Asian stocks reacted negatively after James Bullard, president of the Federal Reserve Bank of St. Louis, suggested that interest rates may rise sooner than people thought. Bullard favours raising the benchmark rate in the first quarter next year.
St. Louis Federal Reserve President James Bullard warned that the Fed could fall behind the curve if the US unemployment rate drops faster than expected. In response to questions after his speech Bullard commented that at the current 6.3% unemployment rate, the US is way ahead of schedule on its trajectory toward a normal labour market. Bullard does not have a vote on the Feds policy-setting committee this year.
Risk sentiments dented further after U.S. consumer spending, which accounts for 70% of economic activity, inched up in May at half the rate that economists had predicted. The poor readings disappointed investors who had been looking for stronger signs that the U.S. economy is bouncing back after shrinking 2.9% in the first quarter.
Adding to the pessimism, Chinese industrial profits grew in May at the slowest rate this year, a sign that the No. 2 economy continues to struggle with an extended slowdown. The National Bureau of Statistics (NBS) said on Friday that China's industrial profits grew 8.9% in May to 512.7 billion yuan ($82.6 billion) from a year earlier, slowing from a 9.6% pace in April. For the first five months of 2014, profits rose 9.8% from the same period of last year to 2.28 trillion yuan.
Turnover across the region were relatively thin, as investors awaited data on U.S. consumer confidence later in the global day to gauge the outlook for the world's largest economy.
Among Asian bourses
Australia market falls 0.35%
Australian share market finished the session on a negative note, with shares of financials consumer staples and industrials leading losses. The benchmark S&P/ASX200 declined 0.35% to 5445.10 and the broader All Ordinaries sank 0.32% to 5429.10.
Ahead of end of financial year on Monday, the benchmark index was tracking up 15.6% for 2013-14. J.P. Morgan kept its S&P/ASX 200 year-end target of 5700, but said fiscal 2015 could be challenging due to expected interest-rate hikes in early 2016, bond yields that were unlikely to fall further, concern about the achievability of 7%-plus growth in China, and limited potential for companies to increase payout ratios and engage in takeover activity.
Financial stocks closed lower, with major four lenders leading losses on profit booking. Commonwealth Bank of Australia declined 0.7% to A$81.47, Westpac Banking Corp 0.8% to A$34.17, ANZ Banking Group 0.9% to A$33.60 and National Australia Bank 0.6% to A$33.03.
Shares of material and resources companies climbed up, lifted by gain in the iron ore price. Spot iron ore gained 1.7% to US$95.30 on Thursday. Iron ore was up 7.1% since June 16, when it hit a 21-month low of US$89.0, but still 29% lower year to date. Resources giant BHP Billiton declined 0.2% to A$36.42, while Rio Tinto rose 0.3% to A$60.06 and iron ore miner Fortescue Metals Group was up 1.8% to A$4.55.
Tatts Group shares rose 2.9% to A$3.21 after winning the first round of a lengthy legal battle against the Victorian government for compensation of a A$451 million over the loss of its gaming licences, while rival Tabcorp was down 5.7% to A$3.40 after its claim of A$750 million was dismissed.
Nikkei drops 1.4%
Japan share market closed steep lower today, as risk aversion selloff across the board amid yen appreciation against the greenback and prospects of an increase in U.S. interest rates. The benchmark Nikkei 225 index fell 1.39% to 15095, while the Topix index of all first-section issues declined 0.81% to 1253.15. The yen gained against the greenback on disappointing U.S. data. As of the close of TSE trading, the yen gained 0.4% to 101.36 per dollar today, extending yesterday's advance.
Export related stocks suffered heavy losses on yen appreciation. Canon, which gets about 80% of its sales from abroad, lost 1.9% to 3,277 yen. Sony Corp., which gets about 70% of revenue from abroad, slid 1.4% to 1,679 yen. Nissan Motor Co., which counts North America as its biggest market for sales, slid 1.1% to 959 yen.
Ono Pharmaceutical jumped 5% to 8,980 yen after national broadcaster NHK said the health ministry will approve its drug for treatment of melanoma, and the product may be distributed by year-end.
Oracle Japan declined 5.1% to 4,390 yen after forecasting its full-year operating profit will be 45 billion yen ($444 million), compared with the 47.7 billion yen median estimate of analysts.
Data from the internal affairs ministry showed that Japanese consumer inflation, stripping out volatile fresh food prices, rose 3.4% year-on-year in May, the fastest pace in 32 years.
Preliminary data from the ministry of economy, trade and industry showed retail sales edged down 0.4% in May, marking the second straight year-on-year drop but improving from drop of 4.3% in April, thanks to the fading drag from the April sales tax hike.
