Asia Pacific market declined for the first time in four straight sessions on Wednesday, 04 September 2013, as worries over potential U.S. action in Syria chilled investor enthusiasm and overshadowed optimism surrounding for the global recovery after upbeat manufacturing data from China, Europe and US. MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.5% after four days of gains.
Profit taking dominated the regional market came amid renewed worries about possible U.S. military intervention in Syria after U.S. Republican lawmakers signalled their support for military action. President Obama received the support for action from two top Republicans overnight and Congress is scheduled to vote on whether to become involved in the Syrian crisis next week.
On Tuesday House Speaker John Boehner said that he supports President Barack Obama's call for military action in Syria. In addition, the Senate reached an agreement on a resolution authorizing military strikes against Syria. The resolution gives Obama 60 days to strike Syria, and is expected to be put to a vote on Wednesday. That intensified worries about the possible expansion of a conflict in an already volatile region of the world.
Among Asian bourses, Tokyo market recouped intraday losses to finish session at fresh 3-week high, helped by futures-led buying, marking its third-straight day of gains. The Nikkei Stock Average climbed 0.54% to 14053.87 and the broader Topix added 0.6% to 1,156.30.
Canon Inc jumped 3.8% to 3145 yen after the consumer- electronics firm said on Tuesday that it will buy back up to 18 million of its shares, or about 1.6% of outstanding shares, for as much as 50 billion yen. The buybacks will take place between Sept. 4 and Nov. 1.
Honda Motor Co rose 0.6% to 3675 yen after a Nikkei report said that it will likely increase its annual dividend for the year ending March on expectations of strong earnings.
The latest data for Japan's Markit service sector indicated a slight recovery of growth in August following July's brief slowdown. Business activity expanded at a faster pace whilst both new work and employment returned to growth having contracted marginally in July. Meanwhile, input prices rose for the tenth successive month. The headline seasonally adjusted Business Activity Index rose from 50.6 in July to 51.2 in August. The latest increase marked the tenth successive reading above the 50.0 no-change mark. This was the longest period of sustained growth ever recorded in this series, which began in September 2007. Anecdotal evidence suggested that higher volume of new orders was the key driver of the expansion. The modest recovery of growth evident in the service sector was complemented by the manufacturing industry data, as goods producers recorded the fastest rise in output since February 2011. As a result, the Composite Output Index rose from July's reading of 50.7 to a level of 51.9 in August.
In Australia, Australian share market declined for the first time in five trading sessions, as investors' booked recent profit amid possibility of military strike on Syria after US Congressional overwhelms news about local economic growth. The S&P/ASX 200 fell 0.67% to 5,161.60.
Australian Bureau of Statistics (ABS) figures showed that GDP, in seasonally adjusted volume terms, grew 0.6% in the June quarter 2013. Growth for the quarter was driven by a 0.2% contribution from Household final consumption and 0.2% contribution from Changes in inventories. The industries that drove growth in the June quarter were Finance, Mining, and Construction. The Finance industry contributed 0.2% to GDP while the other industries each contributed 0.1% to the increase in GDP. The June quarter saw the Terms of trade increase 0.1%.
Materials and resources stocks were mixed in Sydney, with BHP Billiton was down 0.3% to A$35.71 and Fortescue Metals Group 2.6% to A$4.42, while Rio Tinto added 0.8% to A$61.55
McMillan Shakespeare surged 8.5% in Sydney after the Coalition confirmed Tuesday that it will drop the leading Labour party's proposed changes to certain tax benefits, if elected.
In China, Chinese share market closed volatile but choppy trading session slight higher thanks to better than expected China service PMI data, with materials and energy players leading rally. The Shanghai Composite Index advanced 4.51 points, or 0.21%, to 2127.62.
