Asia Pacific shares closed mixed on Thursday, 05 January 2016, as US policymakers hinted at the possibility of faster interest-rate hikes after Donald Trump becomes takes office as President. A higher US interest rate means flight of capital from emerging markets in quest of better returns.
Investors appeared to be pulling back funds from emerging market on their hopes for a more aggressive pace of rate hikes after Fed policy makers hinted Wednesday they may need to raise interest rates faster than planned due to considerable uncertainty linked to Donald Trump's fiscal stimulus plans, which could fan inflation, according to the minutes from the US central bank's Dec. 13-14 meeting out Wednesday. The Fed raised interest rates in December for just the second time in a decade and forecast three rate hikes for 2017.
During Asian trade, the West Texas Intermediate futures slipped 0.19% at $53.16 per barrel, while global benchmark Brent dipped 0.28% to $56.30. Oil prices had added more than 2% overnight, with "a weaker dollar helping crude's cause, as did the American Petroleum Institute's (API) surprising 7.4 million barrel drawdown in inventory late in the session," said Jeffrey Halley, senior market analyst at OANDA, in a note on Thursday.
Among Asian bourses
Australia Market ends higher
Australian share market ended higher for third consecutive session, on the back of positive lead from Wall Street overnight, with shares of financial, material, energy and bullion companies being major gainers. At the closing bell, the benchmark S&P/ASX 200 index inclined 16.90 points, or 0.29%, to 5753.30, while the broader All Ordinaries index added 16.90 points, or 0.29%, to close at 5805.10. Rising stocks outnumbered declining ones on the Australia Stock Exchange by 563 to 438 and 326 ended unchanged. The S&P/ASX 200 VIX, which measures the implied volatility of S&P/ASX 200 options, was down 1.16% to 12.728.
US shares ended higher on Wednesday despite Federal Reserve's December meeting showing concerns that quicker economic growth under President-elect Donald Trump could require faster interest rate increases to ward off inflation.
Solid buying in the financial sector formed the backbone for the day's gains, with top for lenders leading rally. Among major banks, Australia & New Zealand Banking Group inclined 0.4% to A$31.49, Westpac 0.5% to A$33.35, Commonwealth Bank of Australia 0.3% to A$83.85, and National Australia Bank 0.9% to A$31.49.
Mining stocks gained, powered by an overnight surge in copper price on a brightening demand outlook for Chinese metals. BHP Billiton added 0.1% to A$25.63 and Rio Tinto traded up by 0.2% to A$60.50, while Fortescue shed 0.2% to A$6.05. Shares of bullion players advanced on the back of rising gold prices, with Newcrest Mining gaining 1.8% to A$20.71.
Shares of oil producers also did well after oil prices recorded good gains overnight. Crude oil prices rose almost 2% on expectations of a drop in U.S. crude inventories and growing confidence that parties to the OPEC output reduction deal will implement the agreed cuts from this week. Woodside Petroleum rose 0.5% to A$31.45 and Origin Energy added 1.7% to A$6.72.
Engineering and construction giant WorleyParsons rose 2.4% after announcing renewal of a general engineering services contract with Saudi Aramco.
Nikki drop on profit booking
The Japan share market closed lower, dragged down by profit booking after strong rally previous session and yen appreciation to upper 115 yen level ahead of Friday's release of key U.S. jobs data for December. The Nikkei 225 index fell 0.37%, or 73.47 points, to 19520.69. The broader Topix index lost 0.08%, or 1.20 points, to 1555.68.
Department store operators J. Front Retailing, Isetan Mitsukoshi, Takashimaya and H2O Retailing attracted purchases thanks to brisk New Year sales. Mega-bank groups Mitsubishi UFJ and Mizuho as well as insurers Dai-ichi Life and Tokio Marine were also buoyant after their U.S. peers rose in New York trading overnight.
By contrast, automakers Toyota, Honda and Fuji Heavy were downbeat due to a halt to the yen's weakening versus the dollar. Steel makers JFE Holdings and Nippon Steel & Sumitomo Metal met with selling to lock in gains.
Sharp's shares jumped 10.9% to 325 yen after report that Japan's electronics maker will consider an initial public offering for Sakai Display Products Corp., a liquid-crystal display venture with Taiwanese electronics assembler Foxconn. That followed Wednesday's gains amid news that Sakai will build a flat-panel factory worth $8.8 billion in Guangzhou, China.
Toshiba recovered from its recent plunge to trade up 4.72% to 290.5 yen per share after Chairman Shigenori Shiga said that he heard the Japanese banks were ready to provide financial support after it was hit earlier in the week by fresh reports of profit padding. Last week, Toshiba said it may have to book several billion dollars in writedowns related to a U.S .nuclear power plant construction company acquisition and the stock has fallen almost 35% since then.
China Stocks rise on upbeat services PMI
Mainland China stock market finished higher fourth consecutive day, after private survey showing that growth in China's services sector accelerated to a 17-month high in December, with the transportation-related shares leading gains. The blue-chip CSI300 index, which tracks large companies in Shanghai or Shenzhen, eased 0.02% to 3,367.79, while the Shanghai Composite Index rose 0.21% to 3,165.41 points. The Shenzhen Composite Index, which tracks stocks on China's second exchange, fell 0.16% to 2,005.58. The ChiNext Index, which tracks China's NASDAQ-style board of growth enterprises, shed 0.38% to 1,983.97 points.
