Asia Pacific share market declined on Wednesday, August 3, 2016, as investors cashed out of some of last month's best performers amid weak lead from offshore markets overnight, further weakness in the oil price, and more soft economic data out of the China.
U.S. stocks bounced off session lows but still closed lower Tuesday, marking 7th straight daily loss for Dow and ending 5-day win streak for Nasdaq, as investors sifted through quarterly results as well as data on personal income and inflation. London's FTSE 100 dropped to a two-week low because of a fall in bank and energy stocks. The CAC 40 in Paris and DAX in Germany both had steep declines.
Meanwhile, growth in China's services sector cooled in July, a private survey showed today, 3 August 2016. The Caixin/Markit services purchasing managers' index (PMI) fell to 51.7 in July on a seasonally adjusted basis, from an 11-month peak of 52.7 in June. US stocks fell yesterday, 2 August 2016 on the back of disappointing auto sales and a steep drop for retailers on forecasts of poor summer sales.
Among Asian bourses
Japan Market extends losses on yen strength
The Japan share market closed lower for second straight session, pressured by heavy selling due poor showing on Wall Street overnight and the yen's jump to a three-week high versus the U.S. dollar. Investor sentiments were also underwhelmed by a government stimulus package. After Tokyo's markets closed on Tuesday the government unveiled details of a 28 trillion yen ($273 billion) fiscal plan to kickstart the economy, but the latest of several such attempts over the years fell flat. The programme includes 6.0 trillion yen in low-interest loans and just 7.5 trillion yen in fresh spending -- about a quarter of the total -- by the national and local governments. The announcement came after the Bank of Japan disappointed markets with modest tweaks to its own stimulus measures on last Friday. The 225-issue Nikkei average dived 308.34 points, or 1.88%, to end at 16,083.11. The Topix index of all first-section issues dropped 28.22 points, or 2.17%, to close at 1,271.98, after falling 21.63 points the previous day.
A wide range of issues came under selling pressure, with mainstay export-oriented names, including automakers and technologies, leading retreat after the dollar slid below 101 yen level. Toyota fell 1.87% to 5,589 yen and factory robot maker Fanuc slipped 2.53% to 16,715 yen.
Banking stocks tanked on fears about the difficulty lenders face making money in a negative interest rate era as their bottom lines come under pressure. Mitsubishi UFJ Financial Group closed 3.90% lower at 492.3 yen, rival Sumitomo Mitsui Financial Group dived 4.28% to 3,149 yen and Mizuho Financial Group was 3.31% off at 160.3 yen.
Honda bucked the downtrend, soaring 3.82% to 2,865 yen after the car maker on Tuesday reported an April-June net profit that beat market expectations.
Australia ASX200 drops below the 5500 point level
Australian share market stumbled, as investor sentiment undermined by weak lead from offshore markets overnight, further weakness in the oil price, pressure on European banks, and more soft economic data out of the United States. Barring gold, all ASX sector dived into sea of red, with property trusts, financials, realty, utilities, consumer goods, and retailers stocks being major losers. At close of trade, the benchmark S&P/ASX 200 index tumbled 74.80 points, or 1.35%, to 5465.70. The broader All Ordinaries has lost 70.70 points, or 1.26%, to 5551.40.
The banks and financials extended losses, amid concerns over wholesale funding of the country's financial sector. After the central bank on Tuesday cut the country's key rate by 0.25%, commercial banks passed less of that reduction to mortgage holders. The banks also raised term deposits, a move seen as attempting to raise capital without tapping the wholesale market. There is a lot of questioning about whether the banks have signalled to the market that they are getting to the point where net interest margins are becoming a concern. National Australia Bank declined 2.8% to A$25.84, Commonwealth Bank of Australia 2% to A$76.03. Westpac Banking Corp 2.5% to A$30.06, and ANZ Banking Group 1.9% to A$25.23.
Energy and materials were mostly down, as the U.S. crude futures remained below $40 per barrel and Brent was below $42 due to ongoing fuel over supply and stuttering economic growth. BHP Billiton fell 0.8% to A$19.09. Fortescue Metals shares were down 0.2% to A$4.41. Origin Energy sank 2.7% to A$5.33.
Seven Group Holdings rose nearly 6% after the company posted a better-than-expected 10% fall in annual net profit, with rising commodity prices patching over problems in the media business.
