Asia Pacific Market: Market rebound continues

Asia Pacific share market ended last trading session of the week higher, Friday, 28 August 2015, taking heart from a strong rally in the U.S. markets after unexpectedly robust U.S. economic growth in the second quarter and amid signals from the Federal Reserve that an interest-rate increase looks less likely in the coming weeks.

The Wall Street's more than 2% gains on Thursday after better than expected economic data. The Commerce Department reported that the US economy grew at an annual rate of 3.7% in the second quarter, much higher than the 2.3% initially estimated. Initial jobless claims dropped by 6,000 for the week ending in 22 August 2015 to a seasonally adjusted 271,000, according to the Department of Labor. Together, the brighter reports may be giving investors confidence that the US economy could withstand a continuing slowdown in China.

New York Fed's William Dudley suggested that a rate hike in September appeared less likely now. According to him, "the decision to begin the normalization process at the September FOMC meeting seems less compelling to me than it was a few weeks ago". He noted that "normalization could become more compelling by the time of the meeting as we get additional information on how the US economy is performing, and more information on international and financial market developments". Dudley, however, remained hopeful about beginning the tightening cycle this year. He hoped that "we can raise interest rates this year, because that would be a sign that the US economic outlook is good and that we're actually on track to achieve our dual mandate objective".

US Fed official Esther George (non-voting member) said it's too soon to tell whether market volatility is going to affect the U.S. economy, adding that At this point, I have not seen something that would change my own sense of how the economy is doing,

The weekend will bring the Federal Reserve's annual conference in Jackson Hole, Wyo., where the central bank might offer fresh clues about a possible interest-rate hike. Kansas City Fed President Esther George yesterday, 27 August 2015, said the market turmoil complicates any decision to raise rates. Yet, she repeated her long-held call for a rate increase.

Among Asian bourses

Nikkei reclaims 19K mark

Japanese share market advanced for third straight day, as risk sentiments bolstered by tracking a second day of gains in U.S. markets and yen depreciation against dollar. Sentiment also got a lift by speculation of more stimulus from Japan central bank after official data showed that Japanese inflation fell back to zero in July while household spending dropped again. Almost all TSE industry groups advanced, with shares of STEEL & NONFERROUS METALS, ENERGY RESOURCES, COMMERCIAL & WHOLESALE TRADE, AUTOMOBILES & TRANSPORTATION EQUIPMENT, BANKS, MACHINERY, and ELECTRIC APPLIANCES & PRECISION INSTRUMENTS companies being biggest gainers. The Nikkei Stock Average advanced 561.88 points, or 3.03%, to end at 19136.32 points. The broader Topix index ended up 3.3%, or 49.39 points at 1549.80.

Japan Display shot up 7.3% on reports it is buying Sharp's distressed liquid crystal display (LCD) business; the latter's share price rose 7%.

Engineering firm Chiyoda Corp surged 6% after agreeing to buy a 50% stake in the subsea services business of oilfield services firm Ezra Holdings.

Trading house Mitsubishi Corp. soared 6.2% after agreeing to spend $1.09 billion on a Singapore-based food commodity trader.

Japan's consumer price index from the Ministry of Internal Affairs and Communications released on Friday indicated the core consumer price index - excluding volatile perishables - was unchanged from a year earlier in July after +0.1% in June.

Preliminary retail sales data from the Ministry of Economy, Trade and Industry released on Friday showed Retail sales rose 1.6% on year in July for a fourth straight rise after +1.0% in June.

Japan's household spending data from the Ministry of Internal Affairs and Communications released on Friday showed Japan's average household spending unexpectedly slipped a real 0.2% on year in July for the second consecutive drop after -2.0% in June as higher demand for air conditioners amid a heat wave toward the end of the month failed to lift overall spending.

Australia market rises another 0.6%

The Australian share market finished last trading session of the week firmly higher, following rally on the Wall Street overnight. Sentiments also lifted by rebound in crude oil and base metal prices. However, market gains were limited as investors pocketed some gain off the table following recent run and ahead of weekend holiday. The ASX sectors ended mixed, with materials and energy blue chip being winner of the day. The benchmark S&P/ASX 200 index advanced 30.30 points, or 0.58%, to 5263.60 points. The broader All Ordinaries index closed 32.10 points, or 0.61%, higher at 5274.70.

Shares of material and energy companies closed stronger, aided by rebound in base metal and crude oil prices. BHP Billiton advanced 5.8% to A$25.46 and Rio Tinto added 4.8% to A$51.15. Oil and gas producer Woodside Petroleum jumped 1.8% to A$32.07. Oil Search advanced 5.8% to A$6.76.

Financial stocks ended lower on profit booking, with all the major banks down. Westpac Bank led losses among major banks, down 0.7% to A$31.42, meanwhile National Australia Bank fell 0.4% to A$31.44, Australia & New Zealand Banking Group dropped 0.6% to A$28.40, and Commonwealth Bank sank 0.4% to A$76.09.

The Australian currency (AUD) advanced against dollar and basket of other major currencies, aided by gains in equity markets (China, Europe and US) and overnight strength in commodity prices (copper and aluminium). The Aussie is trading stronger against both the US Dollar and Japanese Yen by 0.3% each.

