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Asia markets end mixed, retracing some Yellen-inspired gains

Asia markets ended mixed on Thursday, with some markets partially retracing their advances following U.S. Federal Reserve chair Janet Yellen's cautious stance on the path of tightening earlier this week.

Japan's Nikkei 225 swung between gains and losses before finishing lower by 120.29 points, or 0.71 percent, to 16,758.67 on the final day of the country's financial year. For the January-March quarter, the index lost 11.95 percent.

In South Korea, the Kospi ended down 6.29 points, or 0.31 percent, at 1,995.85; the index is up 1.76 percent for the year-to-date.

Hong Kong's Hang Seng index closed down 26.69 points, or 0.13 percent, at 20,776.70; the index is off 5.19 percent for the January-March quarter.

Chinese markets were higher, with the Shanghai composite closing up 3.73 points, or 0.12 percent, at 3,004.37; for the January-March quarter, the index is down 15.11 percent. The Shenzhen composite added 5.44 points, or 0.28 percent, to 1,912.20; the index is off 17.18 for the year-to-date.

Australia's ASX 200 finished up 72.51 points, or 1.45 percent, at 5,082.78, boosted by advances in the financials, energy and materials subindexes, which gained between 0.93 and 1.75 percent. The benchmark index was off 4.02 percent for the January-March quarter.

Chris Weston, chief market strategist at IG, wrote in an afternoon note that the first quarter of 2016 has been "a tale of two halves," with the beginning of the period defined by a belief that the capital markets were staring at an all-out collapse, led by a fear of a Chinese yuan devaluation.

Since then, the yuan has actually strengthened against the dollar and the S&P 500 is touching its highs for the year, he noted.

"The world is seemingly a perfectly pleasant place to be, led by Janet Yellen, who has left traders with a growing view to avoid listening to regional Fed members [who recently sounded hawkish notes] and totally focus on her comments," added Weston.

Symbol
Name
Price
 
Change
%Change
NIKKEI
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HSI
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ASX 200
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SHANGHAI
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KOSPI
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CNBC 100
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In the wake of Yellen's relatively dovish comments earlier this week, which assuaged concerns about the possibility of an April interest rate hike, the dollar lost some of its strength.

The U.S. dollar index, which measures the strength of the dollar against a basket of currencies, recovered slightly in the afternoon Asia time, trading at 94.892 as of 3:38 p.m. HK/SIN time after briefly reaching the 95 handle earlier. Overnight, it was at 94.841 and on Tuesday, it finished at 95.160.

The Australian dollar traded at $0.7653 Thursday evening local time, up from levels around $0.75 last week.

Australia's so-called Big Four banks - ANZ, Commonwealth Bank of Australia, Westpac and NAB - advanced between 1.51 and 2.34 percent. They have lost ground recently amid concerns about potential losses related to their exposure to the resources sector.

But in a strategy note on Tuesday, analysts at Macquarie said that they remain positive on the banking sector, citing valuations and dividend yields.

"Impairment and capital concerns are real but we think overdone. We believe the sector is one of the few to offer pricing power," the analysts said.

The Japanese yen remained at the 112 handle against the dollar, with the dollar/yen pair trading at 112.32 in the late afternoon, local time. Major exporters closed mixed, with Toyota down 0.8 percent, Nissan up by 0.14 percent and Honda higher by 3.12 percent.

In corporate news, on Wednesday after market close, Taiwan's Foxconn said it has agreed to acquire Japanese electronics maker Sharp. Reuters reported Foxconn will pay about $3.5 billion for a two-thirds stake, nearly $900 million less than its initial offer. Shares of Sharp closed down 4.44 percent.

Foxconn, which is also known as Hon Hai Precision Industry, finished up 1.31 percent.

Shares of airbag maker Takata gained 5.8 percent Thursday, after dropping 19.45 percent on Wednesday. Bloomberg News, citing a person familiar with the matter, reported that Takata estimates the cost of the comprehensive callback of its airbag inflators would amount to about 2.7 trillion yen ($24 billion).

On Thursday, Reuters reported that Takata denied it had calculated a cost estimate, saying that with investigations still underway, it was difficult to determine the recall's price tag.

Toshiba shares advanced 5.8 percent, after the company announced on Wednesday it finalized a deal to sell an 80.1 percent stake in its home appliances unit to China's Midea Group, according to Japanese newspaper Nikkei. The deal is worth roughly 53.7 billion yen ($477 million), Nikkei said.

Elsewhere, shares of Sun Corp. gained 6.96 percent on Thursday, finishing the January-March quarter up 64 percent. The stock climbed after reports suggested one of its subsidiaries - Israeli firm Cellebrite - has helped the U.S. Federal Bureau of Investigation to unlock an iPhone belonging to one of the San Bernardino, California shooters.

In South Korea, government data showed the country's industrial output rose 3.3 percent in February on-month, following a downwardly revised 2.1 percent fall in January, Reuters reported. A Reuters survey of analysts had predicted a decline of 0.2 percent for February.

Trinh D. Nguyen, a senior economist for emerging Asia at Natixis, said in a note this does not signal an overall industrial sector turnaround for South Korea since the increase was "primarily driven by high pre-orders of Samsung Galaxy S7, which drove February output of semiconductors higher."

Samsung Electronics shares closed up 0.31 percent.

A man looks at a board flashing the key indexes in front of a securities company in Tokyo.
Toru Yamanaka | AFP | Getty Images
A man looks at a board flashing the key indexes in front of a securities company in Tokyo.

The Chinese yuan traded nearly flat against the dollar at 6.4670 Thursday afternoon local time.

Before market open, the People's Bank of China (PBOC) fixed the yuan mid-point rate at 6.4612 to the dollar, compared with Wednesday's fix at 6.4841. China's central bank lets the yuan spot rate rise or fall a maximum of 2 percent against the dollar, relative to the official fixing rate.

In Hong Kong, shares of Dalian Wanda Commercial Properties soared, closing up 18.43 percent to 45.95 Hong Kong dollars, after its parent company, Dalian Wanda Group, said it was looking to take the real estate arm private.

A statement posted on the latter's website said Dalian Wanda is in the "preliminary phase of considering a voluntary general offer for the H [Hong Kong-listed] Shares." The statement said the offer price will not be lower than 48 Hong Kong dollars per share.

Oil prices retreated during Asian hours, with U.S. crude futures down 1.7 percent at $37.67 a barrel as of 4:01 p.m. HK/SIN time, while global benchmark Brent slipped 1.07 percent at $38.84.

Energy plays in the region were mixed, with shares of Santos flat, Oil Search up 0.6 percent and Inpex adding 1.56 percent. Chinese mainland shares of Sinopec were down 2.01 percent, while PetroChina fell 0.65 percent.

Overnight, major indexes closed higher, with the Dow Jones industrial average up 0.47 percent, the S&P 500 adding 0.44 percent and the Nasdaq composite higher by 0.47 percent.

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