The Federal Reserve minutes of the two-day policy meeting held on 28-29 July 2015 scheduled to release tomorrow, 19 August 2015. Investors want to wait and see what happens there and if it looks like they're going to bring forward the rate increase. Investors are refocusing attention on the strength of the U.S. economy and its implications for Fed interest-rate policy.
A positive handover from Wall Street overnight did little to help sentiment. The tech-heavy Nasdaq led gains with a 0.9% rise overnight, while the Dow Jones Industrial Average and the S&P 500 notched up 0.4 and 0.5%, respectively, on the back of positive homebuilder data.
Among Asian bourses
Australia market falls to fresh 7-months low
The Australian share market ended steep lower after erasing early gains. Almost all sectors ended in the red, with financial, energy and material sectors leading losses. The benchmark S&P/ASX 200 Index declined 64.60 points, or 1.2%, to 5303.10 points, while the broader All Ordinaries Index de-grew 59.20 points, or 1.1%, to 5309.40 points.
Shares of financial sector ended 2% down, with top lenders all declined, led by Commonwealth Bank (CBA), falling by 5.4% to A$76.91 as it trades ex-dividend. The falls have coincided with a warning from ratings agency Fitch that banks are likely to need to raise further capital over the medium term as regulatory changes stemming from the December 2014 financial system inquiry and Basel framework are implemented. Among other top lenders, National Australia Bank dropped 1.6% to A$31.76, Australia and New Zealand Banking Group 1.9% to A$28.97, and Westpac Bank 0.9% to A$31.66. The four major banks accounted for almost 75% of the market's total losses on Tuesday.
Shares of energy sector ended 1.8% lower, as crude oil prices remained under pressure in Asian trade, with Nymex crude futures still in negative territory after settling at a fresh six-year low the previous session. Woodside Petroleum (WPL) dropped 1.7% to A$32.05. Origin Energy 1.8% to A$9.39 and Oil Search 2.3% to A$6.40. Santos (STO) dipped 2.3% to A$5.84.
Invocare (IVC) shares slumped 6.4% following an 11% slump in half-year profit due to costs linked to the acquisition of a new US chain. IVC owns White Lady, Simplicity Funerals and is expanding offshore.
Sydney Airport (SYD) fell 1.2% to A$5.63 despite reporting better than expected 6.4% rise in half-year EBITDA to $488.3 million, thanks to rising international visitor numbers. The Company announced it would gain control of the retail operations at the airport's Terminal 3 and move to co-locate domestic and international operations there over the longer term after agreeing on the $535 million purchase of the terminal's lease from Qantas Airways.
Sonic Healthcare shares slipped 1.7% to A$19.79 after pathology giant reported a 5.6% slump in full-year profit to A$363.3 million. The weaker profit came despite a 7.3% rise in revenue to A$4.2 billion for the year ended June 2015.
Nikkei ends softer
Japanese share market ended softer, as risk sentiments weighed by weakness in other Asian stock markets and on caution ahead of US Federal Reserve minutes of the two-day policy meeting held on 28-29 July 2015 tomorrow, 19 August 2015. The minutes could offer some clues on the timing of the Fed's plans to raise interest rates for the first time in a decade. The Nikkei Stock Average declined 65.79 points, or 0.32%, to end at 20554.47 points. The broader Topix index ended 0.65 point, or 0.04%, lower at 1672.22 points.
Shares of shipping players advanced after jump in shipping freight rate. The Baltic Dry Index gained 0.8% for a second day of gains. Kawasaki Kisen Kaisha added 1.7%, while rival Mitsui OSK Lines added 2.4%. Nippon Yusen KK climbed 0.6%.
Shares of energy companies extended further drop in crude oil prices weighed down by strengthening of dollar as concerns about weakening demand in China added to expectations that global oversupply will last for years. Meanwhile, West Texas Intermediate crude oil for delivery in September was down 7 cents at $41.80, while Brent crude for October delivery gave up 13 cents to $48.61 a barrel in late morning trade on the New York Mercantile Exchange. Oil explorer Inpex Corp. declined 1.5% while Japan Drilling Co. fell 1.7%. JX Holdings dropped 3.6% after Nomura Holdings Inc. cut its rating on the stock.