China stocks gain for second day

Mainland China's stock market advanced for second day in row on Friday, 28 August 2015, amid speculation that the government had restarted buying in a bid to boost market confidence. Sentiment also got a lift on news that Chinese pension funds will invest $313 billion in stocks and other assets as soon as possible and reports that Chinese government would ease restriction on property purchases by overseas institutions and individuals. The benchmark Shanghai Composite Index spurted 148.76 points, or 4.82%, to 3232.35. The Shenzhen Composite Index, which tracks stocks on China's second exchange, rose 5.4%, or 94.61 points, to 1846.83. The ChiNext Index, which tracks China's NASDAQ-style board of growth enterprises, gained 6.26%, or 122.63 points, to close at 2082.12.

After a fresh bout of heavy selling early in the week, market sentiment in China appears to be calming down. Foreign interest in China shares also seems to be slowly reviving after the plunge left valuations more attractive. Money is flowing into the country again via the Shanghai-Hong Kong Connect scheme.

The Shanghai market currently trades at 14 times companies' earnings, compared with 22 at the market's peak in June. There are some signs that foreign investors are slowly dipping their toes back into the market, in particular blue chips. So far this week, there have been 28.7 billion yuan (US$4.48 billion) in net inflows into Shanghai-listed shares via the Shanghai-Hong Kong stock connect program, a spike from last week, when the daily quota was barely used.

Confidence in the market was boosted by curbs announced by China Financial Futures Exchange, with 164 investors in the stock futures market prevented from opening accounts for a month as punishment for abnormal trades.

Financial magazine Caixin reported on Friday that China's state margin lender has applied for one-year loan from banks worth about 1.4 trillion yuan ($219.03 billion) to fund potential stock purchases. China also announced that local pensions funds will start investing 2 trillion yuan ($313.05 billion) as soon as possible in stocks and other assets.

All ten SSE industry groups advanced, with telecommunication services sector leading rally, up 7.6%, followed by industrials up 7.2%, energy up 6.9%, information technology up 6.7%, materials up 6.6%, consumer discretionary up 5.7%, utilities up 5.2%, healthcare up 5.1%, consumer staples up 3.3%, and financials up 1.7%.

Hong Kong market closes lower on profit booking

Hong Kong stock market finished the session lower after wiping out intraday gain, dragged down by profit taking pressure late afternoon. Most of the blue-chip declined, with banks and financials led losses which reported virtually no profit growth in the first-half and mounting bad loans, adding to worries that the economy may be at risk of a sharper slowdown than earlier expected. The Hang Seng Index ended lower by 226.15 points, or 1.04%, at 21612.39 points. The Hang Seng China Enterprises Index, benchmark measure of performance of mainland China enterprises, sank 112.88 points, or 0.54%, to 9750.73 points. Turnover reduced to HK$108.9 billion from HK$134.5 billion on Tuesday. Turnover soared to HK$122.43 billion from HK$109 billion on Wednesday.

Aluminum Corp of China (CHALCO) (02600) closed 2% higher at HK$2.60 after reported a net profit of Rmb27.58 million for the six months ended 30 June 2015, as compared to the loss of Rmb4,123 million for the same period last year. The turnaround was mainly attributable to the decrease of production cost of the Group's principal products of about 6% to 10% in current period as compared with the corresponding period of the preceding year, as well as increased price of alumina products and gains from partial disposal of shares of Jiaozuo Wanfang Aluminum Manufacturing Co. The revenue was Rmb66,087 million, a decrease of 5.7% from a year earlier, which was mainly attributable to a decrease in sales volume of trading.

China COSCO (01919) closed steady at HK$4.90 despite the company reported a profit of Rmb1,897 million for the first half of 2015, as compared to the loss of Rmb2,277 million for the same period last year. The revenue was Rmb29,928 million, a decrease of 7.9% from a year earlier.

Sensex trades firmly higher in afternoon

A bout of volatility was witnessed as Indian benchmark indices regained strength after trimming intraday gains in early afternoon trade. The 50-unit CNX Nifty retained the psychological 8,000 mark. Earlier, the Nifty regained the psychological 8,000 mark after opening with an upward gap on positive cues from global markets. At 12:19 IST, the S&P BSE Sensex was up 403.85 points or 1.54% at 26,635.04. The CNX Nifty was up 127.45 points or 1.6% at 8,076.40.

Reserve Bank of India (RBI) said in its Annual Report for 2014-15 published yesterday, 27 August 2015, that inflation developments will warrant close and continuous monitoring as part of the overall disinflation strategy that requires inflation to be brought down to 5% by January 2017.

There was massive selling of Indian stocks by foreign portfolio investors (FPIs) yesterday, 27 August 2015. FPIs sold shares worth a net Rs 3347.35 crore yesterday, 27 August 2015, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) bought shares worth a net Rs 2577.06 crore yesterday, 27 August 2015, as per provisional data released by the stock exchanges.

Elsewhere in the Asia Pacific region: Taiwan's Taiex index rose 2.5% to 8019.18. South Korea's KOPSI added 1.6% to 1937.67. New Zealand's NZX50 jumped 0.6% to 5670.48. Singapore's Straits Times index added 1.2% at 2979. Indonesia's Jakarta Composite index grew 1% to 4473. Malaysia's KLCI added 0.7% to 1613.29.

Powered by Capital Market - Live News