Asia Pacific share market closed mixed on Friday, 28 November 2014, in the absence of lead from Wall Street overnight and concerns about the impact of drop in crude oil prices. The MSCI Asia Pacific Index rose 0.1% to 140.90.
The absence of a U.S. lead damped risk sentiment. Wall Street was closed for the Thanksgiving holiday on Thursday and will reopen on Friday for a shortened session.
Brent crude held above $72 a barrel on Friday after hitting a new four year low earlier in the day after OPEC decided not to cut oil output to support prices. Benchmark crude oil prices plummeted following the meeting, with Brent crude sinking 6.2% to $69.11 a barrel. In June, prices were as high as $115 a barrel. Oil prices are at their lowest levels since September 2010, in part due to oversupply, lower demand and a boom in North American production.
While a weaker oil price is in theory positive for the global economy as it encourages a wealth transfer from producers to consumers, it seems in the short term it presents significant challenges for some key central banks. The reality is major central banks have been trying to push inflation higher and oil prices will make this difficult to achieve. The ECB and BOJ are likely to step up stimulus efforts if they are to reach their inflation goals.
The Bank of Japan's key price gauge slowed a third month, increasing 2.9% in October from a year earlier, equivalent to a 0.9% gain when the effects of April's sales tax increase are excluded.
There is also speculation that the European Central Bank will take more stimulus measures. ECB President Mario Draghi said yesterday the bank is open to buying a wide variety of assets for further easing.
Among Asian bourses
Nikkei stocks rises 1.2% on yen depreciation, oil prices
Japanese share market finished sharp higher, as investors chased for bargain buying, with exporters, airline and transport logistics stocks being major gainers, thanks to yen depreciation against the greenback and declines in crude-oil prices. The Nikkei Stock Average ended up 1.2% at 17459.85, snapping a two-day losing streak. For the week, the index added 0.6%, and is now up 7.2% year to date.
Oil-related shares moved strongly, with airlines, shippers and other fuel-intensive industries gaining. Japan Airlines gained 5.3% to 3,490 yen. ANA Holdings Inc. added 7.4% to 292.2 yen. Kawasaki Kisen jumped 6.9% to 311 yen. Nippon Yusen K.K., Japan's biggest shipper, rose 3.4% to 335 yen. Fuji Heavy Industries gained 3.8% to 4318 yen. Tire maker Bridgestone also ended up 2.9% to 4079 yen.
Official data showed that Japan's consumer prices rose 2.9% from a year earlier in October, slowing from September's reading of 3% amid worries about the nation's economic outlook.
Preliminary retail sales data from the Ministry of Economy, Trade and Industry released on Friday showed that Japan's retail sales marked a fourth straight year-on-year rise, up 1.4% on year in October. However, the pace of growth was slower than +2.3% in September, due to bad weather and the lingering drag from the April sales tax hike.
The Ministry of Internal Affairs and Communications said on Friday that Japan's average household spending fell a real 4.0% on year in October as consumers tightened the purse strings on home repairs, cars, appliances and domestic holiday tours.
Preliminary industrial production data released by the Ministry of Economy, Trade and Industry on Friday showed that Japan's industrial production unexpectedly rose 0.2% month on month in October, but the pace of increase was slower than the sharp 2.9% rebound in September.
Aussie market falls 1.6%
Australian share market closed at a one-week low, as risk aversion selloff across the board, with shares of oil producers being suffered the most amid tumbling crude prices and a decision by OPEC's oil ministers to maintain production targets despite a glut of the commodity. Airline and transport logistics stocks were rare bright spots on the market, as lower energy costs will be a boon to their bottom line. The S&P/ASX 200 index stumbled 87.90 points, or 1.63%, to 5313 and broader All Ordinaries index retreated 83.30 points, or 1.55%, to 5298.10.
Shares of energy companies were biggest drag on the market, as Brent crude hovered near a four-year low hit in the previous session following OPEC's (The Organization of Petroleum Exporting Countries) decision not to cut production on Thursday. Among energy shares, Woodside Petroleum slipped 7.1% to A$35.75, Santos dropped 13% to $10.1, Origin Energy fell 7% to $12.25 and Oil Search lost 5.9% to $7.97. Resources giant BHP Billiton, which produces more crude oil than Woodside, was down 3.4 per cent at A$30.92.
In the minerals sector, Fortescue Metals gained eight cents to A$2.94 and Rio Tinto added A$1.08 to A$59.10 as boss Sam Walsh committed to a materially increase in shareholder returns.
