Investment rationale for risker assets underpinned following signs that the US could avert a debt default as talks between Democrats and Republicans are resuming, three days before the deadline to raise the US government's borrowing limit.
Investors are hoping that Washington will come to an agreement to lift the debt ceiling, at least for the short term. Republican Representative Pete Sessions, the chairman of the powerful House Rules Committee, is even hopeful that the GOP and White House can strike a deal today that could also include funding for the federal government so the shutdown can end.
Appetite for risk assets also received support from Senate Majority Leader Harry Reid remarks, who said on the Senate floor that he was very optimistic about concluding a deal this week to raise the debt limit as well as end the government shutdown. Sen. Mitch McConnell, the Republican minority leader, said he shared Reid's feeling that we'll get a result that's acceptable to both sides.
However, turnover across the Asia Pacific region were relatively thin as traders worldwide have been watching Washington as it nears an estimated Oct. 17 deadline for Congress to allow the Treasury to borrow in order to pay the government's bills. Without legislative action, the U.S. could default on its debt obligations at a time when the global economy is still recovering from the financial crisis.
Among Asian bourses, Tokyo shares were mostly higher on Tuesday, 15 October 2013, with the benchmark Nikkei Stock Average rising 0.26% to 14441.54 and the broader Topix index gaining 0.03% to 1197.47, underpinned by tracking gains on Wall Street overnight as U.S. lawmakers appeared to make progress toward raising the U.S. debt limit as that deadline approaches.
Shares of export related companies went higher in Tokyo, on the back of some softening in the yen against the U.S. dollar. Mazda Motor Corp jumped 3% to 443 yen, Sony Corp added 1% to 1938 yen and TDK Corp rose 1.5% to 4090 yen.
Nikon Corp shares lost 2.1% to 1783 yen after a Nikkei report that the firm's consolidated operating profit for the April-September fiscal half likely fell 54% on year to roughly 17 billion yen.
Fuji Heavy Industries shares gained 0.8% to 2815 yen on reports that the auto maker appeared to have logged a group operating profit of around 150 billion yen for the April-September period, up 250% on year and a record high for the fiscal half year, thanks to a weaker yen and brisk sales of its sport utility vehicles.
Dowa Holdings shares shed 5.9% to 942 yen after it cut its zinc price estimate for the business year to $1,800 per ton, down from its previous $1,900 estimate, prompting a negative outlook on its future earnings results.
Japan's industrial output dropped 0.9% from a month ago, sharper than the 0.7% drop previously estimated. On a yearly basis, production was down 0.4%. Industrial production declined more than initially estimated in August, final data from the Ministry of Economy, Trade and Industry showed Tuesday. According to revised data, shipments slipped 0.1% on month, compared to the initial estimate of 0.4% rise. At the same time, the decline in inventory was revised marginally to 0.2% from 0.1%. The capacity utilization ratio declined 2.1% month-on-month in August, reversing last month's 3.7% increase.
In Australia, shares in the Australian share market rallied, with the benchmark S&P/ASX200 rising 0.98% to 5259.10, while the broader All Ordinaries gained 1.01% to 5259.20. The advances in the Sydney market came following signs that the Reserve Bank is likely to keep the cash rate on hold in the near-term and as expectations rose of a US budget and debt ceiling deal.
The Reserve Bank's minutes from its October meeting flagged a wait-and-see approach towards future rate cuts. The Board's judgement was that, given the substantial degree of policy stimulus that had been imparted, it would be prudent to leave the cash rate at the existing low level while continuing to gauge the effects. Members agreed that the Bank should again neither close off the possibility of reducing rates further nor signal an imminent intention to reduce them. The Board would continue to examine the data over the months ahead to assess whether monetary policy was appropriately configured.
Materials and resources shares climbed the most in Australia, with Rio Tinto leading the rally, up 2.5% to A$63.20 after releasing an upbeat set of September quarter results with global iron ore production beating expectations and recovery of a crucial mine in the US progressing faster than first thought.
Rio produced 53.3 million tonnes of iron ore from its operations in Australia and Canada during the period, allowing it to cash in on the stronger than expected iron ore price, which refused to slip below $130 per tonne for much of the period. Iron ore brings in close to 80% of Rio's revenue, and the miner confirmed it was still on track to hit its full year guidance target of 265 million tonnes for the 2013 calendar year.
Among other Australian miners, BHP Billiton climbed up 1% to A$35.40 and Fortescue Metals Group rose 5.8% to A$5.26.
In China, Chinese market declined for the first time in three sessions in row, as profit taking selloff in the shares of financial and industrial companies were offsetting gains for healthcare and mining stocks. The Shanghai Composite Index declined 4.36 points, or 0.19%, to 2233.41. The CSI 300 Index lost 0.2% to 2467.52.
