Regional stock markets had rallied in previous four sessions as expectations that European policymakers will unleash powerful measures to battle the continent's debt crisis and US Federal Reserve would further ease policy action to revive growth.
US economic reports released overnight were largely positive but they failed to encourage the market. US house prices, as measured by the S&P/Case-Shiller index, rose 0.9% in May from April. The number was not only above consensus estimates, but was the fourth consecutive month of gains, suggesting that the recovery in the housing market might be gathering momentum. Meanwhile, US personal income increased 0.5% in June from the previous month, while personal spending was flat.
Fueling to gloom, China official PMI data released from China Federation of Logistics and Purchasing showed that manufacturing activity growth eased for the third consecutive month in July, as new orders continued to shrink mainly due to weak global demand. The headline purchasing managers' index for the manufacturing sector fell to 50.1 in July from 50.2 in June, marking the slowest pace of expansion in eight months. A separate survey by Markit Economics and HSBC continued to show contraction in manufacturing activity in July, albeit at a slower pace
Market pundits are hoping that the Fed may hold its policy easing stance following some improving US economic data points. US home prices rose for the fourth month in a row in May and US consumer confidence unexpectedly rose in July. Fed want to wait and see what impact it's past easing programmes have on the economy before launching more measures.
In contrast, the ECB is expected to restart its dormant government bond-buying programme, in an attempt to lower Spanish and Italian government bond yields. But comments by German officials that there is no need to give a banking license to ESM fund slightly weighed on sentiment.
In the Asia Pacific region, China's Shanghai Composite index rose 0.9% on expectations of more policy fine-tuning in the second half, while Japan's Nikkei225 index lost 0.6% on profit taking after disappointing corporate earning from blue chip players, making both the top gainers and losers respectively in the region.
Amongst other regional bourses, Australia's All Ordinaries index fell 0.16%, New Zealand's NZX50 fell 0.41%, Indonesia's Jakarta Composite index dropped 0.29%, Taiwan's Taiex erased 0.03%, and South Korea's Kospi Composite index was down 0.11%. While Singapore's Strait Time index added 0.48%, Malaysia's KLSE Composite added 0.05%, Hong Kong's Hang Seng index added 0.12%, and India's Sensex rose 0.12%.
Back to country wise performances, Tokyo stock market snapping four days of wining streak, with the benchmark Nikkei Stock Average declined 0.6%, while broader Topix index erased 0.9%, as investors pocketed recent gains amidst cautious ahead of the outcome of US FOMC meetings tonight and European Central Bank interest rate decision on Thursday. Meanwhile disappointing domestic corporate earnings and hardening yen against the euro and other major currencies also pressurized selloff.
Japanese machinery firm Komatsu dropped 7.1% to 1,633 yen after the firm cut its fiscal-year operating profit and sales outlook, while posting a more than 42% drop in quarterly net profit.
Honda Motor Co fell 5.7% to 2,405 yen as automaker net profit failed to meet market expectation. Japan's third-biggest carmaker by volume posted a net profit of 131.72 billion yen for April-June quarter, up from 31.80 billion yen in the same quarter last year, but below market expectation of nearly 149 billion yen. For the full fiscal year, the carmaker maintained its net profit forecast of 470 billion yen, an operating profit outlook of 620 billion yen and a sales projection of 10.3 trillion yen.
Panasonic Corp jumped 7% to 584 yen after posting a swing to a quarterly profit. Panasonic reported a net profit of 12.81 billion yen for the three months ended June 30 versus a loss of 30.35 billion yen in the same period a year earlier. Revenue fell 6% to 1.815 trillion yen, while operating profit increased seven-fold to 38.60 billion yen. Panasonic maintained its forecast for a net profit of 50 billion yen, an operating profit of 260 billion yen on sales of 8.1 trillion yen.
Toshiba Corp climbed 0.8% to 264 yen as company kept its full-year profit forecast unchanged despite posting a quarterly loss. The technology and engineering conglomerate said it booked the net loss of 12.1 billion yen for the April-June quarter, reversing a net profit of 470 million yen for the same period last year. The loss was mainly due to increased expenditure to promote steady business restructuring for strengthening profitability and the impact of yen appreciation, it said in a statement. Toshiba left unchanged its full-year forecast, projecting a net profit of 135 billion yen on sales of 6.4 trillion yen for the year to March 2013.
In China, Mainland China stock market rebounded from 41 months low today, with the benchmark Shanghai Composite index escalated 0.94% from prior day to 2,123.36, as investors chased for bottom hunting on rumor that government would speedup monetary easing stance after manufacturing PMI growth further decelerated last month. Most of the blue chips players rebounded today, with shares of materials and resources and energy producers leading rally.
Investors' confidence boosted by the government's pledge for more measures overshadowed manufacturing data that missed estimates. Premier Wen said downward pressure on the economy is relatively large and pledged to use different monetary policy tools to ensure stable growth in money supply and bank credit, the official Xinhua News Agency reported yesterday, citing a speech on July 26.
China's official manufacturing Purchasing Managers Index fell slightly to 50.1 in July compared with 50.2 in June, the China Federation of Logistics and Purchasing, which issues the data with the National Bureau of Statistics. The July PMI was lower than market pundit's expectations and third consecutive month of decline is likely to add to concern about a sharp slowdown in the world's second-largest economy. In the meantime, HSBC China manufacturing purchasing managers' index (PMI), compiled by Markit, climbed to 49.3 in July from June's 48.2.A PMI reading above 50 indicates an expansion in manufacturing activity, while a reading below 50 indicates contraction.
In India, the benchmark indices eked out marginal gains after witnessing intraday volatility. The barometer index, BSE Sensex, was provisionally up 2.88 points or 0.02% up close to 50 points from the day's low and off about 55 points from the day's high. The market breadth was positive. Small-Cap and Mid-Cap indices on BSE outperformed the Sensex. Provisional data showing that foreign funds remained buyers of Indian stocks on Tuesday, 31 July 2012, underpinned sentiment.
Index heavyweights Reliance Industries (RIL) edged lower in volatile trade. Adani Power dropped after reverse turnaround in Q1 June 2012. Organised retailers were mostly higher. Capital goods stocks rose. Cement shares rose as cement firms will start unveiling monthly sales data for July 2012 from today, 1 August 2012. FMCG stocks rose on renewed buying, with Dabur India and Bajaj Corp hitting 52-week highs.
Powered by Capital Market - Live News
