News Column

Asian Stocks Retreat Before ECB Meeting, US Jobs Report

June 4, 2014

CANBERA (Alliance News) - Asian stocks fell broadly on Wednesday, with the regional benchmark index retreating from a seven-month high, as caution set in ahead of Thursday's European Central Bank meeting and a crucial US jobs report due Friday.

With weaker-than-expected Euro zone inflation figures adding pressure on the European Central Bank to act and ward off the deflation risk, the Governing Council is expected to discuss several measures, including interest rate cuts, cheap loans to banks and large-scale asset purchases to boost the region's economy.

Japanese shares rose modestly as a weaker yen underpinned sentiment, offsetting the weakness seen elsewhere across the Asia-Pacific region. The Nikkei average rose 0.22% to 15,067.96, a fresh two-month high, while the broader Topix Index added 0.4%. Among the prominent gainers, Fuji Heavy Industries, SoftBank Corp, Daikin Industries, Tokyo Electron, Nippon Steel & Sumitomo Metal Corp and Yahoo Japan rose 2-4%.

Dai-ichi Life Insurance rallied 3.6% after it agreed to buy US peer Protective Life Corp for USD5.7 billion. Steelmaker Nippon Steel & Sumitomo Metal Corp jumped 3.8% and JFE Holdings climbed 3.2% after Credit Suisse raised their ratings to 'outperform' from 'neutral'.

Mazda Motor gained 2.6% and Nissan Motor advanced 1.7% after US auto sales rose 11% in May, confirming that the severe weather in the US North and East had more to do with the tepid results earlier this year than a dip in consumer confidence.

Mitsubishi UFJ Financial Group added 0.3% on a report the bank plans to raise up to USD500 million by selling Islamic bonds in Malaysia. Takashimaya dropped 2% on reports it will join hands with Tokyu Land to construct a Yokohama building that houses condominiums and an event hall.

In economic news, Japanese service sector activity declined at a slower rate in May, reflecting the recent hike in sales tax, a survey by Markit Economics showed. The services business activity index came in at 49.3 in May, marking the second consecutive month of decline.

Chinese shares extended losses for the fourth day, dragged down property developers on concerns about price cuts and softening demand. The benchmark Shanghai Composite Index fell 0.66% to 2,024.83. Hong Kong'sHang Seng Index declined 0.6% to finish at 23,151.71.

Australian shares dropped to a near two-week low, as losses in the financial sector and falling iron ore prices overshadowed better-than-expected GDP data. The benchmark S&P/ASX 200 shed 0.63% to finish at 5,444.80. The country's big banks fell between 0.3% and 1%, while mining giant BHP Billiton dropped 0.7% and rival Rio Tinto slipped 0.4%.

Publisher Fairfax Media tumbled 4.4%, Qantas Airways, Australia biggest airline, dropped 2.2%, engineering & property management firm UGL fell 1.8% despite winning a USD280 million contract from Queensland Government, and retailer Woolworths lost 1.4%.

Shares of Australand Property Group jumped 5.6% after the company said it received an AUD2.6 billion (USD2.41 billion) takeover offer from Singapore-based Frasers Centrepoint, trumping a bid by Stockland. Shares of Stockland Corp., meanwhile, advanced 1.8%. Noni B shares soared 45% on reports the fashion retailer is considering several takeover approaches.

On the economic front, the Australian economy grew a seasonally adjusted 1.1% in the first three months of 2014 from the previous quarter, the Australian Bureau of Statistics said, beating forecasts for an increase of 0.9% following the 0.8% gain in the fourth quarter of 2013. On a yearly basis, GDP climbed 3.5% - also topping expectations for a 3.2% rise.

Separately, the Australian Industry Group's Performance of Services Index rose 1.3 points to 49.9 in May, edging closer to expansion following two months of contraction.

New Zealand shares eased slightly as investors remained on the sidelines ahead of the upcoming listings of two tech companies later this month. The benchmark NZX-50 Index slipped 0.09% to 5,159.35. Cloud accounting firm Xero tumbled 3.5%, Diligent Board Member Services, the governance app maker, declined 1.2% and Fletcher Building, the nation's largest construction company, dropped 0.9%. Pacific Edge soared 5.2% on bargain hunting after seven consecutive days of losses.

In economic releases, the value of both residential and non-residential building activity jumped a seasonally adjusted 16.0% in the first quarter of 2014 from the previous three months, Statistics New Zealand said, topping forecasts for an increase of 5.5%.

Elsewhere, India's Sensex was down 0.1% and the Taiwan Weighted average slipped marginally, while the key benchmark indexes in Indonesia, Malaysia and Singapore were down between 0.3% and 0.5%. The South Korean market was closed for regional elections.

On Wall Street, the major averages edged down about 0.1% each on Tuesday as investors found few reasons to buy after recent sharp gains. On the economic front, new orders for factory goods rose for a third straight month in April and automakers reported strong sales in May, pointing to strength in the broader economy.

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Source: Alliance News

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