Asia pacific Market declined on Wednesday, 06 July 2016, as concerns over global economic growth sapped confidence for risk assets. Renewed Brexit jitters also sent the British pound tumbling to a fresh 31-year low.
Investors flocked to safe-haven assets, such as U.S. Treasurys, the yen and the greenback, after three U.K. real estate funds halted selling and the Bank of England relaxed regulations to encourage banks to lend out more money.
Markets are turning focus to FOMC minutes. The FOMC minutes to be released later today are of the meeting just before Brexit referendum. A major focus would be on how policymakers were concerned with the weak May non-farm payroll report released in early June. Also, the minutes might reveal the discussions on the rate path and how confident are policymakers that Fed is still on course for two hikes this year.
Yesterday, San Francisco Fed John Williams downplayed the impact of Brexit and said that it's just a "relatively modest risk to the US outlook". He maintained his view that unemployment will drop to 4.5% this year and inflation will continue to move up. And in William's view, Fed is still on course to hike interest rate if his growth and inflation expectations are met. And he warned that "being cautious forever would just lead us to need to raise rates much more aggressively in the future".
On the other hand, New York Fed president William Dudley said that "if you strip out the energy sector, inflation is still a little below what we would like... so that allows us to be patient in terms of letting the economy run with accommodative monetary policy in place". And, "with uncertainties about the outlook and inflation being lower than desired, it allows us to be a little more patient." FOMC will release June meeting minutes later today and would reveal more about policymakers' view on rate hikes.
Gold reached its highest level in more than two years as investors' risk off sentiment sent them pouring into safe haven assets. The precious metal jumped as much as 1 per cent to $US1370.62 an ounce, the highest level since March 2014. Continued political turmoil in the United Kingdom and the possibility of Brexit marring global growth plans weighed on investors minds. Silver also surged as much as 2.4 per cent to $US20.41 an ounce.
Crude tumbled to a one-week-low as the US dollar continued to strengthen and markets digest ample stockpiles threatening the rebalancing of the oil market. Crude oil has soared more than 80 per cent since its 12-year lows in February, thanks to supply disruptions and falling US output. Most recently, Nigeria has increased its supply output, despite continued militant attacks on its pipelines.
Among Asian bourses
Australia Market extends losses
Australian share market declined on Wednesday, 06 July 2016, on the back of yesterday's weaker trade balance figures and domestic political uncertainty. At close of trade, the benchmark S&P/ASX 200 index declined 30.50 points, or 0.58%, to 5197.50. The broader All Ordinaries shrank 28.10 points, or 0.53%, to 5284.70. Falling stocks outnumbered advancing ones on the Australia Stock Exchange by 582 to 451 and 293 ended unchanged. The S&P/ASX 200 VIX, which measures the implied volatility of S&P/ASX 200 options, was up 1.72% to 19.232.
Shares of banks and financial companies declined for second straight day on signs that lenders will need to further increase their capital buffers after the Australian Prudential Regulation Authority told lenders that they will need to increase their capital ratios further in the wake of shifting international requirements. Commonwealth Bank of Australia dropped 0.8% to A$71.97, Westpac Banking Corp 1.2% to A$28.20. ANZ Banking Group 1.9% to A$22.96, and National Australia Bank 0.6% to A$24.54.
The energy and resources sector shares both tracked volatility in iron ore and oil, with Woodside losing 0.6% to A$26.33 and Oil Search falling 1.2% to A$6.82. BHP Billiton declined 3.8% to A$18.71, meanwhile main rival Rio Tinto was down 2% to A$46.81 and iron ore miner Fortescue Metals Group shed 1% to A$3.79.
Japan Market dips 1.85% on stronger yen
The Japan share market declined for second straight session on Wednesday, 06 July 2016, as a fresh bout of anxiety over Brexit risks and yen strength against greenback rattled investors. Meanwhile selloff pressure mounted on caution ahead of important U.S. economic indicators scheduled to be released later this week, including June jobs data due out Friday, as well as the outcome of Japan's upper house election on Sunday. Total 29 out of 33 TSE sectors declined, with Financial Business, Rubber Products, Securities & Commodities Futures, Iron & Steel, Real Estate, Nonferrous Metals, and Banks issues being major losers while Fishery, Agriculture & Forestry, Pulp & Paper, and Foods issues were notable gainers. The 225-issue Nikkei Stock Average dropped 290.34 points, or 1.85%, to 15378.99. The broader Topix index of all First Section issues on the Tokyo Stock Exchange was down 22.44 points, or 1.79%, to 1234.20.
