RTTNews - The markets across the Asia-pacific region continued to drift lower on Thursday, amid concerns about valuation of stocks as well as pace and magnitude of global recovery. China's Shanghai Composite Index managed to buck the trend and end in positive territory after the World Bank revised its growth forecast for the country.
In the U.S., mixed performance was witnessed Wednesday as traders digested the sweeping proposals of President Obama to revamp the financial sector.
A report released by the Labor Department on consumer prices revealed that the prices edged up 0.1% during May after coming in unchanged in April. However, the increase was less than economists' mean expectation of a 0.3% rise in consumer prices. Core consumer prices, which exclude food and energy prices, also edged up 0.1 percent in May following a 0.3 percent increase in April. The modest increase in core prices came in line with economist estimates.
In other news, the Federal Reserve continued its treasury buyback program Wednesday, completing its second quantitative easing move of the week. The New York Federal Reserve purchased $7.0 billion worth of securities with maturity dates ranging from May of 2016 to May of 2019.
President Obama laid out a sweeping agenda for regulatory reform in an effort to prevent a recurrence of the financial meltdown that sunk the U.S. economy into a recession. He proposed granting the Federal Reserve the authority to scrutinize firms that are large enough to pose a systemic risk to the financial markets. He also called for the creation of an oversight council of existing federal regulators to share information, identify gaps in regulation and tackle issues that don't fit neatly into an organizational chart. The President also called for the creation of a new agency dedicated to looking out for the interests of consumers in the financial markets.
While the Nasdaq finished higher by 11.88 points or 0.7% at 1,808, the Dow slid 7.49 points or 0.1% to 8,497 and the S&P 500 dropped by 1.26 points or 0.1% to 911.
The Nikkei 225 Average opened sharply lower at 9,778 compared to its previous close of 9,840 and continued to drift lower in negative territory. The index finally closed at 9,704, representing a loss of 137.13 points or 1.39%. The broader Topix Index of all first section issues ended at 911, down 11.82 points or 1.13%.
Crude oil prices ended flat with a loss of 3 cents at $71.00 a barrel in Asian trading. Light sweet crude oil finished at $71.03, up $0.56, on Wednesday in New York.
Profit-taking in trading houses, steel and oil companies dragged the market lower. Nippon Steel declined 4.20% after Japan Iron and Steel Federation revealed that production declined more than third during May. Kobe Steel slumped 5.29%. Sumitomo Metal Industries plunged 6.69%.
Mitsui & Co fell 3.64%, Mitsubishi Corp. declined 4.22% and Sumitomo Corp. lost 3.07%.
Among oil and coal companies, Nippon Mining Holdings fell 6.79%, Nippon Oil declined 2.79% and Showa Shell edged down 0.30%.
Among exporters, Honda Motor declined 2.62% and Sony Corp declined 3.13% on the stronger local currency.
Mitsubishi Motors managed to buck the trend and gain more than 3% after announcing plans to develop a cheaper electric vehicle.
The All Ordinaries Index opened unchanged from its previous close at 3,904. Weak cues from Wall Street and concerns about a global recovery dragged the indices below the unchanged line. The index remained below the unchanged line for the bulk of the session before closing at 3,887, representing a loss of 16.80 points, or 0.43%. The benchmark S&P/ASX 200 Index followed a similar trend and ended lower at 3,892, a loss of 12.00 points or 0.30%.
On the economic front, a report released by the Australian Bureau of Statistics revealed that merchandise imports dropped a seasonally adjusted 5% month-on-month in May. Total imports declined to A$16.39 billion from A$17.19 billion in the preceding month.
Separately, a survey released by the Australian Chamber of Commerce and Industry, or ACCI, revealed that business confidence in the country improved in the second quarter. The survey revealed that about 23% of firms surveyed expect improvement in general business conditions, while 27% expect a deterioration. More importantly, half of the respondents expect no change in business conditions.
Resource stocks dragged the market lower on weak commodity prices. BHP Billiton, the world's largest mining company, declined 2.69%. Rio Tinto, which has been trading ex-dividend from Wednesday, slumped 8.95%. Nickel producer Mincor Resources fell 3.61%, and Oz Minerals fell 4.15%.
Gold stocks ended lower on lower gold prices. Lihir Gold declined 1.04%, Sino Gold lost 2.43%, and Newcrest Mining fell 1.16%.
Mixed trading was witnessed among oil stocks. While Woodside Petroleum declined 1.00%, Santos gained 3.59%, and Oil Search rose by 2.89%.
Westfield Group, which owns shopping centers, gained 1.82% following the news that the company has been in discussion with banks for raising about $1.25 billion as a forward start loan for its future expansion plans.
Financial stocks advanced after a report released by the Reserve Bank of Australia revealed that net interest margin, the key measure of bank's performance, has improved in the first half of fiscal 2010 and is presently higher than the margins that prevailed before the start of the global financial crisis. Commonwealth Bank added 0.98%, National Australia Bank gained 1.47% and Westpac Banking Corp advanced 1.58%. However, ANZ Bank bucked the trend and ended lower by 0.61%.
In Hong Kong, the Hang Seng Index opened sharply lower at 17,956 compared to its previous close of 18,085 and continued to trade in the negative territory on increasing concerns about global recovery and lower commodity prices. The market ended with a loss of 308 points, or 1.70%, at 17,777.
All the components of the index, except five stocks, ended in negative territory on concerns about valuation. Banks led the declines following the downgrade of 22 banks in the U.S by Standard & Poor's Wednesday.
Among financial stocks, Bank of China fell 2.85%, Bank of Communications lost 2.50%, ICBC slumped 3.57% and China Commercial Bank declined 2.64%.
Property and resource stocks ended in negative territory. Among resource stocks, Aluminum Corp. of China, or CHALCO, fell 2.90% on lower commodity prices. PetroChina lost 2.31% and CNOOC, the largest offshore oil company in China, declined 1.24%.
In property space, New World Development declined 2.03%, Sino Land fell 1.68%, SHK Property lost 1.89% and Henderson Land Development edged down 0.47%.
In South Korea, the benchmark KOSPI Index ended in negative territory for the fifth consecutive day. After opening slightly weaker at 1,390 compared to previous close at 1,392, the market remained firmly in the negative territory amid volatile trading. Technology and steel stocks declined on concerns about global recovery. The index ended in the negative territory at 1,376, representing a loss of 15.41 points, or 1.11%.
Steelmakers ended lower on demand concerns. Industry leader POSCO dropped 2.36% and Hyundai Steel fell 1.01%.
Technology stocks ended in negative territory on concerns about demand. Samsung Electronics, the leading computer memory-chip maker, lost 1.74% and Hynix Semiconductor slumped 4.38%..
In India, the stock market ended sharply lower as investors preferred to take profits. Weak global cues and lower metal prices impacted the sentiment.
The BSE Sensex lost 257.31 points, or 1.77% to close at 14,266, and the broader Nifty Index shed 104.75 points, or 2.40%, to close at 4,251
Among the other major markets in the region, China's Shanghai Composite Index managed to end in positive territory with a gain of 43.78 points, or 1.56% at 2,854 after the World Bank revised the growth forecast.
However, Strait Times Index in Singapore fell 34.25 points or 1.51% to close at 2,237, Taiwan Weighted Index lost 0.83% or 51.38 points to close at 6,145, and Indonesia's Jakarta Composite Index, slumped 3.65%, or 73.98 points, to close at 1,951.
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