Asia Markets

Asia markets close mixed as yen strengthens and oil falls

Asian stocks open in the green
Asian stocks open in the green

Asia markets wavered between gains and losses on Wednesday, as the yen nudged higher against the dollar and oil prices retreated.

In Australia, the benchmark ASX 200 pared some of the early gains of more than 1.2 percent to close up 29.51 points, or 0.55 percent, at 5,372.30, with the heavily-weighted financials sub-index dropping 0.15 percent.

The trimmed initial gains of over 1.3 percent to close near flat at 16,579.01, with many Japanese shares coming under pressure from fresh strength in the yen against the dollar. Across the Korean Strait, the Kospi retraced some of its losses of over 0.5 percent to close down 2.40 points, or 0.12 percent, at 1,980.10. In Hong Kong, the closed down 187.39 points, or 0.93 percent, at 20,055.29.

Mainland Chinese markets closed mixed, with the up 5.04 points, or 0.18 percent, at 2,837.63, while the Shenzhen composite finished down 11.21 points, or 0.62 percent, at 1,791.05.

The Japanese yen gained fresh strength against the dollar, after weakening in the U.S. session. The dollar/yen pair traded at 108.71 as of 2:55 p.m. HK/SIN, compared to the 109 level in early trade and closing at 109.25 on Tuesday.

The overnight move in the dollar/yen pair came after Japanese finance minister Taro Aso hinted at the possibility of an intervention in the currency market to tame the rise in yen.

Reuters reported that Aso told the Japanese parliament on Tuesday that though Japan had no plans to manipulate currency moves on a long-term basis to give exporters a boost, the country was ready to intervene if one-sided moves in the yen persisted.

Since the Bank of Japan elected to keep its monetary policy unchanged late last month, shocking markets in the process, the dollar/yen pair had fallen from the 111 handle to the 106 handle, before returning to the 108 level earlier this week.

Tuesday's move in the dollar/yen was due to short covering, said Kathy Lien, managing director of foreign exchange strategy at BK Asset Management.

"While we are surprised that more Japanese officials are trying to talk up the currency at 108-109 than 106-107, this could be a strategic move to give speculators reason to cover their shorts at a time when the dollar/yen was struggling to extend its losses below 106," she said.

Major Japanese exporters gave up most of their gains from the morning session to close down. Shares of Toyota dropped 0.76 percent, Nissan down 0.15 percent, while Sony shares retraced some of the near 2.6 percent gains to close up 1.81 percent.

John Greim | LightRocket | Getty Images

Oil prices advanced in the U.S. on Tuesday amid expectations that the build up in U.S. crude inventories will be lower than expected, according to Reuters.

During Asian hours Wednesday, global benchmark Brent was down 0.22 percent at $45.42 a barrel, after settling up 4.3 percent overnight. U.S. crude futures were down 0.38 percent at $44.49 a barrel, after finishing up 2.8 percent in U.S. hours.

Energy plays in Asia ended mixed, with Santos adding 0.74 percent, Woodside Petroleum flat and Inpex higher by 0.82 percent. Chinese energy plays closed mixed, with shares of Sinopec down 0.49 percent and PetroChina up 0.56 percent.

The overnight uptick in oil gave commodity currencies an initial boost, with both the Australian dollar and the advancing against the greenback in early morning Asia time.

But the Aussie gave up gains since, trading down 0.12 percent at $0.7353 as of 3:30 p.m. HK/SIN, compared to an earlier high of $0.7390. The Kiwi was at $0.6797, coming off a previous high of $0.6825.

The dollar index, which measures the greenback against a basket of currencies, was at 94.061, up from the 92 handle it touched last week.

Iron ore and steel futures in China advanced on Wednesday, with the Shanghai rebar futures for October up 1.18 percent in the afternoon local time. Iron ore futures for September, traded on the Dalian Commodity Exchange, were up 0.39 percent. Spot iron ore for immediate delivery to China's Tianjin port was at $54.20 a tonne on Tuesday, down from $55.60 on Monday.

Metal plays in the region were mixed, with major miners in Australia advancing while some Chinese metal plays slipped. Shares of Rio Tinto closed up 1.34 percent, Fortescue up 2.11 percent and BHP Billiton adding 4.04 percent.

Chinese metal stocks were mostly lower, with Aluminium Corp down 0.76 percent and Yunnan Copper down 0.3 percent.

In company news, one of Australia's large grain storage companies, GrainCorp, announced its half-year profit numbers on Wednesday, with net profit at 20 million Australian dollars ($14.7 million) for the period, with the company saying global trading conditions will continue to weigh on the Australian grains sector in the near term.

Shares of GrainCorp closed down 2 percent.

Japanese automaker Toyota released its full fiscal year 2016 financial numbers, after the Japanese stock market closed. The automaker saw net income for fiscal 2016 rise 6.4 percent to 2.31 trillion yen ($21.26 billion) and said it expects a 35 percent drop in net income for fiscal 2017.

Troubled air-bag maker Takata also reported a full-year net income loss of 13.1 billion yen for the year ended in March, hit by costs for recalls of its potentially deadly airbag inflators, reported Reuters.

Stateside, major indexes closed higher, with the up 1.26 percent, the S&P 500 adding 1.25 percent and the composite higher by 1.26 percent.

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