Mixed trading was witnessed among the Asian markets open for trading on Tuesday. The Chinese market was closed for a holiday. The markets in Australia, India, South Korea and Taiwan ended in negative territory, while the markets in HongKong, Indonesia, Japan and Singapore ended in positive territory with modest gains. The surprise decision by RBA to hold interest rates, and Bank of Japan'sstimulus measures apart from reducing key interest rates impacted market sentiment across the region. The weakening of the yen following new measures helped Nikkei post gains while Australian market declined on RBA's disappointment. Weak closing on Wall Street in the previous session also impacted market sentiment in early trading.
In Australia, the benchmark S&P/ASX200 Index declined 18.40 points, or 0.40%, and closed at 4,610 points, while the All-Ordinaries Index ended at 4,661, representing a loss of 17.80 points, or 0.38%.
On the economic front, a report released by the ANZ revealed that the total number of job advertisements in the country rose by a seasonally adjusted 0.7% on month in September to 177,380. The statement further revealed that this is the fifth straight month of increases in the job advertisements. While Newspaper ads declined 1.9% on month, Internet job ads added 0.8%, the statement revealed.
The Reserve Bank of Australia surprised the market by keeping the interest rates unchanged at 4.5% fro the fifth straight month, belying market expectations for a 25 basis point increase to 4.75%. Commenting on the surprise decision, Glenn Stevens, RBA Governor said, "The current stance of monetary policy is delivering interest rates to borrowers close to their average of the past decade. The board regards this as appropriate for the time being. If economic conditions evolve as the board currently expects, it is likely that higher interest rates will be required, at some point, to ensure that inflation remains consistent with the medium-term target".
Separately, results of a new survey conducted by the Australian Industry Group in association with the Commonwealth Bank revealed that service sector activity in the country continued to decline in Septer at a faster pace than in August. The Australia Industry Group / Commonwealth Bank Australia services purchasing managers' index fell to a seasonally adjusted 45.6 from 47.5 in August. A reading above 50 indicates expansion while one below suggests contraction. This is the eighth time that the indicator has fallen below the no-change level of 50 in the past nine months. The latest fall in activity was led by the communication and finance & insurance sub-sectors. Personal & recreational services was the only sub-sector to expand in the month.
A report released by the Australian Bureau of Statistics revealed that retail sales rose a seasonally adjusted 0.3% in August, following a 0.7% increase in July and 0.3% rise in the month of June. Economists expected retail sales to rise 0.4% in August. In trend terms, which further smooth the seasonally adjusted data, retail sales rose 0.5% in August, following 0.5% increases in the preceding two months.
In a separate statement, the Australian Bureau of Statistics revealed that the country had a seasonally adjusted merchandise trade surplus of A$2.346 billion in August, slightly better than forecasts for a surplus of A$2.3 billion, following the revised A$1.743 billion surplus in July. The statement further noted that imports declined 5% on month, or A$1.211 billion, to A$22.365 billion, from A$23.576 billion in the previous month. Exports eased 2% on month or A$608 million to A$24.711 billion down from A$25.319 billion a month earlier. Banks ended the trading session in negative territory following RBA's decision to hold interest rates unchanged. ANZ Bank slipped 0.46%, Commonwealth Bank of Australia shed 0.56%, National Australia Bank edged down 0.31% and Westpac Banking Corp. declined 0.90%.
Mining and metal stocks also ended in negative territory. BHP Billiton slipped 1.25%, Rio Tinto fell 1.38%, Fortescue Metals lost 1.39%, Gindalbie Metals shed 0.54%, Macarthur Coal edged down 0.75%, Murchison Metals plunged 4.91%, Minara Resources declined 1.84% and Oz Minerals was down by 2.64%.
In Japan, the benchmark Nikkei 225 Index The benchmark Nikkei 225 Index gained 137.70 points, or 1.5%, to 9519, while the broader Topix index of all First Section issues advanced 9.90 points, or 1.2%, to 833.
On the economic front, results of anew survey released by Markit Economics revealed that Japan's service sector activity continued to decline in September and also at a faster pace compared to the previous month. As per the report, the Nomura services purchasing managers' index fell to a seasonally adjusted 48.5 from 48.7 in August. A reading above 50 indicates expansion while one below suggests contraction. This is the fifth time in as many months that the indicator has fallen below the no-change level of 50. The survey further noted that new work received by Japanese service providers declined again in September, although the rate of decline was only modest, and the slowest in that period. Those respondents that reported a decline in new orders widely attributed this to lackluster client demand.
In a significant development, the Bank of Japan cut its benchmark interest rate to almost zero as it seeks to kick start a faltering recovery. Under pressure from the government, the BOJ cut rates to 0-0.1% from 0.1%. Rates had been frozen at 0.1% since December 2008 to encourage people to spend and counter falling prices. The central bank also unveiled a new asset purchase scheme to buy up government bonds and boost liquidity in the deflation-wracked economy. The move comes at a time when talks of the U.S. Federal Reserve implementing additional quantitative easing is gaining momentum, as the recovery in the world's largest economy faces the threat of slowing notably or even stalling.
Large banks ended in positive territory following announcement from the Bank of Japan of fresh measures, including surprise rate cut, to support the economy. Sumitomo Mitsui Financial climbed 3.00%, Resona Holdings gained 1.99%, Mitsubishi UFJ Financial rose 2.36% and Mizuho Financial Group surged up 3.57%.
Electric machinery related stocks also surged higher on BOJ announcement and weakness in the local currency. Kyocera Corp. gained 2.84%, Fanuc Ltd rose 1.96%, Tokyo Electron climbed 3.99%, TDK Corp. added 1.69% and Mitsumi Electric Co. surged up 3.17%.
Exporters also ended in positive territory as yen weakened against the dollar. Canon Inc. added 0.38%,Sony Corp. gained 1.36%, and Panasonic Corp. climbed 1.89%.
Continued profit taking amid mixed Asian cues and a slightly disappointing report on India's service sector activity for September weighed on the Indian stock market Tuesday. However, the broader market witnessed significant activity ahead of the earnings season, with the BSE mid-cap and small-cap indexes up 0.78% and 1.14%, respectively. The market breadth was positive, with 1673 gaining shares versus 1291 declining ones.
After trading sideways in a range of 20561- 20,383, the benchmark 30-share Sensex ended down 68 points or 0.33% at 20,408, with 18 of its components ending in the red. The broader Nifty fell by 14 points or 0.22% to 6,146.
The market in China was closed for a holiday.
Among the other markets in the region, Jakarta Composite Index in Indonesia gained 22.20 points, or 0.62%, to 3,592 and the Strait Times Index in Singapore edged up 4.91 points, or 0.16%, to close at 3,162. However, Taiwan Weighted Index ended in negative territory with a loss of 45.67 points, or 0.55%, at 8,200.