Headline shares of the Asia Pacific market closed mostly higher after recouping lost ground on Thursday, 26 September 2013. The MSCI Asia Pacific Index rose 0.2% to 140.65.
However, gain on the upside was limited amid caution about the U.S. economy and a looming budget debate in Washington between the U.S. Senate and House of Representatives over raising the upper limit of Treasury issuances.
Investor risk sentiments were weak across the Asia Pacific region as data released Wednesday showed orders for long-lasting durable goods increased by only 0.1% in August after a sharp drop the month before, raising concerns that third quarter U.S. economic growth may not be as strong as anticipated.
Meanwhile, investment rationale was also hurt by caution ahead of two financial deadlines for the U. government. Congress needs to pass a funding bill to keep the federal government operating after Oct. 1, when its new fiscal year starts. And the nation's borrowing limit needs to be raised before Oct. 17.
Investors largely seated on the sideline for clear market direction due to ongoing battle over US budget funding which threatens to shut down parts of the world's biggest economy. The US Congress and the White House are negotiating to raise the government's borrowing limit. Republicans are calling for cuts to President Barack Obama's healthcare package before they agree to lift the country's borrowing limit, which will be reached in mid-October.
The deadline for a budget deal is up on Monday and markets are worried that US politicians will not reach an agreement to avoid the shutdown of parts of the U.S. economy. Failure to lift the ceiling will mean the U.S. is unable to service its debts and in turn lead to a government shutdown, or even a default.
Among Asian bourses, Japanese financial market rose for the first time in four sessions, with the Nikkei Stock Average was higher by 178.59 points, or 1.22%, from prior day to end the day at 14799.12.
The Japanese market commenced trading with weak note, with the benchmark index briefly plunged more than 200 points in response to debate between the U.S. Senate and House of Representatives over raising the upper limit of Treasury issuances. However, the benchmark index recouped lost ground before finishing morning session and extended gains during afternoon session.
The market was getting boost from yen depreciation against the greenback and from the report on the corporate tax rate cut and optimism the Government Pension Investment Fund may boost shares in its portfolio.
Shares of shipping companies advanced the most in Tokyo on tracking rally on the shipping freight rate index. The Baltic Dry Index, benchmark measures of shipping freight rate, jumped 5.2% on Wednesday to its highest since December 23, 2011. Kawasaki Kisen Kaisha shares rose 3.5% to 238 yen and Nippon Yusen KK added 2.8% to 331 yen.
The Baltic Exchange's Shipping Indexes are widely followed by analysts, money managers, shipping companies and investors because they provide benchmark rates for transporting dry bulk commodities such as iron ore, coal, and grain across water. Higher shipping rates are generally positive for shipping companies' revenues, which will positively affect earnings, cash flows, and share prices.
Exporters were also higher in Tokyo market as the yen fell 0.6% to 99 per dollar. Honda gained 1.4% to 3,870 yen and Mazda Motor Corp. advanced 2.3% to 445 yen. Canon Inc., a camera maker that gets 79% of sales outside Japan, climbed 1.4% to 3,175 yen.
Advantest Corp lost 4% to 1197 yen after the maker of testing systems for memory chips projected a yearly net loss because demand for chips has been weaker than anticipated.
In Australia, Australian share market extended winning streak for the second straight day after shaking off early losses, with the benchmark S&P/ASX200 higher by 0.35% and broader All Ordinaries up by 0.34%, thanks to metal and mining blue chips that leading the way up.
Shares of material and resources companies were biggest winner in the Sydney. BHP Billiton advanced 1% to A$36.35 and Rio Tinto rose 1.6% to A$63.39.
Fortescue Metals Group surged jumped 1% to A$4.91, extending rally for third day after founder and Chairman Andrew Forrest bought more than 5.2 million shares for a total price of A$23.6 million, taking his ownership to 33%.
Telstra (TLS) shares were up 0.6% to A$4.96, a day after the telecom giant announced it would be cutting 1100 jobs by June next year.
