A preliminary private survey showed on Monday that growth in activity in China's vast factory sector slowed to a three-month low in December as reduced output offset a pickup in new orders. The flash Markit/HSBC Purchasing Managers' Index (PMI) fell to 50.5 from November's final reading of 50.8, but for a fifth consecutive month remained above the 50 line which separates expansion of activity from contraction. Given the approaching year-end holiday season, the flash PMI covers only the short period from December 5 to 12. The final PMI will be released on 2 January 2014.
The December HSBC Flash China Manufacturing PMI reading slowed marginally from November's final reading, said Hongbin Qu, chief economist for China at HSBC, in a comment accompanying the PMI. But it still stands above the average reading for 3Q, implying that the recovering trend of the manufacturing sector starting from July still holds up. As a result, we expect China's GDP growth to stabilise at around 7.8% [year on year] in 4Q.
Global investors remain cautious ahead of a possible reduction in United States central bank stimulus later this week. The Federal Open Market Committee (FOMC) holds a two-day policy meeting on interest rates in the United States on 17-18 December 2013. The stimulus has been credited with buoying global equity markets since it was introduced last September.
Financial markets have increased their expectations that a start to the trimming of the US central bank's unprecedented bond-buying program amid improving economic data and reduced risks of another fiscal impasse.
The House passed a bipartisan budget plan which should reduce the near term fiscal drag. And together with recent solid economic data release US, markets have perceived there is increased chance for Fed to taper the USD 85b per month asset purchase program in the last 2013 FOMC meeting.
Market participants set aside the Bank of Japan's tankan survey that showed sentiment among large manufacturers improved to the best level in six years. Japan's quarterly Tankan index for large manufacturers rose to the highest since 2007 in October 2013, climbing to 16 from 12 in September 2013, according to the Bank of Japan. Positive figures indicate optimists outnumber pessimists.
The Bank of Japan (BoJ), which buys more than 7 trillion yen ($67.6 billion) of Japanese Government Bonds (JGBs) every month in its bid to stoke inflation, holds a two-day monetary policy meeting on 19 and 20 December 2013.
Among Asian bourses, Australian share market fell for the seventh time in the past eight sessions, as investors reduced position from top blue-chip shares after weaker than expected reading on Chinese manufacturing and on caution ahead of the US Federal Reserve's meeting this week. However, strength in the mid-cap stocks helped to limit losses. The benchmark S&P/ASX 200 index dropped 8.80 points to finish at 5089.60, while All Ordinaries Index (XAO) fell by 8.40 points to 5093.10.
Australian banks and financials shares were lower, with Commonwealth Bank loosing 0.8% to A$73.63, Westpac Bank 0.7% to A$30.77 and National Australia Bank 0.5% to A$33.20, while Australia & New Zealand Banking Group rose 0.1% to A$30.29.
Insurance Australia Group, owner of NRMA and CGU, which last traded at $5.70, entered a trading halt to announce a $1.85 billion deal to buy Wesfarmers Australia and New Zealand insurance underwriting business. The deal is subject to the approval of competition regulators. Rival insurer QBE Insurance Group dropped 2.3% to A$10.36.
Wesfarmers rose 0.5% to A$1.04 after agreeing to sell its Australian and New Zealand underwriting operations to Insurance Australia.
Retail stocks were mostly higher as the Australian National Retailers Association Christmas Retail Index predicted Aussie shoppers will splurge more than $8.7 billion on gifts and festive trimmings in the last week before Christmas. Among the biggest department stores David Jones added 2.2% to $2.81, while Myer rose 5.6% to $2.66.
In Japan, headline shares of the Japanese financial market declined, dragging the benchmark Nikkei Stocks Average down by 250.20 points to finish at 15152.91, leading a regional slide ahead of the US Federal Reserve's meeting this week and after a measure of factory activity in China unexpectedly fell to a three-month low. A stronger yen also weighed on the Tokyo market.
The Bank of Japan's closely watched tankan survey of business sentiment showed a more upbeat mood, rising in tandem with recent gains for the stock market and improvement in some economic data. The headline index for large manufacturers rose to plus 16 for the current quarter, up from plus 12 in September. The result was the highest since the index printed at plus 19 in December 2007. The companies' assumed dollar-yen exchange rate was at 96.78 yen for the current fiscal year ending in March, the Bank of Japan said, compared to 94.45 yen in the September survey. Among other tankan numbers, the index for major non-manufacturers improved to plus 20 from plus 14, while medium non-manufacturers' sentiment was at plus 11, rising from plus 8, and that for small non-manufacturers printed at plus 4 compared to minus 1. Meanwhile, medium manufacturers showed a plus 6 result after posting a zero reading in the last quarter, and small manufacturers were at plus 1, up from minus 9 in September.