China's services sector activity accelerated in December to the strongest level in 17 months, according to the latest survey of service sector purchasing managers jointly released by Caixin magazine and Markit. The Caixin China General Services PMI rose from 53.1 in November to 53.4 last month. The gain in the headline index was led by rising growth of new orders and input prices.
Shares of transport-related companies soared up after the National Development and Reform Commission, China's top economic planner, announced Thursday it has approved a CNY23.17 billion project to build a highway from Lipu to Yulin cities in Guangxi province. It has also approved a CNY33.63 billion railway project linking Anqing city in Anhui province and Jiujiang city in Jiangxi province.
Shares of state-owned enterprise (SOE) inclined, as China vowed to push forward mixed-ownership reforms in several key sectors, including aviation, railway and telecommunications. SOE Reform bellwether China United Network Communications settled up 5.7%.
Hong Kong Stocks end at three-week high
The Hong Kong stock market closed at a three-week high, on tracking the rally of the offshore RMB (CNH). The market also drew some support from improved conditions in Hong Kong's private sector as reflected by the Nikkei Purchasing Managers' Index (PMI), which in December recorded the first expansion in 22 months. All sectors advanced in the city, led by energy and raw materials stocks. Hong Kong's benchmark Hang Seng Index closed 322.22 points, or 1.46%, higher at 22,456.69. The Hang Seng China Enterprises Index, known as the H-shares index, added 157.69 points, 1.67%, to 9,598.68. Turnover increased to HK$64.6 billion from HK$52.5 billion on Wednesday.
The offshore yuan in Hong Kong rocketed more than 700 basis points stronger to 6.7868 against the US dollar, the best level seen since November. The rally came after the currency strengthened 900 basis points overnight.
The Nikkei Purchasing Managers' Index (PMI) for December showed that the private sector economy might be on the cusp of a recovery, with a reading of 50.3, compared to November's PMI at 49.5. A survey reading above 50 indicates expansion, while a figure below 50 represents contraction.
Oil prices rebounded 2% overnight, boosting oil majors. PetroChina (00857) jumped 4% to HK$5.97. CNOOC (00883) gained 2% to HK$9.96. Sinopec (00386) added 3% to HK$5.71.
Chinese aviation counters benefited from the rally of RMB. China Eastern Airlines (00670) rose 3% to HK$3.71. Air China (00753) climbed 1% to HK$5.11. China Southern Airlines (01055) climbed 4% to HK$4.26.
Sunny Optical (02382) shot up 3% to HK$37.65 after JP Morgan's target price hike to HK$50. AAC Tech (02018) and Tencent (00700) jumped 4% and 2% to HK$74 and HK$193.3.
Mengniu Dairy (02319) has agreed to add stake in China Modern Dairy (01117) at a premium price. Mengniu Dairy fell 3% to HK$14.46, but Modern Dairy shot up 6% to HK$1.98.
China Mengniu Dairy Co. lost 2.7% after the company agreed to buy China Modern Dairy Holdings Ltd, which jumped 5.5%.
Sensex closes up 245 points over budget hopes
Indian stock market rebounded strongly on the back of broad-based rally in metal, auto and bank stocks. The barometer index, the S&P BSE Sensex, gained 245.11 points or 0.92% to settle at 26,878.24. The Nifty 50 index rose 83.30 points or 1.02% to settle at 8,273.80.
Bank stocks gained on renewed buying. Auto stocks edged higher. IT stocks edged lower. Shares of metal and mining companies rose after a private survey showed that activity in Chinas service sector expanded at a faster pace in December.
Canara Bank rose 0.83%. The bank announced fixation of the marginal cost of funds based lending rate for all rupee loans and credit limits renewed. The MCLR for overnight loans was fixed at 8.2%. The rate for one month was fixed at 8.25% and for three months was fixed at 8.3%. The MCLR on 6-month loans is 8.4% and for one-year loan is 8.45%, the bank said. The announcement was made after market hours yesterday, 4 January 2017.
Dena Bank rose 2.85% after the bank announced that a meeting of the board of directors of the bank will be held on 7 January 2017 to consider capital planning for FY 2016-17 i.e. raising of capital through equities and/or bonds. The announcement was made after market hours yesterday, 4 January 2017.
Tata Motors rose 3.20% to Rs 502.05 after the companys British luxury unit Jaguar Land Rover (JLR) reported a 30% jump in retail sales in US in December 2016. JLR yesterday, 4 January 2017, announced its US retail sales for the month of December 2016. JLRs US sales rose 30% to 12,573 units in December 2016 over December 2015. Jaguar sales jumped 259% to 4,294 units in December 2016 over December 2015. Land Rover sales declined 2% to 8,279 units in December 2016 over December 2015.
Elsewhere in the Asia Pacific region: New Zealand's NZX50 was up 0.02% to 6975.60. South Korea's KOSPI index fell 0.2% to 2041.95. Taiwan's Taiex index rose 0.8% to 9358.14. Malaysia's KLCI added 0.75% to 1659.82. Indonesia's Jakarta Composite index added 0.5% to 5325.50. Singapore's Straits Times index added 1.1% to 2954.14.
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