Asia Pacific share market closed mostly down on Thursday, 24 November 2016, pressured by threat of the impact of higher U.S interest rates and an increasingly likely Federal Reserve rate hike next month.
Investors fear that upbeat US economic data strengthened the prospect for higher US interest rate raising worries that higher interest rates in the US will spark capital outflows from the emerging equity markets.
Minutes of the Federal Reserve's last meeting cemented expectations that a hike in short term US borrowing cost was imminent. Most members on the central bank's policy-setting committee were in agreement that an increase in rates "relatively soon" was appropriate. The Fed next meeting is on December 13-14, with a rate increase now looking like a near certainty.
The prospect of rapid capital flight from emerging markets is a key risk factor for investors in Asia, especially under U.S. President-elect Donald Trump's policies. While U.S. stocks have been nudging higher on expectations that President-elect Donald Trump will pursue loose fiscal policies and infrastructure spending, the increase in U.S. yields and a strengthening dollar have raised fears of capital outflows from regional markets. Traders are betting on a faster pace of monetary tightening by the Fed as Trump's policies are expected to boost domestic economic growth and push inflation higher. The dollar index is trading near multi-year highs and U.S. yields are its highest level in more than a year.
Among Asian bourses
Australia Stocks end higher
Australian share market closed mixed after erasing early gains, as investors elected to book profit after sharp 2.5% gain in the previous two sessions. Most of the All industry group of the ASX issues mixed, with the gains from the financial sector were offset by falls in metals and materials stocks. At the closing bell, the benchmark S&P/ASX 200 index edged up by 0.70 point, or 0.01%, to 5485.10, while the broader All Ordinaries index was shade 0.90 point, or 0.02%, lower to close at 5549.
Shares of financial issue posted gains, led by top four lenders. Among major banks, Westpac was up 0.5% to A$31.61, National Australia Bank 0.2% to A$28.87, Australia & New Zealand Banking Group 0.6% to A$28.33, and Commonwealth Bank of Australia 0.01% to A$78.43.
Shares of energy companies ended stronger, on the back of continued gains in the oil price. Brent oil climbed a further 1.3% to $US49.54 a barrel as traders continue to speculate on whether there will be production cuts announced at the Nov 30 OPEC meeting. Woodside Petroleum inclined by 2.4% to A$30.50, Origin Energy 2.1% to A$5.95, and Santos 3.8% to A$4.15.
Shares of bullion mining companies lost ground after gold extended losses from the 9-1/2 month plunge on Wednesday, due to the strengthening US dollar. Among bullion miners, Newcrest Mining tumbled 3.8% to A$19.95.
Brick maker Boral fell 19% to A$4.99, after it issued A$1.58 billion (S$1.663 billion) in new shares to pay for the buyout of US rival Headwaters Inc.
Nikkei ends at fresh 10-month high
The Japan share market finished the session firmly in green terrain, as risk sentiments underpinned on tracking record high close of the Wall Street overnight and yen depreciation to 113-level against greenback. Total 26 out of 33 TSE industry category on the main section except pharmaceutical, oil & coal products, chemical, banks, and mining gained ground, led by transportation equipment, iron and steel, realty, nonferrous metal, and securities broker issues. The benchmark Nikkei 225 index added 0.94%, or 170.47 points, to close at 18,333.41, while the broader Topix index of all first-section issues gained 0.86%, or 12.46 points, to 1,459.96. The Tokyo market was closed on Wednesday for a national holiday.
Shares of export-oriented firms inclined the most in the broader stock market as the yen, which is often bought as a safe haven in time of uncertainty, depreciated to 113-level against greenback. A softer yen is positive to the stock market as it amplifies into exporters' profitability. Many export-oriented Japanese firms set their assumed dollar rates at 100-105 yen. Toyota jumped 4.78% to 6,588 yen, Honda surged 3.93% to 3,278 yen, while tyre maker Bridgestone climbed 2.10% to 4,314 yen. Market heavyweight Fast Retailing, operator of the Uniqlo clothing chain, rose 3.39% to 41,730 yen.
Film distributor Tokyo Theatres skyrocketed 15.93% to 211 yen on the blockbuster domestic box office success of its animated film In This Corner of the World.