Dollar-yen fell below the 103 handle, retreating further from last week's five-year peak, which led investors to sell off blue-chip and currency-sensitive exporter stocks. Index heavyweight SoftBank lost 3% while Sharp, Nissan and Honda fell over 2% each.
Telecom shares were mixed in Tokyo, with SoftBank Corp falling 3.2% to 8620 yen on reports stating SoftBank's Sprint Corp unit is preparing a bid for rival wireless company T-Mobile U.S. Inc. But shares of Nippon Telegraph & Telephone Corp rose 3.2% to 5520 yen following the Japanese government's decision last week to sell a portion of its stake in the company. An NTT official said the company plans to buy back the shares from the government.
In China, shares in the China share market declined for a fifth session in row, dragging the benchmark Shanghai Composite down 35.21 points from prior day to close at 2160.86, after a measure of factory activity in China unexpectedly fell to a three-month low.
Shares of materials and resources declined as an unexpected decline in a manufacturing index heightened concern growth in the world's second-biggest economy is decelerating. Jiangxi Copper, the nation's biggest producer of the metal, slumped 2.2% to 14.59 yuan. Aluminum Corp., known as Chalco, declined 3.2% to 3.68 yuan.
Shares of shipping companies dropped on profit taking, with Cosco Shipping Co. led losses for shippers, plunging 6.1% to 3.70 yuan. China Cosco Holdings Co. retreated 2.3% to 3.42 yuan.
Shares of Chinese consumer-discretionary companies declined, with Suning Commerce Group Co. paced declines, dropping 7.2% to 9.22 yuan. SAIC Motor slumped 5.4% to 14.55 yuan. Great Wall Motor Co. retreated 3.5% to 45.02 yuan.
In Hong Kong, shares in the Hong Kong market fell down in quiet trade. The benchmark Hang Seng Index was provisionally down 131.30 points to 23114.66 while the Hang Seng China Enterprises Index lost 93.55 points to 10932.27.
Among the HK 50 blue chips, 14 rose and 36 fell. Kunlun Energy (00135) was the biggest blue-chip loser, falling 3.1% to HK$14.18. CNOOC (00883) also slipped 2.5% to HK$14.7.
Financial issues were under pressure, with HSBC Holdings fell 1% to HK$ 81.80 and Industrial & Commercial Bank of China 1.7% to HK$5.29.
Materials and resources were weak, with shares of Aluminum Corp. of falling 1.12% to HK$2.66 and Jiangxi Copper Co 1.14% to HK$13.92.
Macau gaming players rose across the board. Galaxy Entertainment (00027) added 3.6% to HK$69.55, making itself the top blue-chip winner. Sands China (01928) gained 1.7% to HK$63.7. MGM China (02282) jumped 2.9% to HK$31.5.
Power Assets (00006) put on 1.2% to HK$59.65 after the company announced the spinoff of its HK Electric in January. CLP (00002) softened 0.4% to HK$61.5.
In India, volatility continued in late trade as the Indian benchmark indices once again sink in negative zone only to recover some lost ground. The barometer index, the S&P BSE Sensex, was provisionally down 50.14 points or 0.24%, up 27.67 points from the day's low and off 99.08 points from the day's high. The market breadth, indicating the overall health of the market, was negative. Sentiment was impacted by latest data showing acceleration in headline inflation in November 2013. In the foreign exchange market, the rupee strengthened past 62 against the dollar.
Indian index heavyweight and cigarette major ITC declined on high volume. Index heavyweight Reliance Industries extended intraday fall in late trade. Bank stocks declined after the latest data showed acceleration in headline inflation November 2013. Tata Motors dropped after the company reported fall in global wholesales in November 2013. Realty stocks dropped. GlaxoSmithkline Pharmaceuticals hit record high after parent firm announced a voluntary open offer to increase its stake in the company from 50.7% to up to 75% at a price of Rs 3100 per share.
Elsewhere in the region, South Korea's KOSPI fell 0.09%. Taiwan's Taiex index fell 0.75%. Singapore's Straits Times index shed 0.4%. Malaysia's KLSE Composite dropped 0.13%. Indonesia's Jakarta Composite index fell 1.17%. New Zealand's NZX50 index rose 0.39%.
Powered by Capital Market - Live News
