Monday, the major markets across the Asia-Pacific region closed lower as investors across the region assessed the implications of the swine flu outbreak on the global economy. The World Health Organization declared the strain of swine flu to be a public health emergency of international concern, Separately, investors expressed caution as they awaited the results of the stress test on 19 leading U.S. banks, which are expected to be out by May 4.
In economic news, new discretionary fiscal stimulus measures announced by G-20 nations raised stimulus estimates to 2% of GDP in 2009 from 1.8% estimated in March, the International Monetary Fund said Sunday. At the same time, estimate for 2010 stood at 1.5% of GDP, larger than the previous estimate of 1.3%. The aggregate amount in 2009 increased to US$820 billion from US$780 billion and in 2010 to US$660 billion from US$590 billion.
After rising nearly 4 percent in the previous session, crude oil retreated below $50 a barrel in Asian trading on profit taking amid weakness in the regional stock markets. Fears of a global flu pandemic after an outbreak of swine flu in Mexico and a flood of earnings due later this week also heightened investor caution. Crude oil for June delivery closed at $51.55 a barrel, up 3.9% in New York trading on Friday.
On Friday, stocks on Wall Street closed with strong gains as participants stepped up buying on hopes the economic cycle may have hit a bottom. Better-than-expected new home sales and durable goods orders also aided sentiment to an extent. The major averages moved off their best levels of the day going into the close but remained firmly positive. The Dow Jones Industrial Average closed up 1.5%, the Nasdaq Composite rose 2.55% and the S&P 500 index advanced 1.68%.
According to a report from the Commerce Department, new home sales saw a modest rise in March, although the annual rate of new home sales came in well above economist estimates due to an upward revision to February sales. The report showed that new home sales fell 0.6 percent to an annual rate of 356,000 in March from a revised February rate of 358,000. Economists had expected new home sales to remain unchanged compared to the 337,000 originally reported for the previous month.
Earlier, a separate report from the Commerce Department showed that durable goods orders fell 0.8 percent in March following a downwardly revised 2.1 percent increase in February. Economists had expected orders to fall 1.5 percent.
The Japanese market closed higher, led by banks and drug makers. However, the weakening of the dollar against the yen, poor earnings reports and negative news flow over the breakout of swine flue checked big gains.
The benchmark Nikkei 225 index rose 18 points or 0.21% to 8,726 and the broader Topix index of all First Section issues on the Tokyo Stock Exchange closed at 833, up 3 points or 0.37%. Trade volume was moderate at about 2 billion shares. While textile and banking stocks closed firm, air and sea transport and mining stocks led the decliners.
Banking stocks closed stronger despite giving off most of their early gains. Mitsubishi UFJ Financial Group gained 2.83% and Mizuho Financial Group added 2.53%, but Resona Holdings slipped 0.61%.
Shinsei Bank surged up 14.52% on reports that Japan's financial regulator, the Financial Services Agency, is promoting the merger of the bank with Aozora Bank. Sumitomo Mitsui Financial Group rose 2.59% after it has emerged as the top candidate to acquire Nikko Cordial Securities.
Pharmaceutical and surgical-mask related stocks rose in response to news of swine flu spreading in humans worldwide. Chugai Pharmaceutical soared 14.03% on expectations of a pick-up in flu drug sales and Denki Kagaku Kogyo K.K, whose subsidiary Denka Seiken makes flu vaccines, jumped 7.77%. However, All Nippon Airways slumped 5.19% and Japan Airlines tumbled 4.02% on speculation that swine flu will impact passenger traffic.
Shipping stocks came under significant selling pressure due to disappointment over fiscal 2008 earnings. Nippon Yusen fell 3.86%, Mitsui O.S.K. Lines tumbled 5.77% and Kawasaki Kisen moved down 4.46%.
Advantest fell 0.91%, Komatsu closed down 0.65%, electronics maker Sharp slipped 0.63% and Kyocera closed up 0.42% ahead of their earnings announcements. After the close of trading hours, Sharp Corp. said that it suffered an annual net loss of 125.8 billion yen ($1.3 billion) due to declining demand and increasing competition amid a global economic slump.
Fuji Heavy Industries surged up 11.27% after reporting a 6 billion yen operating loss in the year ended March, narrower than its loss projection of 9 billion yen.
Among automotive stocks, Nissan Motor rose 2.23%, Mazda Motor closed up 0.82% and Suzuki Motor added 0.26%, but Toyoto Motor slipped 0.52% and Honda Motor moved down 0.56%.
The Australian market closed up modestly, led by gains in the resources sector. The benchmark S&P/ASX200 index closed at 3,732, up 19 points or 0.52% and the broader All Ordinaries index rose 22 points or 0.59% to 3,690.
Among miners, BHP Billiton rose 1.12%, its rival Rio Tinto closed up 0.08% and Iluka Resources advanced 3.43%. Gold miner Newcrest Mining and Lihir Gold also closed sharply higher.
Among airline stocks, Quantas tumbled 4.04% and Virgin Blue slumped 5.36%, weighed down by negative news flow on the flu outbreak.
