.
Clues for Friday's all-important payroll data may come from that ADP private-sector payroll report, due later in global day. Over the last three months, the ADP figures have missed the government's estimate on private-sector payrolls by an average of 67,000. The US government will release its second of three updates on productivity.
The Institute for Supply Management will release its May survey of purchasing managers in the services industry. US ISM non-manufacturing will be followed closely, given the surprise drop in the manufacturing ISM.
Also, the Commerce Department is expected to report that factory orders in April rose 1.6%, compared with a 4.9% increase in March. Then, the Fed's Beige Book of anecdotes about the economy, which is prepared ahead of an interest-rate decision, will be released. The last Beige Book said the U.S. economy expanded at a moderate pace.
In the Asia Pacific market, Japan's Nikkei 225 index tumbled 1.8% to 13,295.89, on disappointment with a lack of detail in Prime Minister Shinzo Abe's unveiling of the third plank of his so-called Abenomics program intended to rouse a long-stagnant economy.
The decline in the Tokyo market came as Abe's blueprint revealed plans to attract foreign funds, boost investment and wages, and revamp the structure of agricultural land. He also announced a proposal to allow the nation's massive pension funds to increase their equity allocation. The market will be looking to hear more about his comments urging Japan's public pension funds to increase their investments in equities and overseas assets, said Stan Shamu, a strategist at IG Markets. The comments made by Abe today were not really a game-changer and disappointed a market which seems to have been positioned for a USD/JPY and Nikkei rally, he added
In Australia, Sydney shares closed sharp lower, led by fall in big miners and banks. The benchmark S&P/ASX200 index fell 1.34% to 4835.2, while the broader All Ordinaries slumped 1.26% to 4825.2. Local share market declined for second time this week, closing at their lowest level since mid January, pushed lower by a disappointing growth reading.
The Australian Bureau of Statistics (ABS) figures showed that Australian GDP, in seasonally adjusted volume terms, grew 0.6% in the March quarter 2013. Growth for the quarter was driven by a 1% contribution from net exports and 0.3% contribution from household final consumption. These increases were partially offset by a -0.9% contribution from public investment and a -0.4% contribution from changes in inventories. The industries that drove growth in the March quarter were Finance, Mining, Transport and Retail. The Finance industry contributed 0.2% to GDP while the other industries each contributed 0.1% to the increase in GDP. The March quarter saw the Terms of trade increase 2.7%.
In China, Shanghai stocks dropped after data showed China's service sector expanded slightly in May. The Shanghai Composite Index declined 1.49 points, or 0.07%, to 2,270.93. Most solar power-related stocks suffered after the European Union imposed a tariff of 11.8% on solar panels from China. Distilleries shares rallied after the Chinese government started an anti-dumping probe into European Union wine imports, while Industrial blue chips stocks dived on worries the slowing economy may hurt prospects.
HSBC China Service Purchasing Managers Index (PMI), a gauge of non-manufacturing activity at private and export-oriented enterprises, inched up to 51.2 in May, slightly up from a 21-month low of 51.1 in April, HSBC Holdings Plc and Markit Economics reported today. A reading of 50 or above generally indicates the activity is expanding.
In Hong Kong, shares of the blue chip companies declined on concerns over China's growth trajectory and renewed worries of Fed's tapering. The benchmark Hang Seng Index closed at 22069.24, lower by 216.28 points or 0.97% from prior day closure. Among the 50 HK blue chips, 43 stocks fell while 5 stocks rose and remaining 2 stocks steady. AIA Group 3.4% to HK$33.20, while Hengan International Group Co and China Overseas Land & Investment both gained 0.44% to HK$80.77 and HK$22.85 respectively, making themselves the largest blue-chip loser and gainer.
In India, Indian stocks eked out marginal gain today, with the barometer index, Sensex, closed at 19,568.22, up 22.44 points or 0.11%, registering first gain in four days in row. Sun Pharma rose after Sweden's Meda denied it was in talks to sell itself to the Indian drugmaker, while Larsen & Toubro rose after winning a $300 million gas project in Saudi Arabia. Reliance Industries raised ahead of its annual general meeting amid speculation the company may have new announcements about a potential tie-up with Reliance Communications
Elsewhere, New Zealand's NZX50 melted 0.5%. Indonesia's Jakarta Composite fell 0.4%. Malaysia's KLSE Composite was down 0.1%. Taiwan's Taiex dropped 0.1%. Singapore's Strait Times shed 1.5%. South Korea's Kospi declined 1.5%.
Powered by Capital Market - Live News
