The Asian market benchmark indices got a strong lead from offshore, after all major equity markets in the United States, the United Kingdom and Europe closed higher on Monday. Global equities were buoyed by the release of a series of better than expected economic data in the UK and Europe data that were interpreted as proof the global demand outlook is improving.
Business activity in the 17-nation eurozone ticked up in December, but the recovery is uneven and weak French data of particular concern, a key survey showed on Monday. Markit Economics said its Eurozone Composite Purchasing Managers Index (PMI) for December rose to 52.1 from 51.7 in November.
US industrial output surged 1.1% in November, the Federal Reserve reported on Monday, with manufacturing showing a fourth consecutive monthly gain. Earlier data showed unemployment fell to a five-year low and third-quarter economic growth was stronger than forecast.
But, regional bourses trimmed earlier gains on caution ahead of decision on bond-buying at a U.S. Federal Reserve policy meeting starting later in the day. Investors risk sentiments muted on caution ahead of the US Federal Reserve's meeting 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. By Wednesday evening U.S. time, the Fed is expected to decide whether to taper its $85 billion monthly bond-buying program.
Financial markets have increased their expectations that a start to the trimming of the US central bank's unprecedented bond-buying program could take place this, amid improving economic data and reduced risks of another fiscal impasse.
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Among Asian bourses, Japanese financial market rebounded, as investors chased for bottom fishing following the prior day's retreat and on an improving global growth outlook. The benchmark Nikkei Stocks Average advanced 125.72 points to 15278.63, while the broader Topix index rose 9.36 points to 1232.31.
Tech, auto and financial stocks advanced, with Seiko Holding Corp raising 3.31% and Honda Motor Co. adding 0.74%. Dai-ichi Life Insurance Co. gained 3.78% as the insurer's rating at Barclays was upgraded to overweight.
Dai-ichi Life climbed 3.8% to 1,620 yen after Barclays raised its recommendation on the stock to overweight from equal-weight and boosted its price target to 2,050 yen from 1,300 yen.
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.
In Australia, Australian share market closed higher, as investors chased for bottom fishing following steep losses in seven times in the past eight sessions. The benchmark S&P/ASX 200 index bounced 13.6 points to finish at 5103.20, while All Ordinaries Index (XAO) rose by 13 points to 5106.10.
Australian top four banking shares were higher, with Commonwealth Bank rising 0.4% to A$73.93, Westpac Bank 0.3% to A$30.7, National Australia Bank 0.6% to A$33.40, and Australia & New Zealand Banking Group 0.6% to A$30.48.
Food and liquor was the best-performing companies in the Australian market today, with Cole's owner Wesfarmers leading the way, up 2.5% to A$42.56. Among the biggest department stores David Jones added 1.4% to $2.85, while Myer rose 1.9% to $2.71.
The metals and mining sector was flat as reforms in China to reduce air pollution cause some concerns for the demand outlook in Australia's biggest export market for iron ore and coal. BHP Billiton was flat at A$35.66. The mining giant announced the closure of its Perseverance Nickel Mine, which has been beset with operational problems at a time when nickel prices have tanked. But Rio Tinto added 0.6% to A$65.30, while Fortescue Metals Group rose 3.2% at A$5.52, despite the spot price of iron ore, landed in China, falling to $US134.90 a tonne.
Wesfarmers (WES) rose 2.5% to $42.56, a day after IAG (IAG) completed its institutional share placement to fund a A$1.85 billion acquisition of WES's insurance division. IAG shares fell 5.3% A$5.40. On Monday, Insurance Australia Group, owner of NRMA and CGU, said it had agreed to buy Wesfarmers' Australia and New Zealand insurance underwriting business.
REA Group, which operates real estate advertising website realestate.com, was the worst-performing stock, dumping 6.9% to A$37.74, following the resignation of chief executive Greg Ellis without a successor. REA Group has been the best-performing stock in the benchmark index in 2013, climbing more than 125% year-to-date.
In economic news- The minutes of the Reserve Bank of Australia's December meeting released on Tuesday, explicitly left open the possibility that the central bank might cut the official interest rate from its current record low 2.5% in 2014 if it judges the domestic economy is worsening. However, the RBA also noted that the benefits of previous cuts are still flowing through.
Tuesday also marked the new federal government's first budget update, releasing the Mid-Year Economic and Fiscal Outlook report. Treasurer Joe Hockey said the government expected the budget deficit to reach $47 billion by the end of the current financial year. The report projected $123 billion worth of deficits over the next four years. The Treasury also forecast gross debt to hit $460 billion in 2016-17.
In China, headline shares on the China share market extended losses for a sixth session in row on Tuesday, 17 December 2013, after data showed China's manufacturing activity may have slowed to a three-month low. The benchmark Shanghai Composite was down 9.78 points from prior day to close at 2151.08.