Whitehaven Coal shares climbed up 0.5% to A$2.02 after announcing it has won the latest court battle over its new coal mine in northern New South Wales. The Federal Court has thrown out a bid by an environmental group to stop work at the Maules Creek mine near Narrabri.
In China, the Chinese shares declined for third straight day, with the Shanghai Composite Index dropped 1.94% while the Shenzhen Composite Index lost 1.35%.
The fall in China market triggered by profit taking among Shanghai free-trade zone related stocks amid concern recent gains were excessive. Meanwhile, Chinese banking shares fell after reports showed a sharp drop in total yuan deposits.
Shares of companies linked to the Shanghai free-trade zone tumbled the most in Shanghai amid concern gains were excessive. Shanghai International Port locked 10% lower circuit at 6.24 yuan. Shanghai Material Trading tumbled 10% daily limit to 15.75 yuan.
Shanghai Jielong Industry Corp. fell down 10% daily limit to 10.12 yuan after saying in an exchange statement that the approval of the Shanghai free-trade zone will have no direct impact on the company's earnings in the short term. The stock jumped 50% in the past month through yesterday.
In Hong Kong, HK shares closes lower with financials, realty and resources dragging the way down amid caution over US debt talks. The benchmark Hang Seng index declined by 76.89 points, or 0.33%, from prior day to end the day at 23132.74.
Among the 50 HK blue chips, 31 fell and 17 rose, with two stocks remaining steady. Lenovo Group soared 1.1% to HK$8.24, while Li & Fung fell 3.4% to HK$11.38 after a report that Wal-Mart Stores Inc is cutting orders to reduce inventory, making themselves the top blue-chip gainer and loser.
Shares of Hong Kong Exchanges & Clearing dropped 1% to HK$125.20 after a breakdown in talks with ecommerce company Alibaba Group Holding Ltd. about listing its initial public offering in Hong Kong.
In India, Indian benchmark indices were higher in afternoon trade after alternately swung between gains and losses on selective buying by participants amid RBI plans to take steps to ensure adequate supply of money for credit flows. The sentiments also improved on today being the last session of current month's expiry in the derivatives segment. At 14:40 IST, the BSE benchmark Sensex was up 119 points, or 0.6%, to 19975.56.
The Reserve Bank of India on Wednesday, 25 September 2013, said that it is closely and continuously monitoring liquidity conditions in the banking system and will take actions as appropriate, including open market operations, to ensure that adequate liquidity is available to support the flow of credit to productive sectors of the economy.
The RBI said that liquidity conditions in the banking system have been tightening due to uncertainties around the government borrowing programme for the second half of 2013-14 as well as the prospective effects of banks' half-yearly account closure, the seasonal pick-up in credit demand, festival-related demand for currency and sluggish deposit growth. The RBI last week began a calibrated unwinding of the exceptional measures undertaken since July so as to restore normalcy to financial flows. Currently, the RBI is injecting about Rs 1.5 lakh crore into the system on a daily basis through the liquidity adjustment facility (LAF), the export credit refinance facility (ECR) and the marginal standing facility (MSF) taken together, the RBI said.
The Reserve Bank of India on Wednesday relaxed the minimum maturity tenure for banks' foreign currency borrowings' to one year from three years, in order to use the central bank's swap facility which was set up to support the ailing rupee. The RBI, however, said the relaxation is only applicable while the swap window remains open until November 30. After that, banks' overseas borrowings above 50% of their Tier I capital will have to be of minimum maturity of three years, it said. The RBI set up the swap window for banks earlier this month saying they can borrow overseas up to 100% of their Tier 1 capital level, although any loan over 50% of that level must be for at least three years. Under the plan, the central bank will offer to exchange foreign currency for rupees at a rate below market rates for banks that raise these funds through overseas borrowings.
Elsewhere, New Zealand's NZX50 closed 0.02% up. South Korea's KOSPI rose 0.46%. Indonesia's JKSE Composite rose 0.54%. Singapore's STI added 0.66%. Taiwan's Taiex fell 1.2%. Malaysia's KLSE Composite lost 0.55%.
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