Data from the Ministry of Internal Affairs and Communications showed that Japan's jobless rate edged down to 3.5% in May, the lowest level in nearly 17 years. The jobs-to-applicants ratio stood at 1.09, the highest in more than two decades, meaning there were 109 job offers to every 100 job seekers.
China stocks fall on liquidity crunch woes
Mainland China share market closed marginally down amid concern about tightening of liquidity and prospects of an increase in US interest rates. The benchmark Shanghai Composite closed 0.11% down from prior day to 2036.51. Trading turnover increased to 76.71 billion yuan from yesterday's 66.53 billion yuan.
Concerns about liquidity crunch flared after China money-market rates climbed. The seven-day repo rose 21 basis points, or 0.21 percentage point, to 3.86% in Shanghai, according to a weighted average from the National Interbank Funding Center.
Shandong Longda Meat Foodstuff Co., Wuxi Xuelang Environmental Technology Co. and Feitian Technologies Co. each gained 10% today after jumping by the 44% limit on their debut on Thursday.
Hong Kong market raises 0.1%
Hong Kong share market closed slight higher after fluctuating in and out of the boundary linein future contract settlement day. The benchmark index fluctuated as growth in China's industrial profits slowed and investors weighed the outlook for U.S. interest rates. The benchmark Hang Seng Index closed 23.69 points higher from prior day to 23221.52. Trading turnover reduced to HK$48.28 billion from yesterday's HK$52.6 billion.
Want Want (00151) put on 2.4% to HK$10.92, making it the biggest blue chip gainer. COLI (00688) was the top blue-chip loser, falling 1.4% to HK$18.64.
StanChart (02888) said in its trading update that its full-year earnings may be lower than that of last year. StanChart slid 4.5% to HK$158.6 after a slew of bearish comments from investment banks.
Lottery players saw renewed interest again. China Vanguard (08156) soared 18.6% to HK$3.76. China Lotsyn (01371) gained 4.2% to HK$0.74. Rexlot (00555) rose 3.4% to HK$0.91. Vodone (00082) added 3% to HK$0.71.
Standard Chartered Plc dropped 4.5% to HK$158.60 after the U.K. bank that generates 58% of its revenue in the Asia-Pacific region said first-half profit probably fell 20%.
Sensex edges higher
Key benchmark indices eked out small gains after moving in a narrow range for most part of the trading session, led by gains in IT, healthcare and power sectors. The S&P BSE Sensex garnered 37.25 points or 0.15% to settle at 25,099.92, while the CNX Nifty garnered 15.60 points or 0.21% to settle at 7,508.80, a highest closing level since 25 June 2014.
IT stocks rose across the board after US-based consulting and outsourcing services provider Accenture on Thursday, 26 June 2014, reported good Q3 May 2014 earnings. HCL Technologies (up 3.24% to Rs 1,481.25), Wipro (up 1.9% to Rs 545.85), and Infosys (up 1.02% to Rs 3,221.95) edged higher. TCS was up 3.85% at Rs 2,398.40. Tech Mahindra was up 4.14% at Rs 2,127.15.
Ranbaxy Laboratories surged after the company announced that it's wholly owned subsidiary Ohm Laboratories, Inc (Ohm) has received first to file approval from the United States Food & Drug Administration (USFDA) with 180-day marketing exclusivity for Valsartan 40 mg, 80 mg, 160 mg and 320 mg tablets -- a generic version of a medicine for treatment of hypertension and heart failure. The stock was up 5.38% at Rs 497.15.
Dr Reddy's Laboratories rose 1.8% to Rs 2,550 after the company said during market hours that it has launched Duloxetine Delayed-Release Capsules USP 20 mg, 30 mg and 60 mg, a therapeutic equivalent generic version of CYMBALTA (Duloxetine Delayed-Release Capsules) in the US market on 26 June 2014. The CYMBALTA brand and its generic version had US sales of approximately $5.04 billion for twelve months ended 30 April 2014, according to IMS Health data.
Gas utility stocks rose after the Cabinet Committee on Economic Affairs (CCEA) on Wednesday, 25 June 2014, deferred a decision on revision of natural gas pricing for three months. Gujarat Gas Company (up 0.08% to Rs 412.90), Gujarat State Petronet (up 2.3% to Rs 89), and Indraprastha Gas (up 1.14% to Rs 351.55) gained.
Elsewhere in the Asia Pacific region- Taiwan's Taiex index was down 0.15% to 9306.83. South Korea's KOSPI index slid 0.33% to 1988.51. Indonesia's Jakarta Composite Index dropped 0.56% to 4845.13. Malaysia's KLSE Composite declined 0.48% to1880.93. Singapore's Straits Times index fell 0.23% to 3271.05. New Zealand's NZX50 jumped 0.27% to 5144.25.
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