Asia Pacific share market mixed in choppy trade on Wednesday, 10 June 2015, as lingering uncertainty in Greece and fears of U.S. rate rise as early as September by the Federal Reserve weighed on sentiment.
Risk appetite in the region moderated on growing speculation that the Federal Reserve could raise interest rates as soon as September after series of encouraging data reports, including stronger-than-expected May jobs data on Friday. Also comments from Australia and Japan's central bank governors compounded the prospect of a September rate hike in the US. The prospect of the Federal Reserve lifting interest rates this year is causing concern about capital outflows.
Concerns about Greece continued to weigh, with Athens handing its creditors new proposals on unlocking funds as time runs out to reach a deal to prevent the country from going bankrupt. Greek Prime Minister Alexis Tsipras asked his party to rally behind the government on Tuesday as time was running out to unlock funding from lenders and avert a debt default. With the Brussels negotiations entering a decisive phase, European officials expressed frustration with Greek tactics and warned Athens of the risks it is running.
Among Asian bourses
Australia market snaps six-day losing streak
The Australian share market closed above the neutral line for the first time in seven consecutive sessions, propelled by value buying among recently oversold stocks. Most of the ASX sectors advanced, with top-weighted energy, bullion, resources, and realty stocks being major winner of the day, offsetting weakness in the telecom, healthcare and retailer counters. The benchmark S&P/ASX 200 Index and the broader All Ordinaries Index both added 0.1% to close at 5478.60 and 5486 points, respectively. Market turnover was relatively flat, with 1.59 billion shares changing hands worth of A$3.15 billion.
Shares of oil related players advanced on tracking rally of more than 3% for both Nymex and Brent oil futures overnight. Beach Energy gained 1% to A$1.07, Woodside Petroleum 1.7% to A$36.22, and Oil Search 0.9% to A$8.07. Karoon Gas Australia gained 4.6% to A$2.49.
Materials and resources stocks were also higher. BHP Billiton was up 0.2% at A$27.66, South32 0.5% to A$2.10, Sandfire Resources 1.7% to A$5.16, and Oz Minerals 0.4% to A$4.56. A flat iron-ore price dragged Rio Tinto 0.5% down to A$56.07 and Fortescue Metals Group 2.5% down to A$2.33. Gold miner Newcrest Mining rebounded 0.8% to A$13.55 and Evolution Mining 1.2% to A$1.16.
Shares of retailers were down after Westpac-Melbourne Institute consumer-sentiment index declined 6.9% in June. Harvey Norman Holdings dropped 1.7% to A$4.62, JB Hi-Fi 3.6% to A$20.71, and Myer Holdings 1.9% to A$1.33.
Japan stocks drop after Kuroda comments
Japanese share market closed at three-week low after Bank of Japan governor Haruhiko Kuroda comments that the yen was not likely to weaken much further. The Nikkei Stock Average declined 49.94 points, or 0.25%, to end at 20046.36, off an intraday peak of 20,264.92. The Topix index of all Tokyo Stock Exchange First Section issues decreased 0.38%, or 6.14 points, to close at 1628.23.
Kuroda, speaking to a lower house financial affairs committee, said the real effective exchange rate shows the yen is "very weak". His comments underscore the view that policy makers in Japan aren't seeking further declines in the yen.
Machinery orders from the Cabinet Office released on Wednesday, showing Japan's core private-sector machinery orders unexpectedly rose 3.8% from the previous month to Y902.5 billion in April on a seasonally adjusted basis, after 2.9% rise in March. On an unadjusted basis, core orders rose 3.0% from a year earlier.
Shares of export-related companies declined on profit taking as the yen appreciated to 122 level against the dollar after comments from the Bank of Japan chief. Among blue-chip exporters- Konica Minolta Inc fell 0.6% to 1476 yen, Casio Computer Co 2.1% to 2301 yen, and Nissan Motor Co 1.3% to 1255.50 yen.
But, gas utility companies, which rely on imports of natural gas, extended gains after Kuroda's remarks. Osaka Gas Co. added 3.5% to 525 yen Tokyo Gas Co rose 1% to 697 yen.
Energy shares rose after crude oil extended its biggest advance this month on signs a slowdown in U.S. drilling is reducing a crude supply glut in the world's biggest consumer. Futures climbed as much as 1.6% in New York after rising 3.4% on Tuesday. Japan Petroleum Exploration Co improved 0.1% to 3930 yen, Inpex Corp 1.9% to1530 yen and trading houses Mitsui & Co 0.4% to 1676.50 yen.
Transport stocks fell on the prospect for higher fuel costs, with airline ANA Holdings Inc. tumbling 1.5% to 321 yen.
The tech and industrial blue chips were mostly up after a surprise gain in Japanese core machinery orders, which tracked as an indicator of capital spending. Sony Corp rose 1.3% to 3653 yen, Kawasaki Heavy Industries 0.2% to 606 yen, and Apple Inc suppliers Japan Display Inc gained 0.8% to 521 yen. Komatsu climbed 0.8% to 2564 yen after Canada's Suncor Energy was reported earlier this week ordering 175 Komatsu driverless trucks.
MSCI exclusion takes a toll on China stocks
Mainland China share market closed softer in choppy trade, due to disappoint after the U.S. index provider MSCI's decision to delay the inclusion of mainland-listed A-shares in its emerging market index. But losses were minimal after downbeat CPI and PPI readings bolstered hopes of fiscal stimulus as the world's second-largest economy shrugged off monetary easing. The Shanghai Composite opened weaker and slumping nearly 2% in the first five minutes of trade following the MSCI's announcement, but the Shanghai bourse slowly clawed back losses to nudge above the flat line in the afternoon session, but failed to hold on to gains. The benchmark Shanghai Composite Index declined 7.50 points, or 0.15%, to 5106.04.
