Asia Pacific share market closed mostly lower on Wednesday, 01 June 2016, on tracking weak lead from Wall Street overnight and as the release of mixed manufacturing activity data from China and as a decline in oil prices weighed on sentiment.
An official measure of China's manufacturing sector held steady in May while a private gauge edged down slightly. China's official purchasing managers' index for manufacturing remained at 50.1 last month, the same level as in April and the third consecutive month the index kept above 50, the line separating expansion from contraction. The competing private Caixin manufacturing PMI index slipped to 49.2 in May from 49.4 in April, the fifteenth consecutive month of contraction. Another data showed that China's official nonmanufacturing PMI fell to 53.1 from 53.5 in April.
US stocks ended mostly lower yesterday, 31 May 2016, as investors turned cautious ahead of key economic reports this week for indications on the pace and timing of the next interest rate hike. The Federal Open Market Committee next undertakes monetary policy review on 14-15 June 2016. The Federal Reserve has kept the benchmark fed funds rate unchanged after raising it for the first time in nearly a decade in December 2015.
Among Asian bourses
Australia Market falls 1%
Australian share market closed lower, as investors elected to withdraw profit off the table on concerns recent gains were excessive than valuation. But losses were limited on the release of stronger-than-expected GDP data. At close of trade, the benchmark S&P/ASX 200 index declined 55.40 points, or 1.03%, to 5323.20. The broader All Ordinaries sank 52.60 points, or 0.97%, to 5395.20.
The Australian Bureau of Statistics said on Wednesday that domestic gross domestic product expanded 1.1% in the first three months of the year, compared with a revised 0.7% in the final 2015 quarter. Meanwhile, year-on-year headline growth accelerated from 2.9% to 3.1%, its fastest pace in almost four years. Despite the good data, shares remained under pressure following its release, perhaps as investors ratcheted down expectations of more interest rate cuts from the Reserve Bank of Australia.
Shares of materials and resources players tumbled hurt by softening commodity prices. Overnight, iron ore slid to a three-month trough, while oil drifted away from recent highs. BHP Billiton tanked 3.per cent to A$18.49 and Rio Tinto slipped 2% to A$43.79, while iron ore miner Fortescue was down 1.7% to A$2.93.
Energy shares lost ground after oil prices failed to hold levels above $50 a barrel. WTI futures were down 1.0% at $48.61, after settling down 0.47% Tuesday. Brent was off 1.10% at $49.34. Oil explorer Woodside Petroleum dropped 1.8% to A$26.91, Santos slumped 4% to A$4.35, Origin sank 1.9% to A$5.60.
Virgin Australia tacked on 1.7%, extending Tuesday's 7.14% jump after it announced that China's HNA Aviation would buy a 13% stake in the Australian airline for A$159 million. The Australia-China airline alliance aimed to capitalize on the growing tourism market between the two countries.
Sirtex fell 7.2% to A$29.24 after issuing a profit warning. Sirtex hosed down market optimism it could grow sales of its cancer treatment at a steady 20% a quarter in perpetuity, warning investors that growth is now expected at 15-17%. It blamed a lot of factors, from supply disruptions to tougher medical funding in some end-markets.
Japan Stocks falls on stronger yen
The Japan share market ended down, snapping a five-day winning streak, weighed by the yen appreciation against greenback and after media reports confirmed that Prime Minister Shinzo Abe is likely to announce a delay to a sales tax hike planned for next year until 2019. Tokyo's benchmark Nikkei 225 index had tumbled 1.62%, or 279.25 points, to 16,955.73. The broader Topix index of all first-section shares fell 1.28%, or 17.73 points, to 1,362.07.
Japan's Prime Minister Shinzo Abe said he'll delay an increase in Japan's sales tax until 2019, a move intended to support struggling households ahead of an election this summer. The decision marks an about-face for Abe, who had vowed his policies would make the economy strong enough to withstand an increase in the consumption tax.
While the news was largely expected, it may rekindle concerns about Japan's ability to handle its government debt load, which tops 200% of GDP. "If Japan's government has decided to delay the consumption tax increase scheduled for April 2017 as reports indicate, it would undermine the credibility of the political commitment to fiscal consolidation," Fitch Ratings said in a note Wednesday afternoon. It added that it would await more details on the government's new fiscal plans before saying how it would affect the country's ratings.
Shares of exporters closed down, weighed by appreciation to 109 levels against greenback. A stronger yen is generally a negative for exporter as it reduces overseas profits when converted into local currency. Sony shed 0.87%, Honda was down 2.28% and Panasonic was off 2.04%. Toyota dropped 0.48% and Nissan lost 1.37%.
Shares of Japan's Softbank bucked the market, rising 0.39% after news it planned to sell $7.9 billion worth of U.S.-listed Alibaba shares to improve its leverage ratio, cutting its stake to around 28% from around 32%.
China Stocks closed marginally down
Mainland China stock market finished marginally lower after wavering between positive and negative territory, following the previous day's sharp rally, as growing optimism about MSCI adding mainland stocks to its emerging markets index was offset by worries over China's economy and a looming U.S. rate hike. The CSI300 index of the largest listed companies in Shanghai and Shenzhen fell 0.28%, to 3,160.55, while the Shanghai Composite Index dropped 0.11%, to 2,913.51 points.
