Asian stocks retreated for a sixth day on Thursday, as losses on Wall Street overnight in response to the release of Fed minutes dented investor sentiment. A surprise rate cut from South Korea, its first such move in more than three years, together with a report showing an unexpected drop in Australian employment also deepened worries over the global economic outlook.
Investor sentiment took a hit after the minutes from the U.S. Federal Reserve's June meeting suggested policymakers are at odds over adding more stimulus to the U.S. economy. Also, with fresh concerns emerging about China, investors seemed to have decided to adopt a wait and watch approach before China's GDP and industrial output data that will be out tomorrow.
Tokyo stocks fell sharply, extending their losing streak for a sixth consecutive session, after the Bank of Japan refrained from adding monetary stimulus. The central bank tweaked its asset purchase program, moving to buy more treasury-discount bills, but kept its overall size of financial asset-buying unchanged at Y70 trillion, last raised in April from Y65 trillion.
The central bank held off on further monetary easing measures, believing that robust private consumption and spending on rebuilding after last year's earthquake will keep the country's economic recovery on track. The Nikkei average lost 1.5 percent, while the broader Topix index slid 1.3 percent.
China's Shanghai Composite index rose half a percent, as investors went bargain hunting in coal and metal stocks on expectations the economy might have bottomed out in the second quarter.
Hong Kong's Hang Seng index closed down a little over two percent after the Federal Reserve's June meeting minutes showed no imminent plans for more quantitative easing.
Australian shares lost ground, erasing early gains after official data showed the Australian economy lost 27,000 jobs in June, well shy of forecasts for no change after adding 38,900 jobs in the previous month. Full-time employment decreased 33,500 to 8,065,500 while part-time employment increased 6,600 to 3,435,000.
The unemployment rate stood at a seasonally adjusted 5.2 percent in the month, in line with expectations and up from 5.1 percent in May. Both the benchmark S&P/ASX and the broader All Ordinaries index lost about 0.7 percent each.
Miners paced the decliners, with BHP Billiton and Rio Tinto falling 2-3 percent, while smaller rival Fortescue slumped 6.1 percent. Among the big four banks, ANZ fell 1.2 percent, Commonwealth edged down 0.2 percent and NAB shed 0.6 percent, but Westpac rose 0.2 percent.
Mineral sands miner Iluka Resources tumbled 3.1 percent after it reported a sharp drop in sales volumes in the first half of the year. Telstra edged down 0.3 percent after announcing a deal with Vodafone for the sale of its New Zealand operations.
South Korea's Kospi average tumbled 2.2 percent to a five-week low, as a surprise rate cut by Bank of Korea, joining the global rush to ease monetary policy, reflected the uncertainty facing global economies. Also, foreign investors dumped blue-chip exporters upon the expiry of future & option contracts. Heavyweight Samsung Electronics fell 2.4 percent, while Hyundai Motor, South Korea's largest automaker, tumbled 3.1 percent.
The Bank of Korea unexpectedly lowered its base rate by 25 basis points to 3 percent to support the domestic economy from global economic turbulence. "Today's rate decision was made in an action against the GDP gap and also to act pre-emptively. The effects of monetary policy decisions are long-term," Governor Kim Choong-soo said at a press conference after the decision.
New Zealand shares rose, shrugging off weak regional cues, as merger and acquisition announcements kept sentiment buoyant. The benchmark NZX-50 index rose 0.7 percent. Shares of Guinness Peat Group rose 2.2 percent after the firm rejected a $A220 million offer for ClearView Wealth, saying the price was "wholly inadequate".
Australia's biggest telecommunications company Telstra Corp. rose 0.8 percent after Vodafone agreed to buy its New Zealand operations. Shares of Heartland New Zealand jumped almost 6 percent after Philip Carter of Carter Group said he now holds 20.97 million shares or a 5.39 percent stake in the would-be bank.
India's benchmark Sensex was last trading down 1.4 percent, dragged down by software service exporters after IT bellwether Infosys posted disappointing first-quarter results. However, offering some respite, government data released today showed that India's industrial output rebounded by a higher-than-expected 2.4 percent in May following a revised 0.9 percent contraction in April.
Elsewhere, Indonesia's Jakarta Composite index was down 0.9 percent, Malaysia's KLSE Composite edged down 0.2 percent, Singapore's Straits Times index eased 0.6 percent and the Taiwan Weighted average lost 1.8 percent.
On Wall Street, stocks posted modest losses overnight, as investors reacted negatively to the minutes of the latest Federal Reserve meeting that provided no hint of any further quantitative easing. According to the minutes, the Fed members were in favor of further action if necessary, but there were no hints that the Fed was considering a third round of quantitative easing. The Dow slid 0.4 percent and the tech-heavy Nasdaq fell half a percent, while the S&P 500 closed roughly flat.
by RTT Staff Writer
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