Airlines and logistics companies benefited from the weaker oil prices. Qantas gained 12.5 cents to A$1.92 and transport company Toll Holdings gained 10 cents to A$5.64.
Challenger shares plunged 7.3% to A$6.35 after the company lowered its earnings guide for its life insurance business as a result of plans by the Department of Social Services to reverse the means test assessment for the company's Care Annuity product.
Shanghai Composite extends gain on stimulus bets
Mainland China share market closed sharp higher, registering advance for seventh consecutive session, on bet for further monetary stimulus, with shares of airline and shipping companies being major gainers. The Shanghai Composite Index rose 2% to 2,682.84 at the close. Full-day turnover was strong, with 465.88 billion shares changed hand worth of 401.95 billion yuan. The measure advanced 7.9% this week, after the central bank unexpectedly lowered deposit and lending rates to support an economy.
The People's Bank of China trimmed its benchmark lending rate by 0.40% to 5.6%, and deposit rate was cut by a smaller 0.25% to 2.75% at the end of last week. There are also rumour in the market that central bank could cut reserve-requirement ratios, which have remained unchanged at 20% for major banks and 18% for smaller banks since May 2012.
Shares of airlines and shippers advanced the most in Shanghai after oil prices plunged. West Texas Intermediate oil slid 6.7% overnight, as OPEC refrained from cutting output to ease a supply glut. China Southern Airlines Co., the biggest domestic carrier, jumped 10%, while China Eastern Airlines Corp. advanced 10%. Cosco Shipping Co. added 4.3%. China Oilfield Services led declines for energy companies, sliding 1.7%.
Hang Seng ends 0.07% down
Hong Kong share market finished session slight down in volatile trade, with energy shares leading fall as crude prices plumbed four-year lows after the Organization of the Petroleum Exporting Countries (OPEC) failed to reach agreement on output cut. The Hang Seng Index declined 16.83 points, or 0.07%, to 23987.45, off an intra-day high of 24117.16 and low of 23887.63. Turnover increased to HK$90.24 billion from HK$72.88 billion on Thursday.
Shares of energy stocks declined after the OPEC meetings which have failed to reach agreement on output cut. CNOOC (00883) plunged 5.5% to HK$11.34. PetroChina (00857) fell 3.3% to HK$8.41. Both were the worst performing blue chips in the day. Kunlun Energy (00135) slipped 3% to HK$8.39. Sinopec (00386) softened 1.2% to HK$6.35.
Airline stocks surged on expectation the industry is set to benefit from the lower oil prices. Cathay Pacific (00293) jumped 5% to HK$17.08. China East Air (00670) soared 6.6% to HK$3.88. China South Air (01055) shot up 8.3% to HK$3.53. Air China (00857) bounced 6.4% to HK$5.95.
Hong Kong Government said today there was a surplus of HK$34.3 billion in October, thereby reducing the deficit for the seven months ended 31 October 2014 to HK$3.6 billion before repayment of bonds and notes, or HK$13.3 billion after repayment of institutional notes of HK$9.7 billion in July 2014. Expenditure for the period amounted to HK$219.7 billion and revenue HK$216.1 billion. A government spokesperson said that the improved financial results in October were mainly due to the collection of profits tax. The fiscal reserves stood at HK$742.5 billion as at 31 October 2014.
Sensex hits new high
Overnight steep slide in global crude oil prices triggered fresh rally as the barometer index, the S&P BSE Sensex, and 50-unit CNX Nifty, both, struck record high. However, the benchmark indices trimmed gains during the latter part of the trading session after a sharp surge earlier during the trading session. As per provisional figures, the S&P BSE Sensex was up 218.77 points or 0.77% at 28,657.68. The CNX Nifty was up 84.25 points or 0.99% at 8,578.45, as per provisional figures.
Foreign portfolio investors (FPIs) bought Indian shares worth a net Rs 389.73 crore yesterday, 27 November 2014, as per provisional data.
Bank stocks surged on optimism falling oil prices will slow inflation and create room for the Reserve Bank of India (RBI) to cut interest rates.
Meanwhile, the Reserve Bank of India (RBI) yesterday, 27 November 2014, set Rs 100 crore as minimum paid-up equity capital requirement for setting up payments banks and small finance banks.
Elsewhere in the Asia Pacific region: Taiwan's Taiex index rose 0.24% to 9187.15. South Korea KOSPI was down 0.07% to 1980.78. New Zealand's NZX50 fell 0.57% to 5424.45. Singapore's Straits Times index slipped 0.29% at 3350.50. Malaysia's KLCI declined 0.49% to 1820.89. Indonesia's Jakarta Composite index added 0.09% to 5149.89.
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