Shares of exports tumbled on concern strong yen hurts the competitiveness of Japanese exports and chips away at the value of exporters' repatriated income. The yen strengthened as much as 0.8 per cent to ?100.94 yen per dollar, its strongest level since June 24 in the aftermath of the Brexit vote. Subaru automaker Fuji Heavy Industries, which relies on North America for 60% of sales, lost 4.4%. Air-conditioner maker Daikin Industries lost 2.9% to 7385 yen. Fanuc Corp dipped 2.8%, Sony Corp 0.2%, Canon Inc 2%, and Panasonic Corp 3.2%. Automaker Toyota Motor Corp dropped 1.7%, Nissan Motor Co 2% and Mazda Motor Corp. 6.1%.
Shares of banks declined after a warning from the European Central Bank that Italy's number-three Banca Monte dei Paschi di Siena, the world's oldest bank, had dangerously high levels of bad debt. Japanese banking giant Mitsubishi UFJ Financial Group and rival Sumitomo Mitsui Financial Group tumbled 3.6% and 2.4%, respectively.
China Stocks end higher
Mainland China stock market closed higher on Wednesday, 06 July 2016, after wavering between positive and negative territory throughout the session. The gain was credited to the People's Bank of China statement that it would continue to implement a prudent monetary policy and reasonable growth in credit and social financing. Total 7 out of 10 SSE sectoral indices advanced, with materials issue being top gainer, followed by consumer staples and healthcare issues being top gainers, while industrials and financials issues were notable decliners. The CSI300 index of the largest listed companies in Shanghai and Shenzhen grew 0.29%, to 3216.80, while the Shanghai Composite Index rose 0.36%, to 3017.29 points.
The China's yuan fell to its lowest against the dollar since November 2010 on Wednesday, extending its slide to a fifth straight session, after China's central bank sharply weakened its official guidance rate as the dollar surged. China's central bank on Wednesday set its yuan/dollar midpoint rate at 6.6857 prior to the market opening after the yuan had tumbled in late trade on Tuesday. Wednesday's midpoint weakened 0.4% from the previous day's fix of 6.6594 per dollar.
Hong Kong Stocks sink 1.23%
The Hong Kong stock market closed down on Tuesday, 05 July 2016, as investors fled riskier assets on following the 108-point slide of the Dow overnight and the break below 10-mark of the pound against HKD amid worries over the fallout from Britain's shock decision to leave the European Union. The benchmark Hang Seng Index dropped 255.43 points, or 1.23%, to 20495.29 points. The Hang Seng China Enterprises Index, benchmark measure of performance of mainland China enterprises, sank 140.17 points, or 1.62%, to 8503.14. Turnover increased to HK$60.7 billion from HK$53.6 billion on Tuesday.
The pound has set new 31-year low against US dollar at 1.28 before recovering. HSBC (00005) and Standard Chartered (02888) dipped 1.2% and 1.5% to HK$46.8 and HK$56.85.
Oil prices tumbled nearly 5% overnight, dragging down oil majors. Sinopec (00386) and PetroChina (00857) declined 2.4% and 1.7% to HK$5.39 and HK$5.14. But aviation counters benefited from lower fuel costs. Cathay Pacific (00293) edged up 0.4% to HK$11.38. China Eastern Airlines (00670) put on 1.8% to HK$4.05.
Chinese banks followed the market lower even though it is expected that China's new loan may grew by Rmb1 trillion. CCB (00939) fell 1.6% to HK$5.03. ICBC (01398) softened 0.5% to HK$4.18.
Gold price have risen for five consecutive days on risk-aversion demand. Zhaojin Mining (01818) surged 8.4to HK$9.17. Zijing Mining (02899) jumped 4% to HK$2.81.
Wharf (00004) said it has received a number of proposals regarding the acquisition of stake in i-CABLE (01097). Wharf fell 1.3% to HK$46.6, while i-CABLE soared 28.6% to HK$0.9.
Elsewhere in the Asia Pacific region: New Zealand's NZX50 rose 0.1% to 6977.23. South Korea's KOSPI index declined 1.9% to 1953.12. Taiwan's Taiex index slipped 1.6% to 8575.75. Markets in Indonesia, India, Singapore, the Philippines and Malaysia are closed Wednesday for holidays.
Powered by Capital Market - Live News
