By Ese Erheriene
Shares in Asia were mixed on Tuesday, with record levels seen in the U.S. market overnight offset by a dip in oil prices and a much stronger yen.
The yen moves drove the Nikkei Stock Average /zigman2/quotes/210597971/delayed JP:NIK -1.68% down 1.6% for the day. Taiwan’s Taiex ended down 0.4%, while Australia’s S&P/ASX 200 /zigman2/quotes/210598100/delayed AU:XJO +0.30% slipped 0.1% as a downswing in oil hit commodity producers. The Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI -0.07% was last up 0.1%, and Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 +1.03% closed 0.1% lower.
A paper released by Federal Reserve Bank of San Francisco President John Williams said U.S. central bankers should either raise the U.S. Fed’s inflation target from the current 2%, or move to a new target based on price levels or economic growth. The suggestion could give the Fed more room to keep rates at current levels, and the greenback softened against a range of currencies Tuesday, including the yen.
The firmer Japanese currency /zigman2/quotes/210561789/realtime/sampled USDJPY +0.1062% , last up 1% and pushing up against the 100 level versus the dollar, hit the share prices of local auto makers. Toyota Motor Corp. /zigman2/quotes/203803129/delayed JP:7203 -4.08% closed down 1.3%, Nissan Motor Co. Ltd. /zigman2/quotes/208298710/delayed JP:7201 -1.84% was off 1.7%, Honda Motor Co. Ltd. /zigman2/quotes/200490352/delayed JP:7267 -2.57% was 0.7% lower, and Mazda Motor Corp. /zigman2/quotes/204777714/delayed JP:7261 -3.00% lost 3.4%.
The market had earlier attempted to shrug off Japan’s disappointing gross-domestic-product data for the April-June quarter released on Monday, which weighed in at 0.2%, below an expected 0.7% expansion.
“On the one hand, the economy is not doing well which doesn’t look good for domestic profits of Japanese firms,” said Marcel Thieliant, senior Japan economist at Capital Economics. However, the weak figures increase the chance of more easing by the Bank of Japan, he said.
Late on Monday, the S&P 500 /zigman2/quotes/210599714/realtime SPX +0.80% , Dow Jones Average /zigman2/quotes/210598065/realtime DJIA +0.17% and the Nasdaq Composite /zigman2/quotes/210598365/realtime COMP +1.37% all reached record highs — a feat they accomplished last Thursday for the first time since 1999 — on the back of hopes for production cuts in the oversupplied oil market.
Brent crude oil eased back from a one-month high in Asian trade, though, and was last down to $47.94 a barrel.
“I don’t think that [the U.S. highs are] too significant,” said William Ma, chief investment office at Noah Holdings Ltd. The muted impact on Asian stocks was due to the small gains involved, he said.
China launches first quantum communications satellite
China launched Micius, said to be the world's first quantum satellite, early Tuesday. The encryption technology it carries could put Beijing far ahead of its rivals in the global race for hack-proof communication.
The Shanghai market erased earlier gains as investors took profits in financial blue-chips. The benchmark Shanghai Composite Index /zigman2/quotes/210598127/delayed CN:SHCOMP +0.11% closed down 0.5% to 3,110.6, after trading up as high as 0.5% after the opening. Banking, car manufacturing and insurance stocks retreated the most as investors took profits in blue-chips.
Hong Kong stocks clawed back some of their early gains after losses in the afternoon session, with persistent talk that the Shenzhen-Hong Kong Connect trading link would be launched before the end of the year having a bullish impact. But banking stocks remained in the red, with HSBC PLC /zigman2/quotes/200827035/delayed HK:820 0.00% down 0.6% and Standard Chartered PLC /zigman2/quotes/202369078/delayed HK:2888 -0.39% 0.7% lower.
“The market was reaching...overbought conditions because of yesterday’s moves, especially the Hong Kong market,” said Hao Hong, chief strategist and co-head of research at Bank of Communications Co. Ltd. “Some people want to lock in gains.”
Elsewhere, China Evergrande Group’s Hong Kong shares /zigman2/quotes/208605330/delayed HK:3333 -1.67% rose 1% after it increased its stake in China Vanke Co. Ltd /zigman2/quotes/203851375/delayed HK:2202 -2.07% to 6.8% from 5%. According to Lucror Analytics, Evergrande’s accumulation of Vanke shares was puzzling, given that the developer is heavily indebted, having aggressively used debt capital to fund recent expansions and acquisitions. Vanke was last trading up 2.7%.
The FTSE Bursa Malaysia Index /zigman2/quotes/210598052/delayed MY:FBMKLCI -0.06% climbed Tuesday, lifted by expectations of more monetary easing around the globe. The Malaysia 30-stock benchmark index increased 0.5% to 1,699.1 points in early trade, and was up 0.5% year-to-date.