06/05/2015 00:56 AST
Asian stocks drifted Tuesday, reversing earlier gains, with China stocks taking fright as new share issues raised the prospect of a sell-off.
Hong Kong’s main index slid 1 per cent by mid-session, tracking China stocks which fell as the new issues raised the prospect of funds being diverted from existing equities, dealers said. The benchmark Shanghai Composite Index dropped 1.84 per cent at the break.
“Today and tomorrow will be the peak for the latest round of IPOs so people may be selling down their holdings from the secondary market to use the money for IPO subscription,” Steven Leung, Hong Kong-based director of institutional sales at UOB Kay Hian, told Bloomberg News.
The Shanghai Composite has recorded an astonishing 118 per cent gain over the past year, on expectations of further monetary easing in China.
Australia’s benchmark S&P/ASX200 closed flat at 5,826.5, dropping 1 point or 0.02 per cent, giving up earlier gains as bank stocks mostly drifted lower after the central bank cut interest rates to an historic low of 2 per cent.
Tokyo and Seoul were closed for holidays, but early trade elsewhere in Asia had been energised by Wall Street, which put in a strong performance Monday on news of the first rise in US factory orders in eight months.
The Dow gained 46.34 points or 0.26 per cent to 18,070.40 after the Commerce Department said new orders for manufactured goods rose 2.1 per cent in March, after seven straight months of declines.
The Australian bourse gyrated around the central bank’s rate decision to cut official rates to a record 2 per cent from 2.25 per cent, as it tries to tamp down the Aussie dollar and stoke economic growth to offset a downturn in the key mining sector.
“At today’s meeting, the board judged that the inflation outlook provided the opportunity for monetary policy to be eased further, so as to reinforce recent encouraging trends in household demand,” Reserve Bank of Australia governor Glenn Stevens said in a statement.
Stevens said the Australian dollar, which has lost ground amid plunging commodity prices, needed to fall further.
The local unit eased to 77.88 US cents immediately after the decision but jumped back to over 79 US cents.
Analysts said the sharp rise reflected the market’s disappointment that the central bank did not include an easing bias in its statement, which could have pointed to further rate cuts.
The greenback was up against the euro and most other major Asian currencies in afternoon Asian trade on fresh expectations the US central bank may raise interest rates in the second half of the year, analysts said.
The euro bought $1.1132, down from $1.1146 in New York late on Monday. The greenback however eased to 120.09 yen from 120.14 yen.
Against the Japanese currency, the euro was changing hands at 133.68 yen from 133.92, but trade was thin with Tokyo markets closed.
Volumes were also thin in oil, with prices edging lower on Tuesday as concerns over a global supply glut persisted and few fresh leads emerged for dealers to track.
Oil prices edged lower in thin Asian trade on Tuesday as concerns over a global supply glut persisted, with few fresh leads for dealers to track.
US benchmark West Texas Intermediate fell seven cents to $58.86 while Brent crude eased ten cents to $66.35 in mid-morning trade.
AFP
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