Asia Pacific share market closed mostly down on Wednesday, 14 September 2016, on tracking fall in the Wall Street overnight and plunge in crude oil prices. Meanwhile uncertainty over central banks' next moves also hurt risk appetite. The MSCI Asia Pacific Index sank 0.7% to 136.21.
All eyes are on the Federal Open Market Committee (FOMC) meeting on Sept. 20-21 as traders anxiously wait for clues on whether the Fed will raise interest rates soon. Few traders expect a rate hike next week and markets are pricing in only a roughly 50-50 chance of one in December.
Japan's central bank is also scheduled to meet next week, with speculation has grown that the BOJ will reduce its purchases of super-long bonds to let the yield curve steepen while maintaining a negative rate on excess reserves. Some also expect the BOJ could cut the rate deeper into negative territory in the future.
Crude oil prices recovered ground in Asian trade after suffered heavy losses overnight after the International Energy Agency (IEA) warned in its latest market update that it may take longer for oil prices to re-balance, citing a faster-than-expected slowdown in global oil demand growth.
During Asian trade on Wednesday, U.S. crude futures rebounded modestly, up 0.82% at $45.27 a barrel, following a 3% drop overnight. Global benchmark Brent added 0.62% to $47.39, after falling 2.5% on Tuesday.
The Paris-based International Energy Agency (IEA) projects that global oil demand growth is "slowing at a faster pace than initially predicted". It now forecasts demand to grow 1.3M bpd this year, down -0.1M bpd estimated last month, before moderating to 1.2M bpd in 2017. On the supply side, IEA noted that world oil supplies dropped -0.3M bpd in August, as non-OPEC output fell. However, OPEC production remained elevated during the period, rising to 33.47M bpd in August, testing "record rates as Middle East producers opened the taps". IEA estimated that OPEC supply was 0.93M bpd above the same period last year. According to IEA, "this supply-demand dynamic may not change significantly in the coming months. Supply will continue to outpace demand at least through the first half of next year".
That followed remarks from the Organization of the Petroleum Exporting Countries (OPEC) earlier this week that key central bank decisions, such as the one due in the U.S. later this month, would be crucial in determining the state of global growth and the overall health of the energy sector.
If the U.S. Federal Reserve does raise interest rates later this month, it would likely strengthen the dollar, which would make dollar-denominated oil trades more expensive for buyers holding other currencies. That could, in turn, hamper global demand and consumption.
Among Asian bourses
Australia Market rises for first time in five
Australian share market advanced for first time in five sessions in row, as gains in telecom, financial, and consumer staples were more than offset by losses in materials and resources. At close of trade, the benchmark S&P/ASX 200 index rose 19.90 points, or 0.38%, to 5,227.70, while the broader All Ordinaries index has gained 16.60 points, or 0.31%, to 5,326.60. Falling stocks outnumbered advancing ones on the Australia Stock Exchange by 589 to 457 and 348 ended unchanged. The S&P/ASX 200 VIX, which measures the implied volatility of S&P/ASX 200 options, was down 9.17% to 16.704.
Telecommunications put in the strongest performance overall, jumping by 2.4%. Unsurprisingly, Telstra just happened to close with a gain of 2.6%.
Resources and energy stocks were under pressure as a strengthening US dollar weighed heavily on commodities. Among energy shares, Woodside Petroleum was 0.7% lower, Oil Search lost 0.9% and Santos sank 5.7%. Crude-oil prices retreated overnight after the Paris-based International Energy Agency cut its 2016 demand growth forecast by 100,000 barrels a day to 1.3 million. That came a day after a report from the Organization of the Petroleum Exporting Countries that pointed to a world still awash in crude. In the mining space, BHP Billiton and Rio Tinto were down 1% and 1.3%, respectively. Iron-ore producer Fortescue Metals Group was 1.7% weaker, and gold miner Newcrest Mining fell 0.5%.
Financial stocks also added strength to bourse, with all big four banks rose. Westpac Banking Corp added 1.5%, Commonwealth Bank of Australia picked up 1% and Australia & New Zealand Banking Group and National Australia Bank each added 0.6%. CYBG, the British lender spun off by National Australia Bank early this year, dropped 5.2% after it told investors in London it was targeting further cost cuts and expected to deliver a double-digit return on tangible equity a year earlier than originally planned.
Japan Stocks falls on weak global cues
The Japan share market ended lower, dragged down by tracking negative lead from Wall Street overnight. Meanwhile, sentiments were downbeat on growing speculation that the Bank of Japan will maintain the negative rate on excess reserves at the policy meeting next week and could even lower the rate in the future. The 225-issue Nikkei lost 114.80 points, or 0.69%, to finish at 16,614.24 on the Tokyo Stock Exchange. The Topix index of all first-section issues lost 8.25 points, or 0.62%, to close at 1,314.74. Falling stocks outnumbered advancing ones on the Tokyo Stock Exchange by 1354 to 543 and 161 ended unchanged. The Nikkei Volatility, which measures the implied volatility of Nikkei 225 options, was up 2.40% to 23.02.
