Asian stock markets are mostly trading lower on Thursday, tracking the mixed cues from Wall Street following the Federal Reserve's decision to extend "Operation Twist"and not implement a third round of quantitative easing that investors had expected.
Investors also preferred to remain on the sidelines ahead of the release of Chinese economic data. Bucking the trend, the Japanese market is trading in positive territory on the back of a weaker yen.
The Fed said it will expand Operation Twist, replacing short-term securities in the Fed's bond portfolio with longer-term securities by $267 billion through 2012, in an effort to push already low long-term interest rates even lower.
Fed Chairman Ben Bernanke said that the move was one of the ways the central bank could boost the economy since the most traditional policy action, the lowering of interest rates, is essentially not available.
Meanwhile, investors await the release of the preliminary June reading for China's manufacturing sector. The HSBC's Flash Manufacturing Purchase Managers Index will be announced later in the day.
The Japanese market is trading higher with investors indulging in brisk buying at several counters.
In late morning trades, the benchmark Nikkei 225 Index was gaining 98.84 points or 1.13 percent to 8,851.15, topping the 8,800 level for the first time in about a month on an intraday basis.
Among exporters, Canon is advancing 1.55 percent and Sony is up 2.18 percent. Panasonic Corp, Kyocera Corp. and Toshiba Corp are gaining more than 3 percent each.
Among automakers, Honda Motor Co. is up more than 3 percent, while Toyota Motor Corp. is adding 0.98 percent and Suzuki Motor Corp. is adding 1.23 percent.
Nissan Motor Co. said it will trim domestic production capacity by 15 percent from July by suspending one of two production lines at its Oppama plant in Kanagawa prefecture, the Nikkei business daily reported Thursday. The company's stock is adding 1.47 percent.
Renesas Electronics Corp. shares gained more than 7 percent after the company's top three shareholders - Hitachi Ltd., NEC Corp. and Mitsubishi Electric Corp. - agreed on Wednesday to offer financial aid to the troubled chipmaker.
Olympus reportedly said it needs to quickly build its capital base through a tie-up with another company. The scandal-hit company's president Hiroyuki Sasa reportedly said the company needs an investment of 50 billion yen. The company's shares are adding 1.36 percent.
On the economic front, Japan residents bought a net 41.1 billion yen in foreign stocks in the week ended June 16, the Ministry of Finance said on Thursday. Japan investors also bought a net 70.8 billion yen in foreign bonds and notes last week, the ministry said.
Meanwhile, foreign investors purchased a net 58.5 billion yen in Japanese stocks last week and they also bought a net 412.6 billion yen in Japanese bonds and notes.
In the currency market, the U.S. dollar was trading in the mid-79 yen range on Thursday. In late morning trades, the dollar was trading in a range of 79.45-79.46 yen, up 0.61 yen from Wednesday's close of 78.84-78.85 yen in Tokyo.
The Australian stock market is trading marginally higher, tracking the mixed cues from Wall Street following the Federal Reserve's decision to extend "Operation Twist"and not implement a third round of quantitative easing that investors had expected.
Financial, energy and mining stocks are mostly trading lower. The benchmark S&P/ASX 200 Index is adding 3.10 points or 0.08 percent to 4135.50, while the All Ordinaries Index is gaining 2.20 points or 0.05 percent to 4,179.00.
Among bank stocks, Westpac is losing 0.14 percent, National Australia Bank is down 0.38 percent, Bendigo & Adelaide Bank is trading lower by 0.54 percent and Bank of Queensland is declining 0.59 percent. Meanwhile, ANZ Bank is up 0.05 percent and Commonwealth Bank of Australia is adding 0.12 percent.
Among top miners, Rio Tinto is gaining 0.26 percent, while BHP Billiton is down 0.15 percent, Fortescue Metals is trading lower by 0.41 percent and Newcrest Mining is losing 1.53 percent.
Rio Tinto said Wednesday that it will commit $4.2 billion to develop its tier one iron ore business, as it sees increased iron ore demand from Asian markets, mainly from China.
In the energy sector, Woodside Petroleum is down 0.52 percent, Santos is losing 1.07 percent, Oil Search is declining 0.60 percent and Origin Energy is trading lower by 0.08 percent.
APN News & Media said it has bought an 82 percent stake in one of e-commerce business brandsExclusive for an upfront investment of A$36 million. The company will pay an additional A$30 million after brandsExclusive achieves its earnings targets for 2013. However, the company's stock is down 1.36 percent.
Tech giant Apple Inc. has been ordered by an Australian court to pay a fine of A$2.25 million for running misleading advertisements on its new iPad. The company was taken to court by the Australian Competition and Consumer Commission for branding the latest version of its iPad as "wifi + 4G" when the device did not work on any existing Australian 4G networks.
In the currency market, the Australian dollar reached a seven-week high after the end of the U.S. Federal Reserve meeting, but fell back to where it began its overnight session. The dollar was recently trading at US$1.0195, compared to US$1.0194 on Wednesday.
Among other markets in the Asian region, New Zealand, Hong Kong, Singapore, Shanghai, South Korea, Malaysia and Taiwan are trading marginally lower.
On Wall Street, stocks saw considerable volatility over the course of the trading day on Wednesday as traders digested news of the Federal Reserve's decision to extend "Operation Twist." Nonetheless, the markets largely held on to their recent gains.
While the Nasdaq crept up 0.69 points or less than a tenth of a percent to 2,930.45, the Dow edged down 12.94 points or 0.1 percent to 12,824.39 and the S&P 500 slipped 2.29 points or 0.2 percent to 1,355.69.
The major European markets moved higher on Wednesday, ahead of the Fed's announcement. The DAX of Germany gained 0.45 percent and the FTSE 100 of the U.K. climbed by 0.64 percent. The CAC 40 of France rose by 0.28 percent, but the SMI of Switzerland declined by 0.27 percent.
U.S. crude oil futures ended sharply lower Wednesday, the lowest since early October 2011, mostly on demand growth concerns after an Energy Information Administration report showed U.S. crude oil stockpiles to have increased more than expected last week. Investors also weighed the Federal Reserve move to leave its interest rate unchanged and extend Operation Twist, citing a slowdown in jobs.
Crude for July delivery dropped $2.23 or 2.7 percent to close at $81.80 a barrel on the New York Mercantile Exchange.
by RTT Staff Writer
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