Asia Pacific Market: Shares mostly lower on Fed, but Japan jumps sharply

Asia Pacific share markets slipped mostly lower on Friday, January 04, 2013, as wave of profit taking after Federal Reserve officials expressed concerns about continuing to expand monetary easing measures, renewing worries the era of easy money in the US may be drawing to a close.

Many of the regional bourses fell for the first time calendar year 2013 after the minutes of the December policy meeting of the Federal Open Market Committee showed that most policy makers saw quantitative easing ending in 2013.

The minutes noted that a few members expressed the view that ongoing asset purchases would likely be warranted until about the end of 2013. Meanwhile, several others thought that it would probably be appropriate to slow or stop purchases well before the end of 2013, citing concerns about financial stability or the size of the balance sheet. The Fed has pledged to buy $85 billion worth of bonds per month and to keep interest rates low until the unemployment rate dips below 6.5%, but no indication has been given as to when QE3 might end.

 

Risk sentiments also hurt by mixed jobs reports out of the US on Thursday. The Labor Department said initial claims for jobless benefits rose by 10,000 to 372,000 last week. The ADP private sector payroll report showed the addition of 215,000 new U.S. jobs last month, up from a revised 148,000 in November. Traders are undoubtedly now turning their attention to the December non-farm payroll report scheduled to be delivered by the U.S. Labor Department later today. The current U.S. jobless rate is 7.7%.

However, many regional markets off an intraday low after release of better-than-expected German data. The statistical office reported that retail sales in November were 1.2% higher than the previous month, but 0.9% lower than a year earlier.

In the Asia Pacific region, Australia's All Ordinaries, South Korea's Kospi, and Taiwan's Taiex each lost 0.4%, while Hong Kong's Hang Seng Index fell 0.3% after recent gains. New Zealand NZX50 dropped 0.2%, India's Sensex and Singapore's Strait Times was little changed. Indonesia's Jakarta Composite rose 0.2%.

China and Tokyo market had first trading day in this calendar year 2013 today. Japan's Nikkei Stock Average jumped 2.8%, powered by yen weakening to 88-level against greenback and as US lawmakers signed an agreement to avert the worst of the fiscal cliff. China's Shanghai Composite Index ended 0.4% higher, unable to rally as hard as stocks in Japan, as investors held out hopes for Beijing to enact large, market-friendly pro-growth measures.

Back to country wise, Tokyo market ended first trading day of calendar year 2013 with bullish tone, sending the benchmark Nikkei Stock Average 292.93 points higher to 10,688.11, its highest level since March 4, 2011, when index closed at 10,693.66. Japan's markets resumed trading from today after shut for last four days for the New Year holidays. Appetite for risk assets underpinned on weakening yen against greenback and the passage of a bill to avoid the so-called fiscal cliff crisis in the US. Meanwhile expansion of US and China manufacturing activities also prompted investors to buy in today's trading.

The U.S. dollar appreciated to the lower 88 yen range in Tokyo trading Friday, after briefly hitting 88.12 yen, the highest since July 28, 2010.

Export-related stocks continued rising on expectation of improved corporate earnings, as the dollar traded at 88.09 yen, up from the 86 yen level a week earlier when the Tokyo stock market was last open. Toshiba Corp added 3.9% to 350 yen and Nikon Corp surged 5.2% to 2,656 yen. Hitachi added 5.2% to 530 yen, Mitsubishi Electric Corp jumped 3.2% to 754 yen, Bridgestone Corp rocketed up 7.5% to 2,390 yen, Toyota Motor Corp gained 6.4% to 4,260 yen, and Honda Motor Co improved by 4% to 3,270 yen.

Financials also drove the gains as the Tokyo market priced in the U.S. fiscal-cliff deal, with Nomura Holdings Inc was up 4.2% to 524 yen, Mitsubishi UFJ Financial Group Inc rose 5% to 484 yen, and Daiwa Securities Group Inc gained 4.2% to 495 yen.

Australia's share market lost a little ground today for the first time this year after a strong start to 2013. The All Ordinaries Index slipped by just 0.4% or 18.5 pts to 4742.9, however improved by over 1.2% this week. The mining sector had a stellar start to the year, with the S&P/ASX 200 Materials index up 1.87% this week. Today however, the industry was the biggest drag on trade, with BHP Billiton down 0.6% to A$37.91 and Rio Tinto slipped 1% to A$68.55.

New Zealand's stock market declined on Friday alongside most regional peers. A rally that has pushed the NZX 50 Index to near a five-year high, faltered on concern the gains have left some equities fully valued. Telecom paced the decline and Xero dipped. By the provisional closing, the NZX 50 fell 7.328 points, or 0.2%, to 4075.038.

Mainland China's share market closed slight higher after moving between boundary line on first trading day of calendar year 2013, helped by gains in resources and realty shares. The benchmark Shanghai Composite index finished 7.86 points up at 2,277.

China's business activity index, which measures the service sector performance, declined to 51.7 in December from 52.1 in November, a survey by Markit Economics and HSBC revealed Friday. The reading still indicated growth in services activity, albeit at a slower pace. An index reading above 50 suggests expansion. The composite output index, a gauge of manufacturing and services activities, posted 51.8 in December, up from 51.6 in November.

Hong Kong's shares fell down today, dragging the benchmark Hang Seng Index 0.3% lower from 19-month highs, as profit taking after minutes of the US FOMC minutes revealed that some members wanted quantitative easing to wind down at an early date. Risk sentiments were also downbeat on HSBC data that showed Hong Kong Purchasing Managers' Index expanded at the slowest pace last month.

The seasonally adjusted headline HSBC Hong Kong Purchasing Managers' Index remained above the 50 no-change mark for the third successive month in December. At 51.7, down from 52.2 in November, the PMI was consistent with a modest improvement in private sector operating conditions. The PMI is a composite index designed to provide timely indications of changes in prevailing business conditions in Hong Kong's private sector economy.

India's shares closed managed to close at new 2-year high after recouping earlier losses, thanks to gains in state owned oil companies on hopes a proposed change in the government's pricing formulas would boost gas prices, while IT stocks rose on expectations for a better 2013. The BSE index provisionally gained 0.02%, while the 50-share NSE index ended up 0.11%, both marking their highest closes since January 2011.

Powered by Capital Market - Live News