Headline indexes of the Asia Pacific market eked out small gain on Wednesday, May 29, 2013, heading for second day of gain in row, as signs of resilience in the US economy and expectations of continued monetary policy support from central banks in Japan and Europe calmed jittery investors. Although, trading was choppy as concern that the Federal Reserve may taper its bond purchases earlier than initial planned on positive sign of the US economic growth.
Market sentiment was given a lift after the US consumer confidence index coming in higher than expected and the house price indices showing stronger gains, indicated a strong underlying momentum in the economy in the face of fiscal restraint.
The S&P Case-Shiller 20-City home-price index for March showed a 10.9% gain compared with the year-earlier period, better than expectations for a 10.3% rise. The March jump was the biggest such gain in seven years. Meanwhile, the Conference Board's consumer-confidence index for May jumped to a five-year high of 76.2, much better than expectations for a reading of 72 and an upwardly revised April reading of 69.
Appetite for riskier assets also underpinned after central banks reassured investors that they will keep policies designed to foster global growth. ECB executive board member Peter Praet was quoted saying that the central bank could still cut interest rates if needed, and ECB is technically prepared to implement negative deposit rates. Japan's BoJ board member Ryuzo Miyao said that monetary policy will continue to put downward pressure on rates and strongly support economic recovery.
In the Asia Pacific region, Japanese market eked gain for second day in row, as strong buys in stock index futures pushing up in cash stocks. The Nikkei Stock Average was up tad 0.1% to 14,326.46, while the broader Topix index added 0.9% to 1178.87. Tokyo stocks traded higher in morning on tracking cues from overnight rise in the Dow Jones industrial average and the dollar's appreciation to the mid-102 yen level. But momentum faltered midmorning and the benchmark index fell into the red. In the afternoon, stocks recouped and ended tad higher as the yen rebounded against the greenback.
Shares of Softbank Corp climbed 2.1% on reports the mobile service provider and Sprint Nextel Corp have reached an agreement with the U.S. to protect national security, clearing a hurdle in Softbank's plan to acquire the U.S. wireless operator.
The Australian share market registered second gain in a row, thanks to gains in metal & mining, healthcare, consumer discretionary and industrials blue chips shares that helped to offset losses in financials and consumer staples stocks. The benchmark S&P/ASX200 index rose 4 points, or 0.08%, to 4,974.7, while All Ordinaries Index added 8.60 points, or 0.17%, to 4,959.20. Despite a positive finish, sentiments remain muted ahead of the capital expenditure expectations report out tomorrow, which will indicate companies' future spending plans after Statistics Bureau said that construction work done fell 2% in March quarter.
The Australian dollar declined to lowest level since October 2011 against the greenback because sentiment has turned against the currency due to the mining slowdown and strong US economic data. Investors are shifting funds toward other attractive yielding assets on concerns about further domestic interest rate cuts and surge in long term US bond yield after better-than-expected economic data. The Aussie dollar fell as low as $0.9530. It has shed nearly 8% so far in May 2013, putting it on track to become the world's worst performing major currency.
Chinese shares ended slight higher on calming jitters over market liquidity on reports that securities regulator planning to postpone new IPOs to August. The benchmark Shanghai Composite Index closed 0.12% higher at 2324.02, In today's trade, blue chips of the technology, healthcare, materials and consumer discretionary companies closed solidly higher, helping to offset fall in the shares of energy and financials issues.
The 21st Century Business Herald reported on Wednesday that the China Securities Regulatory Commission may resume IPO approvals in the second half of August. The commission has suspended IPO approvals since December and ordered companies applying for IPOs on domestic bourses to double-check their financial status in a bid to eliminate frauds.
China's thermal coal prices average benchmark Bohai-Rim Steam-Coal Price Index was at RMB 610 a metric ton between May 22 and May 28, falling 0.16% from a week earlier, according to backed coal price index published Wednesday. The Bohai-Rim Steam-Coal Price Index covers spot prices at six major coal shipping ports in northern China.
The Hong Kong stocks fell down sharply, dragging the benchmark Hang Seng Index 1.61% lower at 22554.93, with major developers, lenders and conglomerates led retreat. The city bourse opened 97 points down from yesterday closure and moved in narrow range till afternoon. But selloff momentum intensified late afternoon, weighing the benchmark index 369.32 points lower. Investors offloaded risk stocks amidst concern that the Federal Reserve may taper its bond purchases earlier than initial plan on positive sign s for the US economic growth. Meanwhile, volatility in the index future ahead of contract settlement date also weighs on the cash stocks.
Among the 50 HK blue chips, 46 stocks fell, while 4 rose. Property counters fell notably. Hang Lung Properties fell 3.5% to HK$28.55. New World dipped 3% to HK$12.86. Both SHKP and Henderson Land were down 2% to HK$105.8 and HK$56.15. Financials were down, with China Construction Bank Corp lost 1.4% to HK$6.32 and Industrial & Commercial Bank of China 1.5% to HK$5.42. Among conglomerates, MTR Corp lost 1.7% to HK$31.45, Tingyi shed 2% to HK$20.10 and diversified Swire Pacific shed 2.9% to HK$99.
Indian stock market closed volatile session tad below the neutral line as emergence of profit-booking by funds and retailers after three sessions of gains. The 30-share barometer declined by 29.52 points, or 0.15%, to 20,131.30 with rate sensitive realty, metals, banks along-with technology and capital goods stocks led the decline.
Elsewhere, Indonesia's Jakarta Composite rose 0.4%, New Zealand's NZX50 rose 0.2%, Taiwan's TAIEX added 0.9%, South Korea's KOSPI Composite jumped 0.75% and Malaysia's KLSE Composite added 0.4%. Singapore's Strait Times index fell 1.1%.
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