News Column

Asian Stocks Mixed After Fed Minutes, China Data

August 21, 2014

CANBERA (Alliance News) - Asian stocks turned in a mixed performance on Thursday despite a positive lead from Wall Street. Risk sentiment was dampened by a weak report on Chinese manufacturing activity as investors pondered interest rate moves by the US Federal Reserve. Minutes from the July 29-30 Fed meeting released overnight showed that Fed officials remain divided in their assessment of the labor market.

Chinese shares lost ground on economic concerns after a private survey showed growth in China's vast manufacturing sector weakened in August. The benchmark Shanghai Composite index dropped 0.44% to 2,230.46, the most in a week, while Hong Kong'sHang Seng index shed 0.66% to finish at 24,994.10, its biggest single-day loss in two weeks.

The latest flash purchasing managers' index from HSBC fell to a three-month low of 50.3, down sharply from 51.7 in July and well shy of forecasts for a score of 51.5, suggesting that industrial demand and investment activity growth will likely stay on a relatively subdued path.

"We think more policy support is needed to help consolidate the recovery. Both monetary and fiscal policy should remain accommodative until there is a more sustained rebound in economic activity," said Hongbin Qu, Chief Economist, China & Co- Head of Asian Economic Research at HSBC.

Japanese shares hit a three-week high, thanks to a weaker yen after the July FOMC minutes showed some members made the case for a "relatively prompt" rate hike based on the economy's progress. The benchmark Nikkei average rose 0.85% or 131.75 points to 15,586.20, extending gains for the ninth consecutive session. The broader Topix index also closed up 0.9% at 1,291.19.

Among top gainers, Daiwa Securities Group, Sumitomo Realty & Development, Mitsubishi Chemical Holdings, Credit Saison and Nomura Holdings rose 3-4%. Mazda Motor Corp. rallied 2.8% on a report the automaker plans to become debt-free by 2017. Mitsubishi Heavy Industries gained 1.7% on a report the defense ministry plans to develop homegrown stealth fighter jet in cooperation with the company and several other Japanese companies.

In economic news, Japan's manufacturing sector continued to expand at an accelerating pace in August, the latest flash purchasing managers' index from Markit Economics revealed - with a score of 52.4. That handily beat forecasts for a score of 51.5 following the 50.5 reading in July.

Australian shares closed on a flat note, giving up early gains as investors fretted about China's growth prospects. The benchmark S&P/ASX 200 rose 0.7% earlier in the day before paring gains to end up 0.08% at 5,638.9. Banks turned in a mixed performance, with Westpac rising 0.2% and NAB adding 0.4%, while Commonwealth ended little changed and ANZ slipped 0.2%. Life insurer AMP jumped 4.2% after posting a 3% fall in half-year net profit due largely to accounting-related losses.

In the mining sector, BHP Billiton, Rio Tinto, Newcrest and Fortescue Metals Group fell between 0.2% and 1.5%. Origin Energy shares soared 4.2%. The country's biggest electricity retailer reported a 6% fall in underlying annual profit, driven by challenging energy markets led by warmer weather. Asciano advanced 2.3%. The ports and rail group upped its total dividend and forecast stronger profits in fiscal 2015 despite reporting a 24% decline in full-year net profit.

Gambling company Tatts Group plunged 5.8% on reporting a 19% fall in full-year net profit. Mirvac Group shed 0.8% despite the property firm tripling its annual net profit. Treasury Wine Estates dropped 2.4%. The winemaker reported its first annual loss on the back of a hefty asset impairment charge.

On the economic front, the Australian economy is on pace to continue its modest recovery, the Conference Board said as its leading economic index increased 0.4% in June after gaining 0.2% in May. The coincident index added 0.2% - unchanged from May.

Seoul shares tumbled in thin trading, with disappointing Chinese data and concerns about early rate hikes in the US weighing on investor sentiment. The benchmark Kospi average fell 1.38% to 2,044.21, falling below the 2,050 level for the first time in 10 days. While overseas investors extended their buying spree to the seventh session, institutional shares offloaded shares worth a net 369.6 billion won, preliminary data showed.

Market heavyweight Samsung Electronics fell over 2% to its lowest level in nearly two years, Woori Finance Holdings, the country's fourth-largest banking group, plummeted 4.6% and automaker Hyundai Motor eased 0.9%. YG Entertainment soared 11% after the private equity arm of French luxury goods giant LVMH agreed to invest up to USD80 million in the talent management and music production group. Korea Electric Power Corp plummeted 4.4% on share sale reports.

New Zealand shares extended gains for a third day as investors cheered a slew of strong earnings reports. The benchmark NZX-50 index rose 0.24% to 5,152.92. Port of Tauranga shares climbed 3.9% to a record high as the country's biggest port company reported a 1.3% rise in underlying group net profit in the year to June 30. Fletcher Building, which posted a 4% gain in full-year profit yesterday, advanced 1.1%.

Skellerup Holdings led the decliners with a 4.2% loss, while energy stocks Mighty River Power, Meridian Energy, TurstPower and Genesis Energy fell between 0.4% and 1.4%, extending recent losses.

In economic releases, consumer confidence in New Zealand has fallen to a 10-month low in August, snapping two months of gains, the results of a survey by ANZ Bank and Roy Morgan Bank showed. The consumer confidence index dropped to 125.5 from 132.7 in July. Separately, central bank data showed that credit card spending in New Zealand increased at a slower rate in July compared to the previous month.

Elsewhere, the benchmark indexes in India, Indonesia and Singapore were marginally higher, while the Taiwan Weighted average dropped 0.4% and Malaysia's KLSE Composite index was down 0.2%.

Malaysia's consumer price inflation rose 3.2% year-over-year in July, slower than the 3.3% increase in June, official data showed. Economists had forecast prices to remain stable during the month.

US stocks ended mostly higher overnight as minutes from the Federal Reserve's July meeting showed most officials don't expect to start raising interest rates until next year, as slack in the labor market remains a concern. The Dow rose 0.4% and the S&P 500 added 0.3%, while the tech-heavy Nasdaq edged down marginally after ending the previous session at a fresh 14-year closing high.

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Source: Alliance News

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