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Most Asia markets lower as traders eye Yellen's speech at Jackson Hole on Friday

Jung Yeon-Je | AFP | Getty Images

Asian markets mostly retreated on Monday, with traders likely holding their horses ahead of a speech from Federal Reserve chair Janet Yellen at Jackson Hole on Friday.

In Australia, the ASX 200 closed down 11.58 points, or 0.21 percent, at 5,515.10, erasing modest gains from the morning session, with the energy and materials sectors shedding more than 1 percent each.

South Korea's benchmark index, the Kospi, slipped 14.08 points, or 0.68 percent, to 2,042.16. In Hong Kong, the Hang Seng index fell 0.43 percent in afternoon trade. Chinese mainland markets were also lower, with the Shanghai composite closing down 23.34 points, or 0.75 percent, at 3,084.76 and the Shenzhen composite dropping 26.03 points, or 1.27 percent, to 2,018.65.

Markets in Japan bucked the regional downward trend to finish up, likely boosted by a weaker yen and anticipation of further monetary policy actions from the Bank of Japan.

The Nikkei 225 added 52.37 points, or 0.32 percent, to 16,598.19, while the Topix index was up 8.01 points, or 0.62 percent, at 1,303.68. The Japanese yen traded relatively weaker against the greenback at 100.76 as of 2:45 p.m. HK/SIN, compared with the 99 handle it reached last week.

Stateside, Yellen was due to give a speech on August 26 at the Federal Reserve Bank of Kansas City's Monetary Policy Symposium at Jackson Hole, Wyoming. The annual Fed symposium has sometimes been used by Fed chairs to make important policy pronouncements.

Analysts expected market sentiment this week would hinge on expectations for Yellen's speech at Jackson Hole.

"The dollar index already seemed to be looking ahead for some slightly more upbeat language on the U.S. economy coming out this week," said Angus Nicholson, a market analyst at spreadbettor IG.

"Jackson Hole is a setting that is not designed for short-term market moves ... much bigger questions will be debated about the efficacy of the inflation targeting regime," he added.

Rabobank's head of financial markets research for Asia Pacific, Michael Every, noted that the market has so far priced in only a 50 percent chance of the Fed raising rates this year.

"If we do get further certainty on that front [at Jackson Hole], even if it means it's not going to happen until December, it could mean we get a bit of a pick up in the dollar this week," he told CNBC on Monday.

Over the weekend, Fed vice chairman Stanley Fischer gave a mostly upbeat assessment of the U.S. economy in prepared remarks for a conference in Colorado, according to Reuters. Fischer said the Fed was close to hitting its targets for full employment and 2 percent inflation, which could be seen as further signs of an imminent rate hike.

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 currency market, the dollar traded up against a basket of currencies, with the dollar index at 94.905 on Monday afternoon Asia time, compared with levels near 94.100 late last week.

The Australian dollar slipped against the greenback, trading at $0.7590 as of 2:49 p.m. HK/SIN, with some commentators suggesting the Aussie took a hit after Moody's Investor Service cut its outlook on the country's domestic banks to negative from stable last week.

Stephen Innes, a senior foreign exchange trader at OANDA, said in a Monday note that currency reactions to rating downgrades tended to be short-lived. But Innes added that the "higgledy–piggledy price action of the past few sessions would indicate that traders are at 'minimum' and are starting to re-think the low volatility carry strategy that is underpinning the Australian dollar."

The currency retreated from highs over $0.77 touched last week in the wake of stronger jobs report, suggesting that Aussie-dollar bears were "gradually awakening from hibernation and may believe the Aussie is topping," said Innes.

Major Australian banking stocks closed lower, with Westpac shares down 0.17 percent and Commonwealth Bank of Australia shares off 0.45 percent.

Elsewhere, reports out of Japan over the weekend suggested that the Bank of Japan (BOJ) might cut rates further into negative territory at its next meeting in September in a bid to prop up the country's moribund economy.

In an interview with Sankei newspaper, Governor Haruhiko Kuroda said the BOJ's negative rate policy, introduced earlier this year, has not reached its limits, according to a Reuters report of the interview.

Japanese exporters were mixed despite a relatively weaker yen. While Toyota advanced 1.23 percent, Honda gained 1.23 percent and Sony was up 1.41 percent, shares of Mitsubishi Motors were down 0.63 percent and Canon shares fell 0.79 percent.

In company news, China's biggest home builder, China Vanke, said on Sunday its net profit rose 10 percent in the six months to the end of June, reported Reuters. Vanke has been embroiled in a high-profile battle for control of the company.

Investors appeared to cheer the uptick in profit numbers, as Shenzhen-listed Vanke shares were up 0.45 percent, while the Hong Kong-listed shares added 0.99 percent.

Oil prices fell on Monday morning during Asian hours. U.S. crude futures were down 1.83 percent at $47.63 a barrel on Monday early morning, while global benchmark Brent was off 1.95 percent at $49.89.

Oil prices surged over the past two weeks due to talk of a potential OPEC supply freeze, especially after the cartel's biggest producer, Saudi Arabia, last week said it was on board with discussing actions if prices remained low.

But analysts pointed out the market has little expectation that OPEC would act at its upcoming meeting in September.

Patti Domm contributed to this report.

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