Asia Pacific share market ended higher on Wednesday, 05 August 2015, on the back surge in China service business activity to11-month high, outweighing concerns that a rise in U.S. interest rates could be getting closer.
The Caixin China General Services Business Activity Index accelerated to an 11-month high 53.8 in July, up from June's 51.8, due to rising business volumes and solid new order growth. Anecdotal evidence suggested that stronger underlying client demand and new customer wins led to increased new work at service providers, according to the Caixin report.
Speculation of U.S. interest rates raise as soon as next month renewed after a top Federal Reserve official expressed support on Tuesday for an interest rate rise as early as September. US Fed official Dennis Lockhart (voting member) said, in an interview yesterday, that the economy is ready for a lift-off
Crude oil prices rose on expectations of upbeat US stockpiles and jobs data due at the end of the week. US benchmark West Texas Intermediate for September delivery gained 51 cents to $46.26 while Brent crude for September was up 59 cents to $50.59.
Copper in London fell 0.3% to $5,217.00 a metric ton, declining for the fourth day in five. Prices are giving up gains made on Tuesday after China's plan for more stimulus helped spark rebounds among industrial metals. Gold slipped 0.1% to $1,087.20 an ounce as the dollar strengthened.
Among Asian bourses
Japan stocks drift higher on earnings, weaker yen
Japanese share market finished the session firmly higher, helped by yen depreciation against the greenback and as the latest survey from Nikkei revealed that the services sector in Japan continued to expand in July, with a PMI score of 51.2. Meanwhile, better than expected earnings from Terumo Corp. to Kajima Corp also bolstered sentiments. The Nikkei Stock Average advanced 93.70 points, or 0.46%, to end at 20614.06 points. The broader Topix index ended 6.02 points, or 0.36%, higher at 1665.85 points. The yen traded at 124.41 per dollar after weakening 0.3% on Tuesday.
More than 110 firms on the Topix index scheduled to announce earnings on Wednesday. As per reports, nearly 63% of the company profit of the total reported companies exceeded expectations, an improvement from the 48% in the previous quarter.
Shares of construction firms gained after upbeat earnings from Kajima boosted optimism about the sector. Kajima Corp rose 6.8% after announcing 76% jump in operating profit to 11.7 billion yen, while rival Shimizu Corp rose 4.2%.
Shares of Apple suppliers declined on tracking sharp drop in shares of the iPhone maker in the US market overnight after disappointing iPhone sales which rekindled concerns over whether the company can continue its fast growth. Murata Manufacturing fell 5% while Alps Electric dropped 3%.
Medical device maker Terumo surged 12.9% on strong earnings and the announcement of a share-buyback plan. The medical-equipment maker said first-quarter net income surged 73% and it will spend as much as 11 billion yen buying back shares.
Fast Retailing Co. dropped 4.7% as it reported a slide in sales at its Uniqlo stores. The Company same-store sales at its Uniqlo clothing outlets in Japan fell 1.5% in July from a year earlier, a second straight month of declines.
Australia stocks fall on weak offshore lead
The Australian share market ended lower, following the weaker tone seen in US and European markets overnight. Nine out of ten ASX sectors ended in the red, with Energy, Telecoms Services and Consumer Discretionary sectors leading declines, although materials sector was conspicuous for their improvement in a weaker market. The benchmark S&P/ASX 200 Index and the broader All Ordinaries Index both declined by 0.4% to 5674 and 5659.50, respectively. Falling stocks outnumbered advancing ones on the Australia Stock Exchange by 559 to 422 and 166 ended unchanged.
Energy sector was top loser in the ASX sector group, with Origin Energy leading losses, down 3.6% to A$10.61 as with investors were unhappy with sale price for its stake in NZ-based Contact Energy. Origin Energy revealed that it will take a one-off charge of about A$270 million in its 2014-15 results as a result of its A$1.6 billion exit from the register of New Zealand power supplier Contact Energy. Among other oil explorers and distributers, Oil Search dropped 2.4% to A$7.03, Santos fell 1% to A$7.08, and Woodside Petroleum dipped 0.4% to A$34.84.
The improving dynamics around iron ore have helped sentiment towards the material companies. Among these influences are iron ore inventories at Chinese ports which fell 0.6% last week to 81.95Mt, and are down 19% year-to-date. Additionally, Chinese domestic rebar prices have risen for 7 consecutive days, with spot prices up 6.6% over the past week. Spot iron ore has increased by 11.5% over the past month. Among top miners, BHP Billiton gained 2.3% to A$26.49 and Rio Tinto rose 1.9% to A$52.98. Fortescue Metals Group gained 6.2% to A$1.885 after reports that state-owned Chinese companies want to buy into the iron ore miner's infrastructure assets.
The services sector in Australia expanded at an accelerated pace in July, with a Performance of Services Index score of 54.1, a 17-month high for the index, jumped from 51.2 in June, according to the latest survey from the Australian Industry Group released on Wednesday. Individually, all five of the sub-indexes expanded - including deliveries, stocks, employment, new orders and sales. The index was supported by a rebound in the housing market, low interest rates and a weaker dollar.
China market drops 1.7%
Mainland China's stock market ended lower in volatile trade, wiping out part of yesterday gains and registering fourth decline in last five trading sessions. On Tuesday, the Shanghai bourse rallied 3.7%, encouraged by news that authorities have stepped up their crackdown on short-selling of shares. The selloff momentum resumed on concerns government recent intervention will drive away investors, shrugging off data showing surge in China service business activity to11-month high and vow by the central bank to stabilise market. All 10 SSE sectors ended in the red, with telecommunication services, information technology, consumer discretionary and financial sectors leading declines. The benchmark Shanghai Composite Index ended 61.97 points, or 1.65%, higher at 3694.57 points. The Shenzhen Composite Index, which tracks stocks on China's second exchange, dropped 1.05%, or 22.54 points, to 2128.42 points. Total volume of A shares traded in Shanghai was 48.38 billion shares, while Shenzhen volume was 27.11 billion shares.