The advance in the Mainland market came after Markit survey data indicated that growth in China's services sector hit a five-month high in August underpinned by new orders and business optimism, adding to views that the world's second-largest economy had avoided a sharp slowdown. The Markit/HSBC Services Purchasing Managers' Index (PMI) climbed to 52.8 in August after seasonal adjustments, up from July's 51.3 and the highest since March. The reading was well above the 50 level that demarcates acceleration in activity from a slowdown, although a sub-index for employment shrank.
The outcome was roughly in line with China's official non-manufacturing PMI on Tuesday, which showed the services sector grew steadily in August as domestic demand picked up. The official survey is weighted more towards bigger and state-owned companies.
Shares of materials sector gained the most in Shanghai bourse, led by rare earth producers on reports the Ministry of Industry and Information Technology will start a check of rare earth exploration, smelting and trading companies. Rising Nonferrous Metals jumped 4.1% to 48.70 yuan. Inner Mongolia Baotou Steel Rare-Earth Hi-Tech Co. advanced 0.7% to 29.46 yuan.
Shares of port operators went higher in Shanghai after the State Council approved the city's free-trade zone plan on Aug. 2. Shanghai's Free-Trade Zone, which was approved by the State Council in August and may open as early as the end of this month according to the Shanghai Securities News, is part of Premier Li's drive to shift the economy toward services and sustain long-term growth. Shanghai International Port advanced 10% to 4.97 yuan. Tianjin Port Co. gained 4.5% to 7 yuan.
In Hong Kong, HK stocks closed weaker on Wednesday in heavy trade, snapping a 4-day winning streak. The market was worried about the US military intervention in Syria, while a number of placing drawing away liquidity also weakened investors' confidence.
Among the 50 HK blue chips, 18 were up and 29 were down, with three stocks remaining steady. Market heavyweights were weak. China Mobile weakened 0.3% to HK$85.5. HSBC nudged down 0.1% to HK$83.75.
Shares of Xinyi Glass plunged 5.9% to HK$6.65 after Chairman's placement at HK$6.7. Want Want fell 2.1% to HK$11.2 on UPC's disposal.
Construction Bank Corp (CCB) declined 1.35% after Bank of America Corp sold its entire stake in CCB for up to $1.5 billion
In India, Indian benchmark indices regained strength after trimming strong intraday gains in afternoon trade. The barometer index, the S&P BSE Sensex, was up 207.89 points or 1.14%, off about 170 points from the day's high and up close to 250 points from the day's low.
Today's recovery on the Indian bourses came after it became clear that the two missiles that landed in the Mediterranean region on Tuesday, 3 September 2013, weren't part of a US led military strike in Syria, as investors had feared. The Sensex had tumbled 3.45% on Tuesday, 3 September 2013, after Russian news agencies reported two missiles were launched in the Mediterranean region. Indian index heavyweight and cigarette maker ITC declined. IT stocks rose on positive US economic data overnight, with TCS hitting record high and Infosys attaining 52-week high. Metal and mining stocks edged higher as a private survey showed growth in China's services sector hit a five-month high in August.
Elsewhere, Indonesia's JKSE Composite declined 2%, Singapore's Straits Times Index sank 0.9% and Malaysia's KLSE Composite fell 0.43%. South Korea's Kospi index fell 0.04% and Taiwan's Taiex lost 0.06%. New Zealand's NZX 50 Index rose 0.08%.
Trading in US index futures indicated that the Dow could decline 11 points at the opening bell on Wednesday, 4 September 2013.
The influential US nonfarm payroll report for August 2013 is due for release on Friday, 6 September 2013. The employment numbers will be keenly watched given the implications for the timing of the Federal Reserve's plan to begin slowing the pace of its monetary stimulus.
Investors across the globe are eyeing the next policy meeting of the Federal Open Market Committee (FOMC) scheduled this month, with their focus squarely on the timing of tapering of Federal Reserve's bond purchases. The FOMC holds a two-day policy meeting on 17-18 September 2013 to decide on interest rates in the United States.
Meanwhile, a summit of leaders from the Group of 20 major economies begins in St. Petersburg on Thursday, 5 September 2013.
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