Asia stock benchmarks fell Thursday, as hopes of fresh stimulus efforts from the US diminished, and investors remained cautious ahead of key growth data from China on Friday.
Japan’s Nikkei Stock Average JP:100000018 -0.74 percent fell 1 percent ahead of a decision for the nation’s central bank later today, South Korea’s Kospi KR:SEU -0.70 percent dropped 0.7%, and Australia’s S&P/ASX 200 index AU:XJO -0.52 percent lost 0.4%.
In China, Hong Kong’s Hang Seng Index HK:HSI -1.69 percent plunged 1.7%, while the Shanghai Composite Index CN:000001 -0.28 percent surrendered 0.7%.
Linus Yip, strategist at First Shanghai Securities in Hong Kong said disappointment about a lack of imminent easing by the US Federal Reserve was draining confidence across Asia.
“A lack of QE3 is negative for global markets,” Yip said.
He said investors were also cautious ahead of Friday’s much-anticipated Chinese second-quarter economic growth figures.
“Markets are occupied with the slowing in China. If GDP goes down to 7 percent or 7.2%, it won’t be a good sign, but it may also mean more action from the People’s Bank of China, and markets may jump at that,” Yip said. Read MarketWatch First Take on coming China data.
Bank and property shares sold-off sharply in Hong Kong. Industrial & Commercial Bank of China Ltd HK:1398 -2.69 percent IDCBF -4.36 percent CN:601398 0.00 percent lost 2%, and China Merchants Bank Co. HK:3968 -2.77 percent CIHHF -3.23 percent CN:600036 -1.09 percent retreated 2.2%, while in the property sector, Agile Property Holdings Ltd HK:3383 -2.58 percent AGPYY +9.50 percent fell 2%, and New World Development Co. NDVLF +11.61 percent HK:17 -2.13 percent traded down 1.4%.
Luxury plays were also heavy decliners in Hong Kong, as Prada SpA HK:1913 -4.47 percent PRDSY -1.83 percent gave up 4%, and Chow Tai Fook Jewellery Group Ltd HK:1929 -7.53 percent slumped 6.2 percent after reporting a fall in its Hong Kong same-store sales in the most recent quarter.
Fed dampens sentiment
The share falls in Asia came after a lack of clarity from the Federal Reserve on future easing measures, which sent most US indexes lower Wednesday. Read more on the US session.
IG Markets strategist Cameron Peacock said that while the minutes of the Fed’s June policy meeting showed several members in favour of further accommodative policies, “it seems they were in the minority, and for the time being the Fed is set to maintain the status quo and monitor the progress the of the economy.”
Central banks were also in focus in Asia, as the Bank of Korea delivered a surprise quarter-percentage cut to its benchmark rate, bringing it to 3%. Read more on South Korea rate cut.
The Bank of Japan, while highly unlikely to adjust ultra-low interest rates, was likely to consider whether to expand its asset-buying programme at its policy meeting later Thursday.
Ahead of the decision, Tokyo-listed financials were weak. Nomura Holdings Inc. JP:8604 -2.90 percent NRSCF -0.48 percent NMR +0.88 percent slumped 2.9%, Aozora Bank Ltd JP:8304 -1.09 percent retreated 1.6%, and Daiwa Securities Group Inc. JP:8601 -1.44 percent DSEEY +1.47 percent gave up 2.2%.
Major exporters also traded lower, including a 6.2 percent plunge for Renesas Electronics Corp. JP:6723 -7.22 percent RNECY -4.85%, while Sharp Corp. JP:6753 -5.34 percent SHCAY -2.21 percent sank 5.3 percent and Mazda Motor Co. JP:7261 -1.03 percent MZDAY -6.82 percent fell 2.1%.
Hitachi Construction Machinery Co. JP:6305 -1.55 percent lost 1.6 percent despite a Nikkei report that operating profit for the April-June quarter was expected to jump following strong U.S and Japanese sales.
Weakness for shipping-related firms helped drag South Korean stocks lower, Hyundai Mipo Dockyard Co. declined 2.1 percent and Hyundai Heavy Industries Co. pulled back 1%.
Shares of Hyundai Motor Co. HYMLY -0.0052 percent slipped 0.2%, while Kia Motors Corp. turned up 0.3%, after a wage dispute saw workers vote in favour of their first strike action in years. Read more on the Hyundai, Kia strike.
Resource shares sold-off across Asia following a mostly weak overnight session for commodity markets.
Hong Kong-listed Aluminum Corp. of China Ltd HK:2600 -2.84 percent ACH +0.30 percent sank 2.5 percent and China Coal Energy Ltd HK:1898 -1.55 percent CCOZY +3.29 percent traded down 2.6%.
Global miners BHP Billiton Ltd AU:BHP -2.19 percent BHP +0.70 percent and Rio Tinto Ltd AU:RIO -2.63 percent RIO +1.36 percent dropped 2 percent and 2.3%, respectively, in Sydney.
Also in Sydney, Telstra Corp. AU:TLS +0.26 percent TLSYY +0.63 percent inched up 0.1 percent after the Australian telecom sold its New Zealand subsidiary TelstraClear to Vodafone Zealand for nearly $670 million. -By Virginia Harrison