Asia Pacific Market: Stocks sign on upbeat US data, China policy moves

Asia Pacific share market closed higher on Friday, 21 November 2014, amid signs the U.S. economy is improving and surprise policy move by the Chinese central bank. The MSCI Asia Pacific Index gained 0.4% to 139.80.

Risk sentiments improved as data showing improvements in the American economy overshadowed concern over weaker growth overseas. Purchases of previously owned U.S. homes unexpectedly rose in October to a one-year high as low borrowing costs helped sustain the recovery in residential real estate. Other data showed fewer Americans filed for unemployment benefits last week as the need to retain staff keeps firings at the lowest levels in more than a decade. A gauge of U.S. leading indicators widened more than estimated last month, while a Federal Reserve factory index for the Philadelphia region jumped.

China's central bank said it is ready to use monetary instruments to boost liquidity in the country's interbank market if needed. The People's Bank of China is offering 50 billion yuan ($8.17 billion) of short-term funds to ease the liquidity pressure during the IPO subscription period. Eleven companies will sell IPO shares next week, seven of them on Monday. The new share sales will probably freeze about 1.6 trillion yuan ($261 billion).

The People's Bank of China surprised the markets today by cutting interest rates for the first time in more than two years as the economy slowed to the lowest pace in more than five years in Q3. The benchmark one-year loan rate was lowered by 0.40% to 5.6%. The benchmark one year deposit rate was lowered by 0.25% to 2.75%. Also, banks are allowed to offer interest of 1.2 times the deposit rate, up from prior 1.1 times.

Among Asian bourses

Nikkei ends 0.33% higher

Japanese share market finished the volatile session slight higher, following the official dissolution of the government's lower house in the afternoon--as promised by Prime Minister Shinzo Abe. The Nikkei Stock Average ended ended up 0.33% at 173574.51. For the week, it still lost 0.8%, but higher by 6.5% year-to-date.

The Tokyo market declined in morning trade due to comments from Finance Minister Taro Aso that the pace of the yen decline in the past week "has been too fast" led to a sharp selloff in the U.S. currency. But, the market recouped lost ground as Abe dissolved the lower house of parliament today ahead of a December election, scuppering plans for a second increase in Japan's sales tax as he tries to salvage his reform program after data this week showed Asia's second-largest economy is in recession.

Shares of airline carriers were up, with Japan Airlines leading gain, up 1.1% after a slew of positive brokerage reviews in light of the recent fall in fuel prices, which is likely to boost profits. SMBC Nikko Securities upgraded JAL to outperform from neutral while upping its price target to Y3,900 from Y3,200. Smaller JAL rival Skymark Airlines went limit-up, adding 25% on a report that the troubled Japanese carrier was in tie-up talks with Japan Airlines (JAL) to boost its low seat-occupancy rate.

Shares of panel makers Japan Display and Sharp lost 2.2% at 1.7% after Taiwan-based Hon Hai Precision Industry and its display unit Innolux Corp. announced a plan to jointly invest up to $2.9 billion in a new display production line in Taiwan. The arrangement is seen as upping the competitive pressure on other panel makers.

Auto airbag maker Takata surged 9.2% on bottom fishing after company officials testifying before a U.S. Senate committee hearing on Thursday cited records pointing to anomalies and not air-bag system errors as the reasons why it did not immediately investigate airbag explosions occurring years ago.

Aussie market falls 0.98%

Australian share market closed down for fifth straight day, as risk sentiments remain subdued due to weak commodity prices and on caution before results of the Murray Inquiry into financial services. The S&P/ASX 200 index closed 11.9 points, or 0.2%, lower at 5304.4. The benchmark declined in every one of the week's sessions, closing 2.8% lower during the five days, it's biggest weekly loss since May 2013.The broader All Ordinaries index fell 10.4 points, or 0.2%, to 5292.1, taking the weekly loss to 2.6%.