Banking stocks pared all their early gains and closed mostly lower. National Australia Bank fell 0.94%, ANZ slipped 0.35%, Commonwealth Bank closed down 0.58% and Westpac Banking moved down 1.09%, but investment bank Macquarie Group rose 0.57%.
Life and health insurer AMP rose 0.76% after former Allco Finance Group chief executive and director David Clarke decided not to seek re-election to the AMP board.
QBE Insurance fell 1.39% and AXA Asia Pacific slipped 0.26%, while Henderson Group closed flat.
Alesco Corporation surged up 12.36% after it has agreed to sell its scientific and medical division to Thermo Fisher Scientific Inc for $175 million. In the oil and gas sector, Woodside Petroleum slipped 0.66% and Oil Search fell 1.21%, but Santos rose 1.71%.
Retailers closed stronger. Woolworths rose 1.40%, Harvey Norman Holding rallied 3.82% and David Jones advanced 1.69%.
The New Zealand market closed modestly higher as gains in top stock Telecom more than offset cautious mood on concerns about swine flu that has killed more than 100 people in Mexico. The benchmark NZX-50 closed at 2,664, up 8 points or a mere 0.30%
Telecom rose 1.54% as investors eyed its dividend yield ahead of the central bank's policy meeting on Thursday. Rural services firm PGG Wrightson rallied 4.17% after the settlement of its payment dispute with Silver Fern Farms.
Retailers closed stronger after data last week showed a strong rebound in consumer confidence. Hallenstein Glasson rose 2.49%, Warehouse Group moved up 2.35% and Pumpkin Patch advanced 3.48%.
Contact Energy closed up 0.36%, even as it struggles to achieve its full-year profit forecast. Lion Nathan surged up nearly 38% after the brewer and wine maker agreed to a buyout by its major shareholder Japan's Kirin Holdings. Freightways closed up 0.74% after it has announced details of its $5 million share purchase plan.
Meanwhile, Fletcher gave up Friday's gains and closed down 1.27%. Fisher & Paykel Appliances fell 2.22%, as investors awaited an update on the restructuring of its heavy debt load. Air New Zealand fell 2.70% on growing concerns of swine flu spreading.
Among other notable stocks, Sanford rallied 3.64%, energy stock Vector closed up 0.47% and Steel and Tube rose 1.19%, but Pike River Coal tumbled 5.06% and Fisher & Paykel Healthcare moved 0.34%. On the other hand, TrustPower, Nuplex, Auckland Airport, Tourism Holdings and Sky City closed unchanged.
The South Korean market finished volatile session lower for the second day in a row as wary institutional investors indulged in profit taking. The benchmark KOSPI closed at 1,340, down 14 points or 1.1%. Volume was at 537.02 million shares worth 6.79 trillion won (US$5.05 billion) and decliners outnumbered gainers by 491 to 369.
Kia Motor gained 2.44% after JPMorgan Chase & Co. raised rating outlook on the stock to neutral from underweight. Ssangyong Motor also moved up 1.92%, but Hyundai Motor declined 1.65%.
Bulk carrier STX Pan Ocean Co. slumped 9.2% after the Baltic Dry Index posted its first decline in 10 days. South Korea's fourth-biggest bank Hana Financial Group tumbled 6.4% on reporting a wider-than-expected first-quarter loss of 325 billion won.
Among other notable stocks, Hynix Semiconductor rose 1.66% on better-than-expected quarterly results, steel maker POSCO gained 0.38% and telecom stock SK Telecom moved up 0.54%, while Korean Air Line plunged 7.35% and Asiana Air Line tumbled 5.21% on concerns over the swine flu outbreak. Market heavyweight Samsung Electronics declined 1.18% and LG Electronics fell 3.77%.
Banking stocks closed weaker. Korea Exchange Bank fell 1.41%, Woori Finance tumbled 4.26% and KB Financial, the holding firm of Kookmin Bank closed down 2.63%. Among shipbuilders, while Hyundai Heavy rose 0.88%, Samsung Heavy Industries declined 1.95% and Daewoo Shipbuilding moved down 2.06%.
The Hong Kong market fell sharply led by airlines and hotel stocks on worries over a drop in international travel following the outbreak of swine flue in Mexico, the U.S. and Canada. The benchmark Hang Seng Index closed at 14,840, down 418 points, or 2.7% and turnover totaled HK$53.01 billion. China's Shanghai Composite Index, which tracks both A and B shares, ended down 1.8% at 2,405 following a 0.6% decline Friday.
Meanwhile, the Indian market is exhibiting considerable volatility amid alternate bouts of buying and profit taking ahead of the expiry of April series derivative contracts on Wednesday and due to a truncated trading week. The market will remain shut on April 30 and May 1 on account of parliamentary elections and Labour Day respectively. The BSE benchmark was last trading at 11,331, up 2 points or a mere 0.07% over the previous close.
Among the other markets in the region, Singapore's STI Straits Times index closed down 1.85% and Taiwan's TWII Weighed index fell nearly 3%.
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