China back on & up. Japan machine orders drop
News Bot: Japanese Machine Orders (Aug) M/M -5.70% vs. Exp. 2.30% (Prev. -3.60%)
- Machine Orders (Aug) Y/Y -3.50% vs. Exp. 3.50% (Prev. 2.80%)
- Japanese government says that machine orders are declining and cuts its assessment.
(Economic and Social Research Institute)
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Chinese stocks rose sharply Thursday, catching up to a rally in global equities after the market was closed for a week-long holiday.
The Shanghai Composite Index was up 3.5% at 3158.90, putting its gains since the lowest point of a painful summer selloff at more than 7%. The benchmark is still off 39% from its June peak.
Valuations in Chinese domestic shares have fallen to less-concerning levels and the "repair is almost done," wrote Kinger Lau, an analyst at Goldman Sachs , in a note earlier. The mainland market has fallen to trade at a ratio of 11 times price-to-earnings on a market-capped basis, although its median valuation is still 20 times.
Meanwhile, Hong Kong's Hang Seng Index was off 0.5% and Japan's Nikkei Stock Average was down 0.1%. The latter was coming off a six-day winning streak that had taken it to its highest level in almost one month.
Energy shares in Hong Kong pulled back, as oil prices fell from a more than one-month high Wednesday. PetroChina Co. and China Shenhua Energy Co. were each down more than 2%, after rallying more than 9% a day earlier.
Japanese trading company Mitsubishi Corp. was down 0.2% after rallying 7% Wednesday, while Australian energy shares made muted gains. Woodside Petroleum Ltd. , for example, was up 0.1% after rallying 6% yesterday.
Brent crude oil prices were up were up 0.4% at $51.51 a barrel in Asia trade, but prices slid in U.S. trade overnight to as low as $51.25 after inventory data showed U.S. stockpiles of crude oil and petroleum products at a record high.
Shares in Australia and South Korea were up little more than 0.2% each.
The region's currencies, having strengthened earlier this week, lost some momentum. The Malaysian ringgit was last flat against the U.S. dollar after sharp gains on Wednesday.
On Wednesday, the International Monetary Fund warned that troubles in emerging markets could risk asset fire sales and curtail growth in rich countries. Downbeat German industrial production figures added more evidence of weakening exports to emerging markets.
However, earlier this week, hopes the Federal Reserve would hold off on raising interest rates quieted fears about outflows from emerging markets, fueling steep gains in some currencies. Many investors raced to cover short bets, which bumped up currencies like the ringgit and rupiah. The latter logged its biggest one-day rise in seven years on Wednesday.
On Wednesday, the deputy governor of China's central bank, Yi Gang , sought to allay fears of a deep economic slowdown in China , saying continued growth would stabilize the country's currency and allow the central bank to let it move according to market forces.
Data Wednesday showed the China's foreign exchange reserves dropped by $43.26 billion in September compared with $ 93.93 billion in August. The trend signals the country's central bank could step up monetary easing, which could a positive for markets.
A hands-off approach could cause more depreciation in the yuan, also known as the renminbi, should the Chinese economy weaken further. But "fundamentals" such as China's strong trade surplus would ensure the yuan's strength, Mr. Yi said.
In August, the Chinese central bank let the yuan fall against the dollar but later intervened to prop up the currency. Mr. Yi said that intervention didn't represent a change of heart on the part of the central bank but rather an attempt to stamp out market volatility.
Gold prices were down 0.4% at $1144.00 a troy ounce.
Write to Chao Deng at Chao.Deng@wsj.com
(END) Dow Jones Newswires
10-07-15 2214ET
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