An earlier version of this report misstated the relative value of the yen to the dollar. The yen has been strong compared to its average value in 2010. The report has been corrected.
TOKYO (MarketWatch) — Japanese stocks ended lower Monday, with a persistently strong yen dragging on some Japanese exporters, while Hong Kong staged a late-session turnaround as banking shares rebounded.
The Nikkei Stock Average (NIKKEI:JP:NIK) ended down 0.7% at 9,448.21, while the broader Topix index lost 0.6% to finish at 812.26.
Toyota Motor Corp. (TKS:JP:7203) (NYS:TM) lost 2.4% after the car maker issued a weaker-than-expected profit outlook late Friday, with the news weighing on the overall auto sector. Read more on Toyota‘s fiscal-year forecast.
The dollar (XTUP:USDJPY) remained below ¥81, though it had risen to ¥80.49 by the Tokyo stock close, up slightly from ¥80.35 in late North American trading Friday.
A strong yen erodes the repatriated profits of exporters, with Monday’s decliners including Fujitsu Ltd. (TKS:JP:6702) (OTC:FJTSY) , down 2.3%; Nintendo Co. (OTC:NTDOF) dropping 2.7%; and Toshiba Corp. (TKS:JP:6502) (OTC:TOSYY) lower by 1.5%.
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Also bruising sentiment in Tokyo Monday were monthly data showing an unexpected drop in core machinery orders, which are considered a leading indicator of corporate capital spending. Read more on Japan core machinery orders.
In Hong Kong, stricter rules for residential mortgages hurt real-estate shares, but the Hang Seng Index (HONG:HK:HSI) surged late in the day on the banking rebound to end 0.4% higher at 22,508.08, after having traded down more than 1% earlier in the session.
Measures by the Hong Kong Monetary Authority on Friday to limit the size of mortgages for some residential properties helped send Agile Property Holdings Ltd. (HKG:HK:3383) (OTC:AGPYY) down 1.4%, and Sino Land Co. (HKG:HK:83) (OTC:SNLAF) lower by 1.7%. See report on Hong Kong property tightening moves.
Banking shares suffered early in the session after People’s Bank of China data showed Chinese financial institutions issued 551.6 billion yuan ($85 billion) of new loans in May, easing from 739.6 billion yuan in April and missing a consensus expectation of 650 billion yuan cited in several news reports. Money-supply growth was also less than expected. See report on Chinese monetary data.
“Though these readings could ease markets’ inflation expectations, they could also add fear to the credit-crunch stories and worsen worries of a hard landing in China,” Bank of America Merrill Lynch analysts in Hong Kong said in a note following the data release.
But the banks staged a sharp rebound in late trading, with Delta Asia Financial Markets equities chief Conita Hung saying bargain hunting led the reverse.
“I don’t see any positive news. ... [Rather,] this was a technical rebound,” she said, describing the market as cautious ahead of key Chinese consumer-inflation data due out Tuesday.
By the close, most major banks had chalked up solid gains in Hong Kong, with Bank of China Ltd. (SHG:CN:601988) (HKG:HK:3988) (OTC:BACHY) swinging to a 1% rise, and Bank of Communications Ltd. (SHG:CN:601328) (HKG:HK:3328) (OTC:BKFCF) up 0.8%.
But Hung warned that if China’s consumer price index surprises to the upside — suggesting more aggressive tightening to come from Beijing — the Hang Seng Index could test the 22,000 level later this week.
Weak crude weighed on energy shares around the region, with the benchmark Nymex contract languishing at or below $99 a barrel for much of the day.
Energy shares fell in Tokyo, with Inpex Corp. (TKS:JP:1605) (OTC:IPXHY) and Japan Petroleum Exploration Co. (TKS:JP:1662) (OTC:JPTXF) each ending 1.7% lower.
In Hong Kong, PetroChina Co. (HKG:HK:857) (SHG:CN:601857) (NYS:PTR) slipped 0.6%, while China Petroleum & Chemical Corp. (HKG:HK:386) (NYS:SNP) , also known as Sinopec, ended flat.
Still, weak crude helped some airline shares, with Cathay Pacific Airways Ltd. (HKG:HK:293) (OTC:CPCAY) rising 0.4%.
Elsewhere in Asia, South Korea’s Kospi (KOREA:KR:180721) closed with a 0.1% gain after moving in either direction during the session, and the Shanghai Composite (SHE:CN:000001) narrowed a 1.1% drop in the morning session to close a more modest 0.2% lower, also benefitting from a rebound in many financials.
Markets in Australia were closed for a public holiday Monday.
Overall, last week’s Wall Street losses helped to depress investor sentiment in Asia. On Friday, the Dow Jones Industrial Average (DOW:DJIA) fell 1.4% to hit its lowest close since March 18, rounding out its sixth straight losing week. Read more on U.S. stocks.
“Last week was another poor week for risk appetite, with weaker-than-anticipated Chinese trade data adding another layer to global growth concerns that had been previously led by the U.S., following a run of weak economic data,” said Mitul Kotecha, a strategist at Credit Agricole SA in Hong Kong.
“Data releases this week are unlikely to reverse the negative sentiment pervading markets,” he said in a note to clients Monday.
In the U.S. this week, key releases are slated to include retail sales, consumer-price inflation, industrial production and consumer sentiment. See U.S. economic preview.