Shares of banks and financials declined the most in Shanghai after the People Bank of China said on Monday that China's money-supply expansion slowed to 14.2% last month and the broadest measure of credit fell to 1.4 trillion yuan ($229.4 billion). September new yuan loans rose to 787 billion yuan. ICBC, the nation's biggest listed lender, slid 1% to 3.84 yuan. China Construction Bank Corp, the second largest, dropped 1.6% to 4.25 yuan. Bank of China lost 1.4% to 2.79 yuan.
Shares of Chinese rail-related stocks declined following sharp rally yesterday on speculation they may help build Thailand's high-speed train system. Among railway stocks, CSR Corp declined 1.4% to 4.25 yuan and China CNR Corp shed 0.2% to 4.58 yuan. China Railway Group jumped 9.9%. China Railway Construction Corp dropped 4.7% to 2.86 yuan.
Shares of drug makers went higher on reports China will relax a threshold for entering the health service industry, increase land supply for the industry and offer subsidies to private medical institutions. Kangmei Pharmaceutical advanced 4.5% to 19.29 yuan. Shanghai Fosun Pharmaceutical Group Co. jumped 10% to 16.91 yuan.
In Hong Kong, HK shares finished stronger, with the Hang Seng Index rising 118 points to 23,336, buoyed by hopes that the US can sort out a deal to lift the debt-ceiling by Thursday. The financial markets closed on Monday for Chung Yeung Festival holiday.
Among the 50 HK blue chips, 26 rose and 20 fell, with four stocks remaining steady. Cathay Pacific dropped 2.8% to HK$15.02, while China Resources Enterprise gained 5.3% to HK$26.8, making themselves the top blue-chip loser and gainer.
Shares of financials were sharp higher in Hong Kong, with Chinese lenders taking the lead after China's central bank data showing financial institutions issued more than expected 787 billion yuan ($128.8 billion) in new loans in September. Hong Kong-traded shares of Agricultural Bank of China jumped 1.4% to HK$3.70, Bank of China added 0.6% to HK$3.64 and China Construction Bank Corp rose 0.7% to HK$6.08.
In India, shares in the Indian financial market closed edged lower in choppy trade as inflation rates continued to accelerate in September 2013, adding to concerns that the central bank is likely to increase its main lending rate again. The market breadth, indicating the overall health of the market, was negative. The rupee edged lower against the dollar. The barometer index, the S&P BSE Sensex, was provisionally down 89.58 points or 0.43%, off close to 240 points from the day's high and up about 70 points from the day's low. Indian stocks snapped five-day winning streak today, 15 October 2013.
HDFC Bank dropped as the bank's net interest margin (NIM) declined to 4.3% in Q2 September 2013 from 4.4% in Q2 September 2012. The stock fell 2.88%. The bank's net profit rose 27.07% to Rs 1982.32 crore on 17.65% rise in total income to Rs 11937.69 crore in Q2 September 2013 over Q2 September 2012. The bank announced Q2 result during market hours.
HDFC Bank's ratio of net non-performing assets to net advances stood at 0.3% as on 30 September 2013, compared with 0.3% as on 30 June 2013 and 0.2% as on 30 September 2012. The bank's ratio of gross non-performing assets (NPA) to gross advances stood at 1.1% as on 30 September 2013, compared with 1% as on 30 June 2013 and 0.9% as on 30 September 2012. Provisions and contingencies fell 1.02% to Rs 385.93 crore in Q2 September 2013 over Q2 September 2012. Provisions and contingencies dropped 26.78% in Q2 September 2013 over Q June 2013. The bank's Capital Adequacy Ratio (CAR) as per Basel III norms stood at 14.6% as on 30 September 2013, compared with 15.5% as on 30 June 2013. Net interest income (interest earned less interest expended) in Q2 September 2013 accounted for 71% of net revenues and grew by 15.3% to Rs 4476.50 crore from Rs 3881.90 crore in Q2 September 2012. Net interest margin for the quarter was at 4.3% in Q2 September 2013, lower than 4.4% in Q2 September 2012.
Reliance Industries fell 0.55% to Rs 865.50 in choppy trade as its Q2 results came more or less in line with market expectations. The company after trading hours on Monday, 14 October 2013, said its net profit rose 1.5% to Rs 5490 crore on 14.2% growth in turnover to a record Rs 106523 crore in Q2 September 2013 over Q2 September 2012. Net profit rose 2.6% on 17.6% growth in turnover in Q2 September 2013 over Q1 June 2013.
RIL's gross refining margin (GRM) declined to $7.7 per barrel in Q2 September 2013, from $8.4 a barrel in Q1 June 2013 and $9.5 a barrel in Q2 September 2012. RIL said that the company's refining business performance during the quarter was positively impacted by increased crude throughput, stable middle distillate and naphtha cracks, and favourable exchange rate movement. This was partly offset by weak gasoline and solid products (pet-coke/sulphur) cracks, widening Brent-Dubai differential and lower domestic sales on weak demand.
Elsewhere in the Asia Pacific region, New Zealand's NZX50 rose 0.29%. South Korea's KOSPI rose 1.02%. Taiwan's Taiex added 1.14%. Markets in Indonesia, Malaysia, Singapore and the Philippines were closed for holidays.
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