Asia Pacific Market: Stocks trade higher

Asia Pacific share market finished up in subdued trade on Tuesday, 24 November 2015, due to cementing likelihood for a December rate hike by the Federal Reserve.

New York Fed President William Dudley said Friday that there is a "strong case" for hiking rates at the central bank's next meeting in December as long as economic data continues to remain solid. Also on Monday, the Federal Reserve Board of Governors scheduled a closed-door meeting, held under expedited procedures, to review the discount rates charged by its regional banks.

The discount rate is the interest rate charged to commercial banks on loans they receive from their regional Federal Reserve Bank lending facilities, also known as the discount window. When the Fed increases the discount rate, it makes the borrowing costs for banks more expensive, decreasing the money supply in the system.

The discount rate differs from the Federal Funds Rate, which is the rate banks lend to one another on overnight loans for funds maintained at the Federal Reserve. In February, 2010, the Fed increased the spread between the discount rate and the top of the target range of the Federal Funds Rate to 50 basis points. It came nearly two years after the Fed reduced the spread to 25 points in March, 2008, in an effort to bolster liquidity.

The Federal Funds Rate has remained at a level between zero and 0.25% for nearly seven years, since December, 2008. The announcement of the previously unscheduled meeting helps raise speculation that the U.S. central bank will lift the Fed Funds Rate when it meets next on Dec. 15-16. The Fed last held an unscheduled meeting in December, 2012. An initial rate hike is viewed as bearish for gold, which is not attached to dividends or interest rates and struggles to compete with high-yield bearing assets.

Federal Reserve Chair Janet Yellen said Monday she and her colleagues hope and expect the economy will continue to expand and if that is the case, it will be appropriate to raise interest rates. "Most of us expect the pace of that normalization to be gradual," Yellen said in a letter to Ralph Nader released by the Federal Reserve. Nader penned an open letter to Yellen Oct. 30, calling on the policymaking Federal Open Market Committee to raise the fed funds rate off the zero lower bound where it has been since December 2008.

Among Asian bourses

Nikkei ends at three-month high

The Japanese share market ended edged higher after a tussle between dip-buying and profit-taking due to yen's firmness against US dollar and an absence of other trading cues. But gains were limited ahead of fresh Japanese data later this week and details of a government stimulus package, after the world's number three economy slipped into another recession. The day's notable gainers comprised Metal Products, Construction, Pharmaceutical, Retail Trade and Marine Transportation issues, while Insurance, Air Transportation, Electric Power & Gas, and Banks issues were among major losers. The Nikkei 225 index at the Tokyo Stock Exchange gained 0.23%, or 45.08 points, to 19924.89, while the wider Topix index of all first-section shares finished up 0.17%, or 2.76 points, at 1,605.94. The Japanese markets were closed for Labor Thanksgiving day on Monday.

Shares of pharmaceutical companies ended stronger, led by Nitto Denko Corp. which was up 5.3%, on the back of an announcement on Friday that its drug for the treatment of liver fibrosis was granted fast track designation by the U.S. Food and Drug Administration.

Sharp Corp surged 13.6% on reports that state-backed fund Innovation Network Corporation of Japan may invest in the financially-troubled electronics maker if Japanese banks agree to write off an unspecified amount of its debt.

Sumitomo Metal Mining Co. dropped 1.8% as copper futures held losses near the lowest price in more than six years. Nickel fell to the lowest level in more than a decade, sending miner Dowa Holdings Co. down by 1.1%.

Akebono Brake Industry Co. lost 3.3% after SMBC Nikko Securities Inc. cut its rating on the auto-parts maker. Shares have dropped 9.9% this month after the company said it found evidence it had inflated revenue.

Australia market snaps five days rally

The Australian share market declined for first time in six consecutive sessions, as investors opted for profit booking due to negative finish of offshore markets and pullback in commodity prices to multi-year low. The benchmark S&P/ASX 200 index ended 50 points, or 0.95%, lower at 5226.40 points, while the broader All Ordinaries index declined 49.50 points, or 0.93%, to 5277 points.

Shares of resources companies were major drag on the ASX industry groups, after metal prices dropped to multi-year lows on worries about Chinese demand, with a strong dollar also hindering prices. BHP Billiton shares dipped 1.8% to A$19.71. Rio Tinto fell 1.5% to A$47.42. Fortescue Metal dropped 3.2% to A$2.11.

Shares of Billabong plunged 22.9% to A$0.54 after surfwear and skateboards retailer revealed that the lower Australian dollar and weakness in the North American market had dented group earnings in the first four months of fiscal 2016.

Logistics company Qube Holdings eased 1.3% to A$2.37. Qube is bracing for difficult trading conditions as it battles for control of takeover target Asciano.