Banks stocks suffered on concerns about short investment horizon which tend to suffer from low short-term rates. Speculation has grown that the BOJ will reduce its purchases of super-long bonds to let the yield curve steepen while maintaining a negative rate on excess reserves. Some also expect the BOJ could cut the rate deeper into negative territory in the future. Mitsubishi UFJ Financial Group Inc. fell 3.2% to 507.5 yen. Sumitomo Mitsui Trust Holdings Inc. lost 2.1% at Y336.3.
A bright spot for the market was life insurance companies. Life insurers are less sensitive to short-term interest rates and tend to benefit from higher, longer-term rates. Dai-ichi Life Insurance Co. rose 4.3% to Y1,476.0. Japan Post Insurance Co. gained 4.6% to Y2,282.
Apple supplier Alps Electric Co. rose 4% after reports iPhone 7 orders at some U.S. carriers surged past prior models. Japan Display Inc. advanced 4.7%.
China Stocks retreat to lowest level in a month
Mainland China stock market closed at lowest level in a month on the last trading day of this week, as investors sold stocks on uncertainty over whether the Federal Reserve will raise interest rates next week. All SSE sectors except technology issue lost ground, with blue chip players in telecom, industrials, consumer staples, energy, financials and utilities sectors hit the hardest. The CSI300 index of the largest listed companies in Shanghai and Shenzhen eased 0.66%, to 3,238.73 points, while the Shanghai Composite Index lost 0.68% to 3,002.85 points. The gauge has lost 2.5% this week, amid a jump in the cost of borrowing the yuan in Hong Kong. China stock market will close on Thursday and Friday for mid-Autumn Festival.
China Petroleum & Chemical Corp. fell 1.2%, after U.S. oil prices slumped 3% on Tuesday amid concern a global supply glut will persist.
A measure of consumer-discretionary shares declined 1% as Midea Group Co. slid to its lowest close since July 11 and FAW Car Co. retreated from a three-week high.
Chinese banks granted net new loans of CNY948.7 billion in August, the People's Bank of China announced Wednesday, sharply higher than the new loans of CNY463.6 billion in July 2016. M2 was up 11.4% on year at the end of August, higher than the 10.2% increase in July.
Hong Kong Market closes softer
The Hong Kong stock market declined modestly on tracking plunge in U.S. equities overnight and on caution ahead of next week's Federal Reserve policy meeting. The benchmark Hang Seng Index declined 25.12 points, or 0.11%, to 23190.64 points. The Hang Seng China Enterprises Index, a benchmark measure of performance of mainland China enterprises, slipped 28.54 points, or 0.3%, to 9542.52. Turnover decreased to HK$60.9 billion from HK$73.5 billion on Tuesday.
Sands China (01928) rose 1% to HK$34.15. The company's casino Parisian opened last night. Deutsche Bank deemed it eye-catching feature and a "must-see" destination. Galaxy Entertainment (00027) climbed 2% to HK$28.6.
Oil prices plunged 3% as OPEC and IEA forecast oversupply may extend to next year. CNOOC (00883) slipped 1.2% to HK$9.37. Sinopec (00386) and PetroChina (00857) fell 1% to HK$5.31 and HK$4.99.
Sensex, Nifty rebound
Indian shares snapped a two-session losing streak to close slightly higher, led by a recovery in bank stocks, but sentiment remained weak on concerns over the ability of global central banks to prop up growth. The barometer index, the S&P BSE Sensex, rose 18.69 points or 0.07% to settle at 28,372.23. The Nifty 50 index rose 11 points or 0.13% to settle at 8,726.60.
Coal India shares fell after the company reported a 15% fall in its first-quarter profit. Tata Steel declined to its lowest in a month after reporting a wider first-quarter loss on sale of a business in Europe.
Domestic sentiment remained weak as India's industrial production (IIP) fell 2.4% in July 2016 over the same month last year. Industrial production expanded 2.1% in June 2016 over the year-ago month.
Meanwhile, foreign funds sold shares worth Rs. 593.61 crore on Monday, as per the provisional data released by the stock exchanges.
Elsewhere in the Asia Pacific region: New Zealand's NZX50 fell 0.5% to 7210.72. Taiwan's Taiex index slumped 0.4% to 8902.30. Singapore's Straits Times index shed 0.3% to 2809.35. Indonesia's Jakarta Composite index shed 1.3% to 5146.04. Malaysia's KLCI eased 0.9% to 1661.39. South Korea market closed for holiday.
Powered by Capital Market - Live News
Disclaimer: No Business Standard Journalist was involved in creation of this content
