Risk aversion selloff flared on doubt about the health of Chinese economy following the weak manufacturing PMI data in April HSBC's China Purchasing Managers' Index, a gauge of manufacturing activity slanted more toward private and export-oriented firms, fell to 50.4 in April from March's 51.6 on a 100-point scale on which numbers above 50 show an expansion in activity. The sub-index for new export orders fell for the first time this year to 48.4 from 50.5 in March, suggesting sluggish demand in the euro zone and the United States may pose threat to China's economic recovery. A separate survey Wednesday by an industry group, the China Federation of Logistics & Purchasing, also showed manufacturing growth weakening. The group's PMI fell to 50.6 from March's 50.9.
Markets were also disappointed by an Institute for Supply Management report that showed US manufacturing activity slowed sharply in April and the ADP job report showed April job growth that fell to the slowest level in seven months. This triggered disappointment over the U.S.'s economic recovery, even though the outcomes from the Fed meeting were in line, i.e. that the Fed will maintain its ultra-low policy rate and QE program.
The ISM's manufacturing purchasing managers' index fell to 50.7 in April from 51.3 in March. A reading above 50 indicates expanding activity. The report said 14 of 18 industries reported growth last month. Meanwhile, the ADP job report showed April job growth fell to the slowest level in seven months. Private-sector jobs in the U.S. increased by 119,000 last month, according to a national employment report calculated by payroll processor Automatic Data Processing Inc. (ADP) and forecasting firm Moody's Analytics. Meanwhile the Federal Reserve kept its $85 billion a month bond-buying program in place, while raising the possibility that it could do more if necessary.
The Australian share market has finished lower, with material and resources and industrials heavyweights led retreat as investors begin to doubt the health of world economies and commodity prices continue to wane. The benchmark S&P/ASX200 fell 36.2 points, or 0.7%, to 5130, while the broader All Ordinaries shed 39.8 points, or 0.8%, to 5104.1.
Australian Bureau of Statistics (ABS) Building Approvals data showed that the number of dwellings approved have fallen in the first 3 months of 2013, in trend terms, following a period of growth throughout 2012. In March they declined by a further 1.2% on February. Dwelling approvals decreased in March in New South Wales (-3.7%), Victoria (-3.6%) and Tasmania (-3.5%) but increased in Queensland (2.4%), Western Australia (0.7%) and South Australia (0.2%) in trend terms. Dwelling approval trends have been rising for over a year in Western Australia (14 months) while falling for the last year (12 months) in Tasmania. Separately, the Australian Bureau of Statistics released Data on International Trade Price Indexes for the first quarter, showed Export price index rose 2.8% quarter-on-quarter in Q1, marking the best quarterly increase since Q3 2011 and rebounding from two straight quarters of decline. On a year-on-year basis, export prices fell 5.2% but this was a big improvement from a 14.3% drop in Q4 of 2012. A 12.5% increase in metalliferous ores and metals scrap was partly offset by lower prices for coal, coke and briquettes (-5.7%). The import price index was flat after a 0.3% rise in Q4.
Japan's market declined for fourth straight day, as weak economic data from the U.S. and China added to worries about global growth, weighing off appetite for risk associated stocks. Meanwhile the dollar's decline to the lower-97 yen level and the euro fall to lower-128 yen level also triggered risk aversion selloff. The benchmark Nikkei Stock Average ended the day down 105.31 points at 13,694.04, while the broader Topix Index lost 5.09 points to 1153.28.
Exporters were among the top decliners as the yen strengthened further against the U.S. dollar. Among them, Nissan Motor Co lost 2% to 979 and Bridgestone shed 2.2% to 3540 yen. Panasonic Corp shares price added 0.3% to 702 yen on media report that the company had unloaded shares worth about 100 billion yen in firms such as Toyota Motor Corp. Toyota stock lost 1.1% to 5490 yen. Sharp Corp rose 5% to 337 yen after a Nikkei newspaper report that some banks were considering extending a 100-billion-yen credit facility to the electronics company ahead of upcoming bond redemption.
Minutes from the Bank of Japan's milestone policy meeting on April 3-4, released Thursday, showed the central bank's board members felt it was necessary for the bank to enter a new phase of monetary easing both in terms of quantity and quality and end a previous, incremental approach. The meeting led by newly installed Gov. Haruhiko Kuroda unveiled a fresh round of aggressive monetary easing, including expanding its government-bond purchases, and buying longer-term debt. The Bank of Japan also reaffirmed its target of achieving 2% consumer inflation within two years. Still, the minutes showed one member, unnamed in the minutes per bank policy, said meeting the target remained uncertain, and specifying a two-year window entailed a high risk. In terms of global economic outlook, the members agreed that the U.S. was on a moderate recovery trend, while the euro zone continued to recede slowly. They also held a consensus that the Chinese economy had been stabilizing in reflection of firm domestic demand, though some members expressed the view that full-fledged recovery had not yet materialized.
New Zealand's market declined as investors free up funds to participate in the government sale of the MightyRiverPower offer. The NZX 50 Index dropped 28.55 points, or 0.6%, to 4574.46. Within the index, 31 stocks fell, 12 rose and seven were unchanged. Skellerup Holdings tumbled 10% after cutting its annual profit guidance a second time. The industrial rubber goods maker said net profit would be NZ$17 million in the year ended June 30, from a NZ$20 million forecast in February, because drought had hurt local demand and North American and European sales were tracking below forecast.
China's share market declined after a three-day holiday, as investors got first chance to react with disappointing manufacturing Purchasing Managers' Index for April, that fuelling concerns that China's economic recovery is losing momentum. The benchmark Shanghai Composite ended the day 3.79 points, or 0.17% down at 2174.12. Jiangxi Copper Co., the largest producer of the metal, dropped 2.8% after forecasting a 50% slump in first-half profit. Sany Heavy Industry Co. paced declines for construction-related stocks after reporting lower profit. China Vanke Co. led developers higher after home sales rose in April.
Hong Kong's shares ended lower, weighing the benchmark Hang Seng Index down by 0.3% to finish at 22,668.30, as investors elected to book recent gain after China's weaker-than-expected manufacturing data and as profit-taking set in following a 4.3% rise over the past five sessions.
Among the HK 50 blue chips, 11 rose, while 39 fell. Tencent advanced 2.7% to HK$273.40, while Tingyi fell 3.7% to HK$20.65, making themselves the largest blue-chip gainer and loser. China Mobile was down 0.3% to HK$84.7 on rumor that its executive was taken away by the regulator. Lenovo dipped 2.7% to HK$6.9 on talks that its proposed acquisition of IBM's server business fell through. Shares of Macau casino operators fell, succumbing to more profit-taking after rallying last week and after Reuters reported China is sending an official with a tough cop reputation to be its top man in Macau. Sands China slid 1.1% to HK$40.25, continuing to retreat after hitting an all-time high of HK$43.70 last Friday. Galaxy Entertainment dropped 3.6% to HK$33.50. Last week, the two stocks rose 8.2% and 10.0% respectively.
India's share market ended edged higher as index heavyweights ITC and Reliance Industries (RIL) rose. The barometer index, the S&P BSE Sensex, was provisionally up 229.58 points or 1.18%, up close to 280 points from the day's low and off about 60 points from the day's high. Interest rate sensitive banking and realty stocks rose on expectations that the Reserve Bank of India will cut its key policy rate viz. the repo rate in its monetary policy review tomorrow, 3 May 2013 to boost economic growth amid slowing wholesale price inflation. Kotak Mahindra Bank rose on strong Q4 results. Reliance Anil Dhirubhai Ambani (ADA) Group shares surged.
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