HSBC's Flash China Purchasing Managers' Index, the earliest indicator of Chinese manufacturing activity, fell in December to 50.5, the lowest reading in three months and compared with 50.8 in November, HSBC Holdings PLC said yesterday. A reading of 50 or higher indicates that expansion.
Shares of Chinese consumer-discretionary companies declined the most in the Mainland China market. Gree Electric, which makes air conditioners, dropped 3.2% to 32.29 yuan. Qingdao Haier, the biggest maker of refrigerators, slumped 6.9% to 18.95 yuan.
Shares of developers were weak. Gemdale slid 1.9% to 6.30 yuan to lead declines for developers. China Vanke, the biggest developer, fell 1.9% to 8.27 yuan in Shenzhen trading.
In Hong Kong, shares in the HK market declined in volatile trade after data showed China's manufacturing activity may have slowed to a three-month low and on caution ahead of decision on bond-buying at a U.S. Federal Reserve policy meeting starting later in the day. The benchmark Hang Seng Index was provisionally down 45.43 points to 23069.23 while the Hang Seng China Enterprises Index lost 37.98 points to 10894.29.
Among the HK 50 blue chips, 22 rose and 26 fell, with two stocks remaining steady. Li & Fung (00494) was the biggest blue-chip winner, rising 3.1% to HK$9.79. CNOOC (00883) slipped 3.5% to HK$14.18, making itself the top blue-chip loser.
Market heavyweights were firmer. HSBC (00005) gained 0.3% to HK$82.05. China Mobile (00941) edged up 0.5% to HK$80.7. Elsewhere, AIA (01299) jumped 2.2% to HK$37.95 after Jefferies raised its target price for HK$44. Macau gaming players were mixed. Galaxy (00027) dipped 1.4% to HK%68.6. Sands China (01928) and Wynn Macau (01128) put on 1.5% and 3% to HK$64.65 and HK$36.15.
In economic news- Hong Kong's seasonally adjusted unemployment rate stood at 3.3% in September - November, same as that in August - October. The underemployment rate decreased from 1.5% in August - October to 1.4% in September - November, data from the Census and Statistics Department showed.
In India, Indian benchmark indices reversed direction after holding positive zone till afternoon trade as European stocks dropped. The barometer index, the S&P BSE Sensex, was provisionally down 50.40 points or 0.24%, off 174.91 points from the day's high and up 14.13 points from the day's low. A widely expected hike in repo rate by the Reserve Bank of India (RBI) after a monetary policy review tomorrow, 18 December 2013, weighed on stock prices as key benchmark indices dropped for the sixth day in a row.
Among the 30-share Sensex pack, 17 stocks gained and rest of them declined. Coal India (down 3.08%), NTPC (down 2.21%) and HDFC (down 1.94%) declined. Cipla (up 2.88%), TCS (up 1.42%) and Sesa Sterlite (up 1.2%) gained.
Bank stocks edged lower as the Reserve Bank of India (RBI) is widely expected to increase in main lending rate viz. the repo rate by 25 basis points to 8% from current 7.75% after a mid-quarter monetary policy review tomorrow, 18 December 2013, to rein in inflation after recent data showed that both consumer prices and wholesale prices accelerated last month. ICICI Bank fell 0.43% at Rs 1,092.65. The stock was volatile. The scrip hit high of Rs 1,121.85 and low of Rs 1,090.
Private sector bank HDFC Bank dropped after the Reserve Bank of India (RBI) on Monday, 16 December 2013, banned further purchases of the bank's shares by foreign institutional investors (FIIs) after foreign shareholding in the bank crossed the overall limit of 49% of the bank's paid-up capital. The stock lost 3.61% at Rs 658 in volatile trade. The scrip hit high of Rs 675.05 and low of Rs 655.10.
State Bank of India shed 1.02% to Rs 1,715.10. Kotak Mahindra Bank (down 1.16%), Axis Bank (down 0.63%), Punjab National Bank (down 0.02%), Bank of Baroda (down 1.37%), and Union Bank of India (down 2.46%) dropped.
Bharti Airtel surged 4.41% to Rs 327.85. As per reports, Bharti Airtel is close to selling its operations in Sri Lanka to UAE-based telecom company Etisalat. Bharti Airtel and Etisalat have been negotiating for over five months now and have agreed on the broad characteristics of the deal.
Elsewhere in the region, South Korea's KOSPI rose 0.23%. Taiwan's Taiex index added 0.47%. Singapore's Straits Times index added 0.45%. Malaysia's KLSE Composite rose 0.71%. Indonesia's Jakarta Composite index added 1.37%. New Zealand's NZX50 index fell 0.16%.
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