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Nikkei drops amid jump in yen, weak trade data as Asia markets trade mixed

Asian shares trade mixed

Japanese shares dropped on Thursday in a mixed Asian trading session, as a stronger yen weighed on sentiment.

The declined 259.63 points, or 1.55 percent, to 16,486.01, while the Topix index fell 20.34 points, or 1.55 percent, to 1,290.79.

During trading hours, the Japanese yen strengthened as high as 99.62 against the dollar before retreating slightly. As of 4:03 p.m. HK/SIN, after markets closed for the day, the yen traded at 100.05 against the dollar.

That spurred declines in major exporters, with Toyota closing down 1.76 percent, Nissan down 2.56 percent and Mazda dropping 1.34 percent.

Declining exports in July may also have hit sentiment on exporters. Japan's July exports fell 14 percent on-year, the worst drop in seven years, but in line with expectations, while imports declined 24.7 percent, missing a Reuters forecast for a 20.6 percent decline.

Across the Korean Strait, the Kospi closed up 11.72 points, or 0.57 percent, at 2,055.47. In Australia, the ASX 200 dropped 27.23 points, or 0.49 percent, to 5,507.82, with the heavily-weighted financials sub-index declining 0.87 percent.

In Hong Kong, the climbed 223.38 points, or 0.98 percent, to 23,023.16. Hong Kong-listed shares of Tencent closed up 5.18 percent, after the company's results, released Wednesday, smashed expectations.

Chinese mainland markets closed lower, with the composite declining 5.23 points, or 0.17 percent, to 3,104.32, and the composite closing nearly flat at 2,042.22.

The mixed Asian session followed a modestly higher finish stateside as investors digested the U.S. Federal Reserve's July meeting minutes.

Asia-Pacific Market Indexes Chart

In the broader currency market, the dollar slipped against a basket of currencies, with the dollar index trading at 94.468 as of 4:08 p.m. HK/SIN, down from 94.930 on Wednesday afternoon Asia time.

Analysts pointed to the meeting minutes released by the U.S. Federal Reserve overnight, which showed members of the Federal Open Market Committee had a generally upbeat view on the U.S. economy and labor market, but mostly agreed more data were needed before increasing rates again.

"Dollar traders were not impressed," said Kathy Lien, managing director for foreign exchange strategy at BK Asset Management. "Given the recent weakness of U.S. data and the strong downtrend in dollar/yen ... dollar traders were looking for unquestionable hawkishness."

"They received no additional clarity on whether rates will rise by December and were simply told that the Fed is still in wait-and-see mode," Lien added.

Elsewhere in the currency market, the Aussie dollar surged against the greenback from levels near $0.7660 before the release of better-than-expected July headline employment figures to as high as $0.7723 afterward. As of 4:09 p.m. HK/SIN, the Aussie traded at $0.7698.

Australia's July employment print came in better-than-expected, with 26,200 new jobs being created, beating a Reuters forecast for 11,000 new positions. The unemployment rate for the month came in at 5.7 percent. Full-time employment, however, declined by 45,400, while part-time employment increased by 71,600.

Shane Oliver, head of investment strategy and chief economist at AMP Capital, said despite the solid headline figures, the Australian jobs market wasn't as strong as it looked due to the decline in full-time jobs and the slow uptick in hours worked.

"Forward looking labor market indicators have lost a bit of momentum, but still point to reasonable jobs growth ahead," Oliver added.

Kazuhiro Nogi | AFP | Getty Images

Some analysts found the Thursday surge in the Aussie unusual.

"It's odd for the Aussie dollar to rally so much on domestic data, considering the Reserve Bank of Australia recently cut interest rates, painted a dismal picture on the outlook for inflation and made a fairly good case for two more rate cuts to happen over the next twelve months," said Angus Nicholson, a market analyst at spreadbettor IG, in a note to clients.

Nicholson pointed out the support for the Aussie was a reflection of the macro picture, where prospects for a rise in U.S. yields have fallen, and bond buying from central banks in Japan, Britain and the European Union continue to depress local yields.

"The yield appeal of the Aussie continues to hold," he said, adding that as a commodity currency, the Aussie is also a "key beneficiary of the steady push towards more global fiscal intervention."

In China, home price growth sped up in July, but analysts do not expect prices to keep up the pace for much longer.

The cost of a house across China rose around 7.9 percent on-year in July, accelerating from 7.3 percent in June and 6.9 percent in May, marking the fastest growth since February 2014, according to Reuters.

JPMorgan's Grace Ng, Haibin Zhu and Marvin Chen said in a note to clients that the moderation in housing market activity was in line with their expectations.

"We expect real estate investment growth will come in at 4.5 percent for the full year of 2016," the JPMorgan analysts said.

Shares of Chinese property developers closed mostly higher. Shenzhen-listed shares of China Vanke closed down 1.04 percent, erasing earlier gains of near 5 percent, Gemdale advanced 4.58 percent, Shanghai Shimao rose 1.3 percent and Poly Real Estate gained 2.53 percent.

In the commodity space, oil prices early losses in late after trading in Asia. U.S. crude futures climbed 0.68 percent to $47.11 a barrel, while global benchmark Brent advanced 0.06 percent to $49.88.

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