Asia Pacific share market ended mixed on Tuesday, 29 November 2016, with risk sentiments curbed by a lackluster performance in global equity markets overnight and ahead of key events from OPEC talks to the U.S. jobs report and Italy's referendum. The MSCI Asia Pacific Index slid 0.1% to 136.47.
Wall Street suffered its worst performance in nearly a month overnight, while European stocks also softened, led by a slump in Italian banks as political risk resurfaced in Europe ahead of a referendum in Italy this weekend.
Investors were turning their attention to the OPEC meeting on Wednesday and Italy's vote on constitutional reform at the weekend. The Organization of the Petroleum Exporting Countries (OPEC) will meet in Vienna to discuss a planned production cut in an effort to curb overproduction that had dogged markets and more than halved prices since 2014. The uncertainty has prompted oil price to fall. The price of the benchmark U.S. oil fell 20 cents to $46.88 a barrel in electronic trading on New York Mercantile Exchange. The contract jumped $1.02 to close at $47.08 a barrel on Monday. Brent crude, the international standard, eased 29 cents to $49.92 a barrel in London, from $48.79 on Tuesday.
Italians vote on constitutional changes on Dec. 4 that would limit the power of the upper house and make it easier for governments to pass legislation. Prime Minister Matteo Renzi has said he will resign in case of a "no" result. New elections, if held, could bring to power the Five Star Movement, which has said it wants to hold a referendum on euro membership.
Among Asian bourses
Australia Market ends softer
Australian share market closed marginally lower today, as risk sentiments subdued on tracking weak lead from Wall Street overnight. The major banks gained some ground but the miners dragged on the market. At the closing bell, the benchmark S&P/ASX 200 index fell 6.90 points, or 0.13%, to 5457.50, while the broader All Ordinaries index declined 12.10 points, or 0.22%, to close at 5520.50.
Telecom stocks were the biggest drag, with Vocus Communications falling 24.5%, after the company issued its first guidance for 2016-17 bringing recent acquisitions Nextgen, M2 Group and Amcom under the one umbrella. Vocus said revenue was expected to be about A$1.9 billion, underlying EBITDA was forecast between A$430 million and A$450 million, while underlying net profit after tax was expected to be between A$205 million and A$215 million. TPG Telecom fell 7.2% to A$7.00, after being caught up in negative sentiment in the sector sparked by a guidance update from competitor Vocus.
Shares of financial players inclined, led by top four lenders. Among major banks, Commonwealth Bank of Australia was up 0.8% and Australia & New Zealand Banking Group rose 0.2%.
The plunge in the Dalian iron ore futures hit local iron ore miners, with Fortescue dropping 0.6% to A$6.21, after earlier in the session rising as much as 3% to a five-year high of $6.44. Gold miners, too, lost their shine as the precious metal reversed some of Monday night's gains.
Nikkei falls on profit booking, weak offshore lead
The Japan share market declined for second straight session, as investors continued locking gains after the benchmark index hit 11-months high at the end of last week and on tracking negative lead from Wall Street overnight and a pause in the yen's recent weakening.. Total 20 out of 33 TSE industry categories on the main section declined, with Insurance, Iron & Steel, Securities & Commodities Futures, and Glass & Ceramics Products being major losers, while Fishery, Agriculture & Forestry, Chemicals, and Foods issues being notable gainers. The benchmark Nikkei 225 index dropped 0.27%, or 49.85 points, to close at 18,307.04, while the broader Topix index of all first-section issues lost 0.07%, or 1.01 points, to 1,468.57.
Insurer Dai-ichi Life, brokerage firm Nomura and steelmaker JFE Holdings met with selling. Clothing store chain operator Fast Retailing and mobile phone carrier SoftBank Group, both heavily weighted components of the Nikkei average, were also downbeat. Oil companies, such as JX Holdings and Japex, lost ground amid diminishing expectations for an agreement on cutting crude oil output at the upcoming OPEC meeting. Other major losers included automakers Toyota, Suzuki and Fuji Heavy.
By contrast, general contractors Kajima, Taisei, Shimizu and Zenitaka attracted buying. Mega-banks Mitsubishi UFJ, Mizuho and Sumitomo Mitsui wiped out earlier losses to end higher.
Japan retail sales fell 0.1% on year in October, the Ministry of Economy, Trade and Industry said on Tuesday, following the fall of 1.7% in September. On a seasonally adjusted monthly basis, retail sales climbed 2.5%, up from 0.3% in the previous month. Sales from large retailers shed 1.0% on year, following the 3.2% tumble a month earlier.
Japan jobless rate was a seasonally adjusted 3% in October, the Ministry of Internal Affairs and Communications said on Tuesday, unchanged from the previous month. The job-to-applicant ratio came in at 1.40, up from 1.38 in the previous month. The participation rate was 60.4%, easing from 60.5% a month earlier. The number of employed persons in October was 64.95 million, an increase of 630,000 or 1% on year.