As per China Securities Depository & Clearing data, the number of new stock investors fell 13% from a week earlier to 340,500 in the week ended 30 July 2015.
China's central bank promised to "stabilise financial market expectations" on Tuesday, saying it will head off risks in the latest show of official resolve to keep the economy on an even keel.
Shares of technology and telecom companies declined the most in SSE industry group. Leshi Internet, the biggest Internet video provider, slumped 7%. ZTE, China's second-largest phone-equipment maker, retreated 2.9%. East Money Information Co. tumbled 6.2%.
Shares of Property developers, brokerage houses and banking heavyweights were among the laggards; Shanghai Shimao and Poly Real Estate plunged more than 3% each, while Citic Securities and Haitong Securities shaved off 3.4 and 3.3%, respectively.
Shares of industrial companies mostly up on reports China is planning at least 1 trillion yuan ($161 billion) in bonds to fund construction projects and help a struggling economy. Anhui Conch Cement Co., China's biggest cement maker, climbed 2.4%. Sany Heavy Industry Co., the biggest maker of construction machinery, added 3.1%.
Hong Kong market rises
The Hong Kong stock market ended higher, on the back of surge in China service business activity to11-month high and vow by the China central bank to stabilise market. However, market gain was limited after survey data of Hong Kong private sector companies signaled a further deterioration in overall operating conditions at the start of the third quarter. The Hang Seng Index ended 108.40 points, or 0.44%, higher at 24514.16 points. The Hang Seng China Enterprises Index, benchmark measure of performance of mainland China enterprises, rose 50.92 points, or 0.46%, to 11125.84 points. Turnover reduced to HK$68.6 billion from HK$74.7 billion on Tuesday.
The Nikkei Hong Kong Purchasing Managers' Index (PMI) posted at 48.2 in July, down from 49.2 in June, and signaled a further deterioration in the health of the sector. Operating conditions have now worsened in each of the past five months. Though moderate, the latest rate of deterioration was the second-sharpest since October 2014. The latest set of PMI data signalled an ongoing downturn in Hong Kong's private sector, as output and new orders continued to contract and at faster rates than in June. Looking ahead, the PMI data suggest that Hong Kong's economy may struggle to get back into expansionary mode, as companies continued to cut staff numbers while reducing their inventories at the quickest rate since 2011.
Financial stocks advanced the most in the HK bourse, led by HSBC Holdings, up 1.9% to HK$71.25, after Goldman Sachs issued positive comment on the stock, while Standard Chartered Bank rose 0.2% to HK$117 ahead of its earnings report today.
Mengniu Dairy (02319) put on 5% to HK$33.75 after JP Morgan expects the company to report double-digit earnings growth and as Moody's said that Mengniu's ratings is unaffected by share issuance to Danone.
BYD (01211) soared 7.5% to HK$36.8 on reports that the NDRC is shifting its view to the development of new energy cars.
Sensex logs modest gains
Indian stock market ended modest higher, powered by capital inflows by foreign funds and buying by retail investors amid a strong Asian trend. As per provisional closing, the S&P BSE Sensex was up 130.69 points or 0.47% at 28,202.62. The CNX Nifty was up 51.05 points or 0.6% at 8,567.95.
Foreign portfolio investors (FPIs) bought Indian shares worth a net Rs 118.70 crore yesterday, 4 August 2015, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) sold shares worth a net Rs 112.55 crore yesterday, 4 August 2015, as per provisional data released by the stock exchanges.
Taiwanese electronics giant Foxconn said yesterday, 4 August 2015, that the company is considering setting up manufacturing facilities in India. Foxconn Chairman Terry Gou reportedly said at a news conference in New Delhi yesterday, 4 August 2015, that Foxconn intends to set up manufacturing facilities for producing televisions, routers, switches, storage equipment and batteries among other devices in India. Foxconn is the world's largest contract electronics manufacturer by revenue.
Meanwhile, the outcome of a monthly survey released today, 5 August 2015, showed that India's services sector activity rose last month, primarily in response to a renewed increase in new business. The seasonally adjusted Nikkei Services Business Activity Index rose back above the 50 no-change mark in July, posting 50.8 from 47.7 in June.
Meanwhile, the Reserve Bank of India (RBI) Governor Dr. Raghuram G. Rajan indicated in his written monetary policy statement yesterday, 4 August 2015, that monetary policy could be eased further if there is greater monetary policy transmission by way of cut in base rate by commercial banks. The RBI kept its benchmark lending rate viz. the repo rate unchanged at 7.25% after a monetary policy yesterday, 4 August 2015, while retaining the accommodative stance of monetary policy.
Adani Enterprises shares closed 4.5% higher after the company said on Tuesday it was in talks with Taiwan's Foxconn for a possible joint venture, though no agreement had been signed.
Elsewhere in the Asia Pacific region: Taiwan's Taiex index added 0.4% to 8542.27. South Korea's KOSPI jumped 0.1% to 2029.76. New Zealand's NZX50 advanced 0.1% to 5938.51. Singapore's Straits Times index edged up 0.01% at 3191.39. Indonesia's Jakarta Composite index rose 1.5% to 4850.53. Malaysia's KLCI rose 0.1% to 1725.56.
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