By contrast, drugmakers Takeda, Astellas and Towa Pharmaceutical were downbeat on news reports that the government is considering revising drug prices every year, instead of every two years in principle under the current rule. Also on the minus side were mega-bank groups Mitsubishi UFJ and Mizuho, game maker Nintendo and electronics maker Sony.
China Stocks end mixed
Mainland China stock market closed higher, due to gains in shares of consumer goods, retailers, and materials issues were more than offset by losses among tech, energy and telecom blue-chips shares. The blue-chip CSI300 index rose 0.4%, to 3,488.74, while the Shanghai Composite Index gained 0.02% to 3,241.74 points. The Shenzhen Composite Index, which tracks stocks on China's second exchange, lost 0.38%, or 8.02 points, to 2,121.49.
China's blue-chips have outperformed growth stocks over the past month, reflecting investors' renewed inclination toward cyclical sectors such as financials and commodities, amid signs that the economy is finding its feet.
Shares in China's major base metal producers, including Shenzhen Zhongjin Lingnan Nonfemet and Jiangxi Copper rose sharply as futures prices of copper, zinc and nickel jumped, maintaining strong upward momentum.
Hong Kong Stocks closed weaker
The Hong Kong stock market retreated, pressured by concerns about the impact of a surging U.S. dollar and an increasingly likely Federal Reserve rate hike next month. The Hang Seng Index ended down 0.3%, or 68.20 points, to 22,608.49 and the Hang Seng China Enterprises index added 0.13%, or 12.78 points, to 9,678.77. Turnover decreased to HK$55.8 billion from HK$60.8 billion on Wednesday.
China Life Insurance jumped 3.1% to HK$21.85, becoming the top blue-chip gainer, helped by rising bond yields in China and the U.S. China's 30-year bond yields have risen by 20 basis points this month, climbing in tandem with an increase in U.S. Treasury yields. Goldman Sachs lifted its target price for the insurer and added it into conviction buy list.
SJM (00880) jumped 3% to HK$6.23 after Goldman's analysis reports showed that for every 10% rise in VIP revenues in Macau gaming industry, the company likely see its EBITDA rise by 7%. Both Galaxy Entertainment (00027) and Sands China (01928) put on 2.2% to HK$37.4 and HK$38.65, respectively.
Link REIT advanced 0.7% to HK$52.45. Daiwa Capital Markets upgraded the stock to buy from outperform, citing a recent correction that had made its unit price to "reasonably attractive levels" for accumulation.
Property counters were lower after the minutes from the November FOMC meeting indicate the committee members agreed that the case for a rate hike was becoming stronger. Wheelock (00020) slipped 2% to HK$42.35. New World (00017) softened 1% to HK$8.51.
Indian Market settles with modest losses
Stocks of private sector banks, auto sector stocks and index heavyweight Reliance Industries led modest losses for key benchmark indices. The barometer index, the S&P BSE Sensex, lost 191.64 points or 0.74% to settle at 25,860.17. The Nifty 50 index fell 67.80 points or 0.84% to settle at 7,965.50. Key indices snapped two-day winning streak today.
Stocks of public sector banks were mixed. IT stocks advanced on weak rupee. Infosys rose after the company announced that it has signed a definitive agreement to a Limited Partner investment of Rs 31.6 crore from its Innovation Fund in Stellaris Venture Partners, an India-based early stage venture fund. TCS edged higher after the company said it will implement a unified global process blueprint for ASML, one of the world's leading manufacturers of chip-making equipment. Power Grid Corporation of India (PGCIL) rose after the company said that a meeting of Committee of Directors for Bonds is planned to be held on 28 November 2016, to consider issue of secured, redeemable, non-convertible, non-cumulative, taxable bonds (debenture) under private placement.
Elsewhere in the Asia Pacific region: New Zealand's NZX50 rose 0.5% to 6883.25. Indonesia's Jakarta Composite index slipped 2% to 5107.62. Taiwan's Taiex fell 0.3% to 9152.11. South Korea's KOSPI index declined 0.8% to 1971.26. Malaysia's KLCI was down 0.4% to 1624.21. Singapore's Straits Times index rose 0.1% to 2843.72.
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