China Market attains highest level 11 months
Mainland China stock market extended their bull run for a fourth session, closing at the highest level in almost 11 months as investors hopes that speculation curbs on the real estate market will push funds into equities. Investor sentiment also received a boost after Morgan Stanley upgraded their ratings on mainland stock markets. The blue-chip CSI300 index rose 0.82%, to 3,564.04, while the Shanghai Composite Index gained 0.18% to 3,282.92 points. The Shenzhen Composite Index, which tracks stocks on China's second exchange, fell 0.77% to 2,110.36. The measure has added 5.9% so far this month.
As per reports, China's central bank is clamping down further on mortgage lending in areas deemed overheated and some lenders have been asked to suspend distributing new home loans. The city of Shanghai said in a social media post on Monday that it will tighten mortgage loan policies starting Nov. 29, while Tianjin has raised minimum mortgage down payments for first homes to at least 30%. Market pundit expects the government tightening property likely move some of excess liquidity into the A-share market again.
Investor sentiment also received a boost after analysts from Morgan Stanley upgraded their ratings on mainland stock markets, forecasting the Shanghai Composite Index to top 4,400 in 2017 as China maintains loose monetary conditions amid a challenging external trade environment after US president-elect Donald Trump takes office. The Morgan Stanley index prediction is 34% higher than Monday's Shanghai close of 3,277.
Shares in home appliance, liquor and traditional Chinese medicine firms attracted buying ahead of the start of a trading link between Hong Kong and Shenzhen on 5 December 2016. Midea Group Co. jumped 4.5% to close at a record price, and the liquor companies Wuliangye Yibin Co. and Luzhou Laojiao Co. rose 3.5% and 3.2%, respectively. Dong-E-E-Jiao Co., a maker and seller of traditional Chinese medicine, climbed 1.9%.
Hong Kong Stocks fall, energy shares weigh
The Hong Kong stock market ended lower, weighed down by energy shares as oil prices dropped on doubts that producer cartel OPEC would hammer out an output cut this week. Investors' risk appetite was also curbed by a lacklustre performance in global equity markets overnight. Wall Street suffered its worst performance in nearly a month, while European stocks also softened, led by a slump in Italian banks as political risk resurfaced in Europe ahead of a referendum in Italy this weekend. But losses were limited ahead of next week's unveiling of the much-anticipated Shenzhen-Hong Kong Stock Connect, which will offer foreign individual investors access to the tech-heavy Shenzhen market for the first time. Sector performance was mixed, with energy and raw material shares sliding while industrial and utilities gained. The Hang Seng Index ended down 0.41%, or 93.50 points, to 22,737.07 and the Hang Seng China Enterprises index fell 0.3%, or 29.33 points, to 9,846.21. Turnover decreased to HK$68.7 billion from HK$70.6 billion on Monday.
The Organization of the Petroleum Exporting Countries (OPEC) will meet in Vienna to discuss a planned production cut in an effort to curb overproduction that had dogged markets and more than halved prices since 2014. The uncertainty has prompted oil price to fall. Sentiment was also dampened by falling coal prices. China's thermal coal futures lost nearly 3% to a 5-1/2-week low. Index heavyweight China Shenhua Energy Co slid 1.5%.
Property developers' shares hit after Tianjin and Shanghai stepped up property curbing measures. CR Land (01109) fell 1% to HK$18.9. China Overseas Land (00688) edged down 0.8% to HK$22.4. Hang Lung Properties (00101) slipped 1.2% to HK$17.22. Hang Lung Group (00010) slid 2.7% to HK$29.1.
Standard Chartered (02888) fell 1.5% to HK$60.5 on rumours that is planned job cut will start this week. HSBC (00005) sank 1.5% to HK$60.6.
Sensex, Nifty hit 2-1/2-week closing high
Indian benchmark indices registered gains for a third day, led by a rally in automakers while banks continued to falter. The barometer index, the S&P BSE Sensex, rose 43.84 points or 0.17% to settle at 26,394.01. The Nifty 50 index rose 15.25 points or 0.19% at 8,142.15.
Sentiment remained upbeat for the better part of the day after the government yesterday provided yet another opportunity to black money holders to legalise their wealth. The government has proposed to tax at 50% the unaccounted demonetised cash that is disclosed voluntarily till 30 December, after which a steep up to 85% tax and penalty will be levied on undisclosed wealth that is discovered by authorities.
Idea Cellular surged 4.42% on media reports that the company is likely to sell 100% stake in its tower subsidiary. Idea Cellular has dropped its earlier plans to sell a minority stake in the tower business and now it is looking to sell 11,000 telecom towers for close to $1 billion, reports suggested.
Elsewhere in the Asia Pacific region: New Zealand's NZX50 was slight 0.01% down at 6902.71. Indonesia's Jakarta Composite index added 0.4% to 5136.67. Taiwan's Taiex fell 0.3% to 9192.38. South Korea's KOSPI index edged up 0.01% to 1978.39. Malaysia's KLCI was down 0.1% to 1626.93. Singapore's Straits Times index rose 0.2% to 2879.14.
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