A closely watched privately compiled index of China's manufacturing sector declined further in May, remaining within contraction territory for the 15th successive month, even as a government index pointed to expansion. The Caixin Purchasing Managers' Index, which is compiled with Markit Economics and focuses on small and mid-sized businesses, came in at 49.2, just below expectations for a reading of 49.3 and slipping from 49.4 in April. Readings above 50 signal economic expansion. The data followed on the heels of China's official purchasing managers' index, which came in unchanged at 50.1 in May. The government PMI is weighted towards China's larger, state-owned enterprises.
Shares of banks and utility companies declined, as manufacturing data failed to ease concern about the nation's economic outlook. Agricultural Bank of China Ltd. retreated 0.9% and China Minsheng Banking Corp. lost 1.2% in mainland trading. Huaneng Power International Inc. slid 0.8%.
Shanxi Securities Co. added 3.9%, while Sealand Securities Co. advanced 0.9%. The two stocks jumped at least 9% on Tuesday amid expectations brokerages will benefit from a possible addition of Chinese shares in MSCI's benchmarks.
Hong Kong Market ends down
The Hong Kong stock market declined, snapping a six-day straight win, after mixed signals from China's purchasing managers' index (PMI) surveys. The benchmark Hang Seng Index declined 54.11 points, or 0.26%, to 20760.98 points. The Hang Seng China Enterprises Index, benchmark measure of performance of mainland China enterprises, rose 3.39 points, or 0.04%, to 8708.29. Turnover decreased to HK$65 billion from HK$103 billion on Tuesday.
Macau government announced that GGR for May amounted to MOP18.4 billion, which was lower than market expectations. Sands China (01928) and Galaxy Ent (00027) slid 3.5% and 2.3% to HK$27.8 and HK$25.5. Both were the top blue-chip losers today.
Opinion polls show rising risks of Brexit. HSBC (00005) slipped 1.7% to HK$50.35. StanChart (02888) plunged 3.7% to HK$59.35. China Merchants (00144) dipped 3.2% to HK$21.5 after Daiwa Research downgraded the stock and chopped its target price.
Indian indices eke out small gains
Amid a divergent trend among various index constituents, the two key benchmark indices registered small gains. The barometer index, the S&P BSE Sensex, rose 45.97 points or 0.17% to settle at 26,713.93. The Nifty rose 19.85 points or 0.24% to settle at 8,179.95.
The small upmove for the two key benchmark indices materialized after data showing acceleration in growth in India's gross domestic product in Q4 March 2016, a sharp pick up in growth in core sector in April 2016 and fiscal deficit meeting the target for fiscal year 2015-16 aided the upmove on the bourses.
Growth in India's gross domestic product accelerated to 7.9% in Q4 March 2016 compared with a revised reading of a growth of 7.2% in Q3 December 2015. For the fiscal year 2015-16, GDP grew 7.6%, which was higher than 7.2% growth recorded in 2014-15. The government released the GDP data after market hours yesterday, 31 May 2016. Another data released by the government after market hours yesterday, 31 May 2016, showed the output of eight core infrastructure industries carrying 38% of the weight in the Index of Industrial Production (IIP) increased at 18-months high pace of 8.5% in April 2016.
Meanwhile, the finance ministry said that as per the provisional accounts for 2015-16, the fiscal deficit in 2015-16 stands at 3.9% of GDP, meeting the target set by the government. This is a significant improvement over the fiscal deficit of 4.1% in 2014-15 and 4.7% in 2013-14. Revenue deficit has also shown significant improvement due to a sharp increase in capital expenditure of the central government. Revenue deficit improved to 2.5% of GDP in 2015-16 from 2.9% in 2014-15. There was also an increase in the Plan Expenditure in 2015-16 despite substantial increase in share of tax devolution to the States.
Meanwhile, the outcome of a monthly survey showed slight expansion in growth in India's manufacturing sector in May 2016. The seasonally adjusted Nikkei India Manufacturing Purchasing Managers' Index (PMI) edged higher to 50.7 in May from 50.5 in April. The rate of growth in output as well as new orders was well below trend. New export orders fell for the first time in 32 months. Sub-sector data highlighted intermediate goods as the best performing category in May. Investment goods firms, in contrast, saw further declines in new work and production.
Although firms passed on to their clients part of the additional increase in costs by way of raising selling prices, the rate of charge inflation eased to the weakest in the current three-month sequence of increases despite cost inflation climbing to a 14-month high.
Elsewhere in the Asia Pacific region: New Zealand's NZX50 declined 0.24% to 7022.40. South Korea's KOSPI index dropped 0.03% to 1982.72. Taiwan's Taiex index grew 0.72% to 8597.16. Malaysia's KLCI rose 0.03% to 1626.50. Indonesia's Jakarta Composite index added 0.89% to 4839.67. Singapore's Straits Times index fell 0.02% to 2790.54.
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