Shares of materials and resources companies struggled as the price of iron ore, delivered at the Chinese port of Qingdao, threatened to drop below $US70 per tonne. On Thursday night, the bulk commodity fetched $US70.97 per tonne, with futures trading late Friday afternoon suggesting a further fall in the price that night. Resources giant BHP fell 0.3% to A$31.70 while main rival Rio Tinto closed steady at A$56.41. Fortescue shares rebounded 1.9% to A$2.69, while fellow iron ore miners Atlas Iron fell 7% to 20 cents.

Shares of financial players were also down, as investors continued to remain wary of the sector before the results of the Murray Inquiry into financial services, due to be handed over to the government by the end of the month and which is expected to recommend lenders hold more capital. Commonwealth Bank of Australia was down 0.3% to A$80.009, while Australia and New Zealand Banking Group finished 0.4% down at A$31.82 and Westpac Banking Corp fell 0.9% to A$32.25. National Australia Bank rose 0.5% to A$32.27 after its US subsidiary Great Western Bancorp lifted full year profit 9%.

Shanghai Composite rises 1.4%

Mainland China share market closed sharp higher, on growing rumor that China will take steps to prevent a cash crunch before initial public offerings next week. The Shanghai Composite rose 1.4% to 2,486.79 at the close, the most since Nov. 10.

Financial stocks the most in Shanghai on reports that central bank is considering changing the way it calculates banks' loan-to-deposit ratios, an efforts to boost credit as the economy falters. ICBC added 1.4%. China Construction Bank Corp. rose 1.2%.

Brokerages advanced after Premier Li Keqiang said on Thursday that the government will accelerate reform of initial public offerings. The China Securities Regulatory Commission said it's preparing to move toward an American-style IPO registration system and may announce a plan by the end of the year. The new framework would ensure issuers meet disclosure requirements, leaving investors to judge if companies are fairly priced. Citic Securities gained 6.6%, while Haitong Securities jumped 8.2%.

HK Stocks rise for first time in five days

Hong Kong share market closed higher, registering first gain in five consecutive sessions, amid signs the U.S. economy is improving and as of surprise policy move by the Chinese central bank. The Hang Seng Index ended higher by 87.48 points to 23437.12, off an intra-day high of 23508.02nand low of 23301.48. Turnover rose to HK$71.08 billion from HK$61.10 billion on Thursday.

Macau gaming stocks advanced on reports that Macau government plans to extend the opening hours of the Gongbei Border Gate between Macau and Zhuhai by two hours from 18 December. The Hengqin border crossing between Macau and Hengqin Island will also be open 24 hours a day. Galaxy Ent (00027) jumped 4.2% to HK$52.5. Sands China (01928) put on 1.6% to HK$45.5. But Wynn Macau (01128) edged down 0.8% to HK$26.1 after the US authorities investigated its parent company on alleged money laundering.

Sensex, Nifty attain record closing high

As European stocks nudged higher after European Central Bank (ECB) President Mario Draghi's comments sent a strong signal that the ECB is ready to step up asset-buying, key equity benchmark indices in India surged. The barometer index, the BSE Sensex, and the 50-unit CNX Nifty, both hit record on intraday basis as well as on closing basis. The Sensex jumped 267.07 points or 0.95% to settle at 28,334.63. The market breadth indicating the overall health of the market turned negative from positive in late trade. The BSE Small-Cap and Mid-Cap indices, both, slipped into the red from green in late trade.

Shares of Kotak Mahindra Bank edged higher after the bank and ING Vysya Bank after trading hours yesterday, 20 November 2014, announced that ING Vysya Bank will be merged with Kotak Mahindra Bank. Shares of ING Vysya Bank eked out small gains in volatile trade. Shares of many other private sector banks edged higher after the announcement of the Kotak Mahindra Bank and ING Vysya Bank merger deal. Shares of index heavyweight ITC and Reliance Industries edged higher.

Elsewhere in the Asia Pacific region: Taiwan's Taiex index rose 0.14% to 9091.53. South Korea KOSPI was up 0.35% to 1964.84. New Zealand's NZX50 fell 0.56% to 5495.81. Singapore's Straits Times index grew 0.9% at 3345.32. Malaysia's KLCI fell 0.72% to 1809.13. Indonesia's Jakarta Composite index rose 0.36% to 5112.13.

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