Shares of Olympus Corp retreated 3.4% on the back of news that the U.S. Food and Drug Administration have issued warning letters to the makers of medical scopes linked with recent superbug outbreaks. However, Fujifilm Holdings, another manufacturer given the warning letter, managed to cut losses and end up 0.2%.
China stocks plummet on capital outflow, yuan devaluation woes
Mainland China's stock market plummeted on increasing sign of capital outflow amid weaker outlook for the yuan and Chinese economic growth. Selloff momentum accelerated reigniting fears that Beijing may be intent on a deeper devaluation of the currency. Selling was broad based, with more than 1000 stocks fell by the maximum 10% daily limit, with large state-owned enterprises especially hard hit. The benchmark Shanghai Composite Index closed down 6.15%, or 245.50 points, to 3748.16 points. The Shenzhen Composite Index, which tracks stocks on China's second exchange, de-grew 6.58%, or 153.07 points, to 2174.42 points. Total volume of A shares traded in Shanghai was 72.25 billion shares, while Shenzhen volume was 38.90billion shares.
Investor concerns about capital outflow refueled after data released from the foreign exchange regulator on Tuesday showed that forex purchases by banks exceeded renminbi purchases by $43bn in July, a sign that demand for the Chinese currency is waning. The data come after the central bank moved unexpectedly last week to loosen its grip on the renminbi, allowing it to fall by 3%.
Also, China's central bank injection of the largest amount of cash into the financial system on a single-day basis in almost 19 months, rekindled concerns about capital outflows after the yuan's recent weakening. In a routine money-market operation Tuesday, the People's Bank of China offered 120 billion yuan ($18.77 billion) worth of seven-day reverse repurchase agreements, or reverse repos, which are short-term loans to commercial lenders in the money market.
Shares of utilities and industrial sectors were hardest-hit among SSE sectors group, with Jiangsu Linyang Electronics, Baoding Tianwei Baobian Electric and Jiangxi Ganyue Expressway losing the daily maximum allowable of 10% each. China Shipbuilding Industry and China Shenhua Energy also closed down 10% each, despite news that Beijing may be close to announcing broad plans to reform its state-owned enterprises (SOEs) this month.
Hong Kong market ends down
Hong Kong stock market ended down on tracking plunge in the mainland A-share markets. Risk sentiments hurts by increasing sign of capital outflow amid concern about the weaker outlook for the yuan and Chinese economic growth. The Hang Seng Index ended down 339.68 points, or 1.43%, at 23474.97 points. The Hang Seng China Enterprises Index, benchmark measure of performance of mainland China enterprises, lost 192.19 points, or 1.75%, to 10770.05 points. Turnover increased to HK$80.8 billion from HK$65.8 billion on Monday.
Chinese insurers extended losses after Credit Suisse expects that Tianjian explosion may trigger insurance claims of up to US$1.5 billion. Ping An (02318) slipped 3% to HK$41.5. China Life (02628) fell 3% to HK$27.45.
Macau gaming counters were pressured after Barclays Research forecast that August GGR could see a 39% y/y decline. Sands China (01928) dropped 2.5% to HK$32.7. Galaxy Ent (00027) slipped 3% to HK$32.7.
Sensex falls for the 2nd day in a row
Losses for state-run companies and oil exploration and production firms offset gains for IT stocks and oil marketing companies to push key benchmark indices lower. The barometer index, the BSE Sensex, dropped 46.73 points or 0.17% to settle at 27,831.54.
IT stocks edged higher after strong US housing data released overnight. Cement stocks also edged higher. Shares of oil exploration & production (E&P) firms edged lower and shares of public sector oil marketing companies (PSU OMCs) edged higher as global crude oil prices fell. Shares of public sector banks (PSU banks) witnessed a mixed trend. Shares of private sector banks dropped.
Foreign portfolio investors (FPIs) bought Indian shares worth a net Rs 142.34 crore yesterday, 17 August 2015, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) bought shares worth a net Rs 183.72 crore yesterday, 17 August 2015, as per provisional data released by the stock exchanges.
Elsewhere in the Asia Pacific region: Taiwan's Taiex index fell 0.4% to 8177.22. South Korea's KOPSI declined 0.6% to 1956.26. New Zealand's NZX50 dropped 0.3% to 5710.77. Singapore's Straits Times index shed 0.6% at 3049.65. Indonesia's Jakarta Composite index sank 1.6% to 4510.48. Malaysia's KLCI rose 0.5% to 1579.60.
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