Asia Pacific Market: Stocks rise after unprecedented ECB actions

Asia Pacific share market closed higher on Friday, 06 June 2014, on tracking a record close on Wall Street overnight and the European Central Bank's aggressive monetary easing measures aimed at fending off deflation and boosting growth.

Global investors cheered after the European Central Bank (ECB) launched a raft of measures to fight low inflation and boost the euro zone economy, cutting rates, imposing negative interest rates on its overnight depositors and offering banks new long-term funds. This means banks will be charged for leaving funds at the ECB in the hope they might lend it on to businesses and consumers instead.

 

The ECB cut all its main rates to record lows in a drive to fight off the risk of Japan-like deflation and bring down the euro's exchange rate. For the first time, it will charge banks 0.1% for parking funds at the central bank overnight. The bank lowered the interest rate on its deposit facility to -0.1% from 0%, while it cut its main refinancing rate to 0.15%, and the marginal lending rate - or emergency borrowing rate - to 0.4%. The ECB said hundreds of billions of euros would be made available in cheap loans to banks as long as they lent more to the private sector.

US share markets rose on Thursday after the European Central Bank cut rates and vowed more measures if needed to combat deflation. The Dow Jones index rose by 98.6 points or 0.6% to record highs, the S&P 500 rose by 0.7% to record highs and the Nasdaq gained 44.6 points or 1.1%.

Eyes are now on the release later in the day of US jobs data that will provide a fresh look at the state of the world's number one economy and likely set the tone for markets for the following week as traders assess whether it changes the Federal Reserve's current policy stance of not rushing to raise interest rates.

Among Asian bourses- Australia market rises for the first time in four days

Australian share market registered first gain in four consecutive sessions, on tracking a record close on Wall Street overnight and the European Central Bank's aggressive monetary easing measures, with shares of bullion, energy, financials and property trusts counters leading rally. The benchmark S&P/ASX200 climbed up 0.5% to 5464, while the broader All Ordinaries each climbed up 0.44% to 5443.50. For the week, the benchmark S&P/ASX 200 Index lost 0.5% while the broader All Ordinaries Index shed 0.6% to 5443.5.

Financial stocks closed higher, with the big four banks contributed most to the rise on receiving boost from the promise of increased global liquidity courtesy of the ECB. The ECB has cut a raft of interest rates, including slashing bank deposit rates below zero to force Europe's banks to lend more. Commonwealth Bank of Australia advanced 1% to A$81.77, Westpac Banking Corp 1% to A$34.55, National Australia Bank 0.9% to A$33.53 and ANZ Banking Group 1.3% to A$33.67.

Gold and energy stocks were the other bright spot. Australia's biggest oil producer Woodside Petroleum added 0.5% to A$41.74 with Brent crude oil basically flat, ending the week at $US108.89 a barrel. Oil Search jumped 2.7% to A$9.78. gold miner Newcrest Mining rose 1.7% to A$9.77 and Evolution Mining added 7.4% to A$0.795.

Shares of Consumers discretionary sector was worst performer in the Sydney today, as entertainment, travel and retail companies got slugged, with investors worried a slump in consumer confidence since May's budget announcement is set to hurt their earnings. Casino operator Crown Resorts dropped 3.1% to A$15.76, while travel business Flight Centre lost 5.8% to A$46.90. In retail, Harvey Norman fell 0.7% to A$2.99, and David Jones dipped 4.7% to A$3.85. Wesfarmers, owner of Coles, dropped 2.2% at A$42.42, while Woolworths lost 1.3% at A$37.04.

New Zealand shares climb

Equities on the New Zealand stock market closed higher as Fletcher Building climbed to a two-week high on government data showing building activity was growing at its fastest pace in over a decade. Fisher & Paykel Healthcare touched an intraday record. The NZX 50 Index rose 22.947 points, or 0.4% to 5182.437. Within the index, 21 stocks rose, 22 fell and seven were unchanged. Turnover was $128.8 million.

Fletcher Building, New Zealand's largest listed company, advanced 3% to $9.19, its highest since May 26. This week Statistics New Zealand said first quarter house building activity grew at its fastest pace in almost 12 years as construction ramped up to rebuild Christchurch, the country's second-biggest city, and to fill a housing shortage in Auckland. Shares in the construction company have declined 6.9% over the past three months.

Fisher & Paykel Healthcare rose 1.7% to an eight-year high of $4.68, after touching an intraday record of $4.71. The breathing apparatus manufacturer, which exports 98% of its product, last month said its 2014 annual profit rose 26% to $97.1 million but expects 2015 earnings growth to stall as it struggles against a high kiwi dollar. The kiwi fell to a three-month low this week.

Japan market falls marginally from 2-month high

Japanese market closed mixed, as optimism the country's largest pension fund will funnel more money into stocks was offset by profit-taking after the previous day saw the market post its best finish in two months. Investors were unmoved by the European Central Bank's launch of unprecedented easing measures to ward off deflation in the eurozone. The benchmark Nikkei 225 index was down 2.13 points to 15077.24, while the Topix index of all first-section shares inched up 1.82 points to 1234.57. For the week, the benchmark added 3.0%.

Shares of Japanese brokerages were higher, on speculation that GPIF participation would translate into more commission-based profits. Nomura Holdings was up 0.9% at 689 yen, Daiwa Securities Group rose 0.8% to 863 yen and Matsui Securities added 1..3% to 1069 yen.