China Stocks edge up
Mainland China stock market advanced for second day in row on Wednesday, 03 August 2016, on the back of gains for property shares and growing expectations of state-owned enterprise (SOE) reforms. However, trading remained thin as investors are still concerned about the economy private survey showed on Wednesday that growth in the services sector cooled in July. The CSI300 index of the largest listed companies in Shanghai and Shenzhen gained 0.14%, to 3193.51, while the Shanghai Composite Index inclined 0.24%, to 2978.46 points and the Shenzhen index closed 0.3% higher at 10281.25 points.
Real estate shares continued yesterday's gains, thanks to earlier reports saying home prices in 100 major cities continued their month-on-month increases for 15 months and year-on-year gains for 12 months in a row.
Stocks of China's state-owned enterprises (SOE) also gained notably, especially those in Shanghai and Shenzhen. Officials from both cities promised publicly to carry on with SOE reform last week. Shenzhen Zhenye (Group) Co., Shenzhen Textile (Holdings) Co. and Shanghai Y.U.D. Yangtze River Investment Industry Co. all rose by the daily limit of 10%.
Hong Kong Stocks end 1.76% down
The Hong Kong stock market ended lower, following weak lead from offshore markets overnight, further weakness in the oil price, pressure on European banks, and more soft economic data out of the China. The benchmark Hang Seng Index declined 390.02 points, or 1.76%, to 21739.12 points. The Hang Seng China Enterprises Index, benchmark measure of performance of mainland China enterprises, slipped 150.87 points, or 1.65%, to 8978.33. Turnover increased to HK$70 billion from HK$63.4 billion on Monday. HK financial markets were closed on Tuesday due to Typhoon Nida.
HSBC (00005) rose 1.6% to HK$51.6 becoming the only blue chip that was higher today. The global banking group announced during lunch break that its profit before tax for the first half of 2016 dropped 28.7% year-on-year to US$9,714 million. The Board has determined to return to shareholders US$2.5bn by way of a share buy-back to be executed during the second half of the year. Hang Seng Bank (00011) declined 2.3% to HK$135.1 after it reported underlying profit fell 15%. Standard Chartered (02888) also reports earnings after market closes. It edged down 0.7% to HK$61.7.
Oil stocks took heavy punishment as the WTI Crude Oil in New York and Brent Crude in London fell below the US$40 threshold overnight. CNOOC shares dropped 4.43% to HK$8.85, the lowest level in almost three months. China Petroleum & Chemical Corporation shares fell 1.61% to HK$5.5, with PetroChina losing 1.88% to HK$5.21.
Property stocks suffered steep losses on profit booking. Sun Hung Kai Properties declined 4.1%, while New World Development Co. sank 3.5%.
Sensex settles at lowest closing level in more than 3 weeks
Losses in auto, capital goods, FMCG sector stocks and index heavyweights Reliance Industries, HDFC and ITC led losses for key benchmark indices. The barometer index, the S&P BSE Sensex lost 284.20 points or 1.02% to settle at 27,697.51. he Nifty dropped 78.05 points or 0.91% to settle at 8,544.85.
Bank stocks declined. Indian Bank fell 3.49%, with the stock sliding on profit booking after surging by the maximum permissible 20% level yesterday, 2 August 2016.
Bharat Heavy Electricals (Bhel) declined 4%. The company announced that it commissioned the second 500 megawatts (MW) thermal unit at Marwa Thermal Power Station in Chattisgarh. Marwa TPS has been set by Chattisgarh State Power Generation Company (CSPGCL). The first unit of Marwa TPS was also commissioned earlier by Bhel. The announcement was made during market hours today, 3 August 2016.
HCL Technologies rose 3.16% at Rs 825.90 after consolidated net profit rose 1.84% to Rs 2050.78 crore on 5.96% increase in total income from operations to Rs 11336.32 crore in Q1 June 2016 over Q4 March 2016.
Elsewhere in the Asia Pacific region: New Zealand's NZX50 fell 0.7% to 7277.40. South Korea's KOSPI index slipped 1.2% to 1994.79. Taiwan's Taiex index grew 0.74% to 9001.71. Malaysia's KLCI was down 0.7% to 1648.50. Indonesia's Jakarta Composite index slipped 0.4% to 5351.88. Singapore's Straits Times index dropped 1% to 2827.58.
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