Global stock-index compiler MSCI Inc said in statement posted on its website that it will wait to add mainland China-listed shares until a few important remaining issues related to market accessibility have been resolved. MSCI Inc said it expects to include China A-shares in its global benchmarks once those issues are worked out, and that it plans to form a working group with Chinese stock regulator China Securities Regulatory Commission to address the concerns. MSCI offered a list of some issues it would discuss with the regulators, including the allocation of investing quotas for large investors, capital mobility and details over beneficial ownership.
Market pundits expect Beijing requires both a dramatic reduction to interest rates combined with more government spending to bolster growth in the world's second largest economy, because of weak producer prices.
Annual consumer inflation eased to 1.2% in May according to National Bureau of Statistics data showed yesterday, lower than the forecast 1.3% and the previous month's 1.5%. The producer price index stayed unchanged at a negative 4.6%, suggesting that factory pricing power is sliding deeper into its fourth year of contraction.
Total of five out of ten SSE industry groups declined, with industrial issue being top loser (down 2.4%), followed by utilities (down 2%), energy (down 1.3%), financial (down 0.9%), and material (down 0.5%). Bucking the trend, information technology issue was top gainer, up 3.7%, followed by consumer discretionary (up 2.4%), consumer staple (up 2.2%), healthcare (up 1.8%), and telecommunication services (up 0.9%).
Hong Kong stocks extend losses
The selloff in late afternoon trading dragged the Hong Kong stock market deeply in red terrain today. The selloff pressurized on disappointment following the exclusion of China's A share from one of the world's major equity indexes. The People's Bank of China researcher's downward revision of China's growth forecast to 7% from 7.1% also weighed on sentiment. The Hang Seng Index dropped 301.88 points or 1.12% to finish at 26687.64, off an intra-day high of 27116.92 and day low of 26573.96. The Hang Seng China Enterprises Index, benchmark measure of performance of mainland China enterprises, lost 245.29 points, or 1.77%, to 13616.67 points. Turnover reduced to HK$144.13 billion from HK$167 billion on Tuesday.
China Shenhua (01088) slid 4% to HK$19.16 after announcing it has not received notification from government regarding its merger with China Coal (01898). China Coal fell 4.4% to HK$4.95.
Nuclear stocks bore the brunt of selling pressure. CGN Power (01816) plunged 10% to HK$4.7. Shanghai Electric (02727) slid 6.5% to HK$7.22.
China Merchants (00144) soared 3.7% to HK$32.3 on reports that Morgan Stanley raised its stake in the company by 43.45 million shares earlier this month.
Sensex trades stronger in mid-afternoon trade
Firmness continued on the Indian bourses in mid-afternoon trade. The barometer index, S&P BSE Sensex, and the 50-unit CNX Nifty were currently trading with gains of more than 1% each. The market breadth indicating the overall health of the market was quite strong. At 14:16 IST, the S&P BSE Sensex was up 307.74 points or 1.16% at 26,788.99. The CNX Nifty was up 88.10 points or 1.1% at 8,110.50.
Indian stocks edged higher today, 10 June 2015, after major index provider MSCI Inc. chose not to add Chinese domestic stocks to its widely tracked emerging-markets index for now. With this decision, a major overhang has been lifted from the Indian stock market. The inclusion of Chinese domestic stocks to the MSCI Emerging Market Index would have resulted in a sharp increase in China's weightage in the index which in turn would have resulted in decline in weightage of other emerging markets including India. As per market speculation, decline in India's weightage would have triggered outflows exceeding $1 billion from Indian equities. According to media reports, India's share in the MSCI Emerging Market Index would have fallen to 5.8% from 7.2% if MSCI had decided to include Chinese domestic stocks to the MSCI Emerging Market Index.
MSCI yesterday, 9 June 2015, said it will wait to add mainland China-listed shares to its benchmark indices until a few important remaining issues related to market accessibility have been resolved. The MSCI said it expects to include China A-shares in its global benchmarks once those issues are worked out, and that it plans to form a working group with Chinese stock regulator China Securities Regulatory Commission to address the concerns.
Index heavyweight Reliance Industries (RIL) edged higher. Pharma shares rose. Power generation stocks gained on renewed buying. Bharti Airtel rose on reports a foreign brokerage has maintained high conviction buy rating on the stock.
Meanwhile, the Reserve Bank of India (RBI) yesterday, 9 June 2015, said in its draft guidelines on issuance of rupee linked bonds in overseas markets that Indian corporates eligible to raise external commercial borrowings (ECB) will be permitted to issue rupee linked bonds overseas.
Foreign portfolio investors (FPIs) sold Indian shares worth a net Rs 645.02 crore yesterday, 9 June 2015, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) bought shares worth a net Rs 692.29 crore yesterday, 9 June 2015, as per provisional data released by the stock exchanges.
Elsewhere in the Asia Pacific region: Taiwan's Taiex index rose 1.2% to 9298.50. South Korea's KOSPI dropped 0.6% to 2051.32. New Zealand's NZX50 was down 1% to 5803.87. Singapore's Straits Times index jumped 0.9% at 3325.11. Malaysia's KLCI added 0.4% to 1735.95. Indonesia's Jakarta Composite index increased 0.7% to 4932.57.
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