TDK Corp closed up 2.9% to 2595 yen following a Nikkei report that it plans to begin mass-producing high-performance magnets for hybrid vehicles in China by 2015, something that could help Japanese auto makers with aggressive expansion plans in the region.

Shares of Sumco Corp added 11.3% to 914 yen after media reports that prices for the firm's silicon wafers used in semiconductors held stable for the April-June period after two years of softness.

China market falls 0.54% on growth slowdown woes

Mainland China share market closed down, dragged down by losses in material and resources, financials and property counters on concerns about soft demand due to slowdown in the nation's economic growth. Worries over a possible share glut caused by upcoming initial public offerings also weighed on sentiment. The market regulator said last month it would approve around 100 new listings in the second half of the year. The benchmark Shanghai Composite declined 0.54% to finish at 2029.96, on turnover of 55.12 billion yuan.

The World Bank said on Friday that China's growth will moderate in the medium term as the economy continues to rebalance gradually, while policy responses should focus on risks including shadow banking and local government debt. China's economic growth is expected to slow marginally to 7.6% in 2014, and 7.5% in 2015, from 7.7% in 2013, according to the World Bank's latest China Economic Update report. China's economy grew at its weakest pace in 18 months in the first quarter of 2014, expanding by 7.4%.

Yesterday, the International Monetary Fund has cut its 2015 economic growth forecast for China to about 7%, but urged authorities to avoid further stimulus measures and concentrate on curtailing financial risks instead.

Financial plays were lower on economic concerns. Ping An Insurance Group dropped 0.83% to 39.46 yuan while banking giant ICBC fell 0.55% to 3.61 yuan.

Dairy producer Inner Mongolia Yili Industrial Group lost 2.32% to 31.95 yuan despite an announcement that a unit will receive a capital injection of at least 2.0 billion yuan from two investment funds.

Hong Kong market ends 0.69% down

Hong Kong share market closed lower, as risk aversion selloff, with financial and construction related shares leading retreat. The benchmark index opened higher on tracking a record close on Wall Street overnight and the European Central Bank's aggressive monetary easing measures aimed at fending off deflation and boosting growth. But the market was heading south afterwards, on concerns about slowdown in the China's economic growth. The benchmark Hang Seng Index closed 0.69% down at 22951. Turnover increased to HK$56.4bn from HK$48.6bn on Thursday.

China cement stocks were lower after Citi said the sector is turning negative. CNBM (03323) and CR Cement (01313) dipped 0.71% and 1.62% to HK$7.04 and HK$4.87. Anhui Conch (00914) and Conch Venture (00586) dropped 3.52% and 1.35% to HK$27.4 and HK$17.5. Prada (01913) plunged 6.88% to HK$53.45 after its 1Q earnings declined from a year earlier.

HKTV (01137) surged 6.47% to HK$2.47 after it has submitted its application for the local free television license once again in response to the Communications Authority invitation.

Sensex, Nifty hit new record highs

Key benchmark indices surged as the market sentiment was boosted by data showing that foreign funds made substantial purchases of Indian stocks on Thursday, 5 June 2014. Firmness in European stocks also boosted sentiment. The S&P BSE Sensex was up 376.95 points or 1.51% at 25,396.46, a record closing high for the index. The CNX Nifty was up 109.30 points or 1.46% at 7,583.40, a record closing high for the index.

Shares of companies engaged in natural gas production edged higher after a government official on Thursday, 5 June 2014, reportedly said that the oil ministry has to decide on gas pricing by 1 July 2014 and that more clarity on the issue is expected next week. Reports also suggest that hike in prices of kerosene and LPG is also in the offing. Oil India was up 3.5% at Rs 595. ONGC closed up 10.57% at Rs 464 after hitting record high of Rs 467.95 in intraday trade. Reliance Industries was up 3.07% at Rs 1,121.

PSU OMCs extended recent gains on reports the Oil Ministry is considering hiking liquified petroleum gas (LPG) and kerosene prices and will be consulting the Prime Minister's Office (PMO) and the Finance Ministry on the same. BPCL rose 1.74% to Rs 627.60 after hitting record high of Rs 650 in intraday trade. HPCL rose 1.96% to Rs 455.15 after hitting 52-week high of Rs 462.70 in intraday trade. Indian Oil Corporation (IOCL) rose 1.72% to Rs 373.20 after hitting 52-week high of Rs 385.35 in intraday trade.

TCS declined 1.02% as the stock turned ex-dividend today, 6 June 2014 for final dividend of Rs 20 per share for the year ended 31 March 2014 (FY 2014).

Infosys dropped 1.26% on reports one more top executive quit the company. Prasad Thrikutam who was in charge of strategic sales, marketing and alliances quit on Thursday, 5 June 2014. President Pravin Rao will take up his portfolio, reports suggest.

Elsewhere in the Asia Pacific region- Taiwan's Taiex index was down 0.07%. South Korea's KOSPI index declined 0.65%. Malaysia's KLSE Composite slid 0.34%. New Zealand's NZX50 rose 0.44%. Singapore's Straits Times index added 0.6%. Indonesia's Jakarta Composite Index jumped 0.03%.

Powered by Capital Market - Live News