Brokerage leads China market rebound

The Mainland China stock market finished session marginally higher after wiping out early losses in late afternoon trade, with brokerage stocks leading rally amid market talks that regulators have scrapped a rule requiring brokerages to hold daily net long positions. But gains were limited amid concerns over fresh batch of initial public offerings as well as the extremely low commodity prices and world economic growth. The Shanghai Composite Index advanced 0.16%, or 5.79 points, to close at 3616.11 points. The Shenzhen Composite Index, which tracks stocks on China's second exchange, grew 1.39%, or 31.47 points, to close at 2300.09. The ChiNext Index, which tracks China's NASDAQ-style board of growth enterprises, was up 1.64%, or 45.47 points, to close at 2816.05.

The China Securities Regulatory Commission last week gave the green light to 10 companies to restart their IPOs. Subscription for the IPOs will take place in the first three days of next week. Ten companies are expected to freeze more than 960 billion yuan.

Shares of brokerage firms went higher on reports the government will allow them to freely conduct proprietary trading after imposing restrictions following a market rout earlier this year. Northeast Securities jumped 8.9%, while Founder Securities added 4.3%. Everbright Securities rose 3.9%.

Robot-related stocks rallied after state media reported the government would promote development of the industry. Siasun Robot & Automation Co. gained 0.6%, while Nanjing Estun Automation Co. jumped 4.6%.

Hong Kong market fall 0.35%

The Hong Kong stock market to finish the session modestly down, following the soft tone of the offshore markets overnight on renewed concerns over world economic growth. All major sectors improved, with financial and realty stocks being among major gainers. The benchmark Hang Seng Index declined 78.27 points, or 0.35%, to 22587.63 points. The Hang Seng China Enterprises Index, benchmark measure of performance of mainland China enterprises, has lost 72.80 points, or 0.71%, to 10156.63 points. Turnover reduced to HK$57.2 billion from HK$62.3 billion on Monday.

Coal mining counters fell across the board after China's nationwide coal shipment declined 19.7% to 157 million tonnes in October. China Shenhua (01088) dipped 2.2% to HK$12.62. Yanzhou Coal (01171) and Asia Coal (00835) slipped 2.7% and 2.2% to HK$3.68 and HK$0.131. China Coal (01898) fell 1.5% to HK$3.35.

Retailers were mixed after reporting earnings. Sa Sa (00178) gained 3.2% to HK$2.93 despite its interim earnings slumped 55% to HK$153 million. Texwinca (003321) also rebounded 3.2% to HK$7.76. Belle (01880) dipped 1.7% to HK$7.05.

Sensex trades flat ahead of F&O expiry

Indian stocks trading near flat ahead of the market holiday on Wednesday and as investors remained cautious ahead of November futures and options expiry on Thursday. On the sectoral front, energy, realty and oil and gas witnessed the maximum gain in trade, while capital goods, software and auto remained the top losers on the BSE sectoral space. At 14.37 IST, Benchmark BSE Sensex was down 64.20 points at 25,755. Nifty was down 23 points at 7,826.

Domestic equity markets will remain shut on Wednesday on account of Gurunanak Jayanti. The markets will closely watch the winter session of Parliament, beginning this week, which sets the agenda of the government. NDA's recent reverses in Bihar elections have put a cloud over the pace of reforms, and market participants fear that it won't be smooth sailing in Parliament.

Bosch lost on reports that a foreign brokerage has initiated coverage on the stock with an underperform rating. The foreign brokerage is reportedly concerned on growth of diesel cars as share of diesel variants has already come off in the past two years and it may fall further. While Bosch has traditionally been considered a play on emission norms, the impending BS IV emission norms may put its dominant position in commercial vehicles (CVs) segment under threat, as its first-mover advantage could diminish, the foreign brokerage reportedly said.

Gammon India was locked at 20% upper circuit at Rs 15.49 after the company said that the corporate debt restructuring empowered group (CDR EG) in its meeting held yesterday, 23 November 2015, discussed and noted the invocation of strategic debt restructuring (SDR) in the company by the CDR lenders. The announcement was made after market hours yesterday, 23 November 2015.

DCW surged 7.4% to Rs 22.50 after the company said it has allotted 48.80 lakh equity shares and also 26.12 lakh convertible warrants to promoters and business associates on preferential allotment basis. The announcement was made during market hours today, 24 November 2015.

Elsewhere in the Asia Pacific region: Taiwan's Taiex index fell 1% to 8400.14. South Korea's KOPSI grew 0.63% to 2016.29. Malaysia's KLCI added 0.37% to 1677.03. Singapore's Straits Times index grew 0.7% at 2924.33. Indonesia's Jakarta Composite index rose 0.1% to 4545.38. New Zealand's NZX50 added 0.4% to 6101.27.

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