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Most Asia markets head higher, but Japan shares end slightly lower

Most Asia markets finished higher on Tuesday, while Japanese shares edged down in a muted reaction to better-than-expected economic data.

The benchmark Nikkei 225 closed nearly flat, down 0.07 percent, or 12.13 points, at 16,725.36, while the Topix edged down 0.43 point, or 0.03 percent, to 1,312.81. Both indexes wavered modestly between positive and negative throughout the session.

Data released before the Japanese market opened showed Japan's household spending fell 0.5 percent on-year in July, narrower than a Reuters poll forecast for a 0.9 percent decline. Japan's retail sales slipped 0.2 percent on-year in July, a narrower decline than a median market forecast for a 0.9 percent drop, according to Reuters.

Japan's seasonally adjusted unemployment rate for July came in at 3.0 percent, a touch lower than June's 3.1 percent and the lowest since 1995.

But Graham Harman, senior investment strategist for Asia Pacific at Russell Investments, told CNBC's "Street Signs" that the drop in unemployment did not mean there was strong growth in employment.


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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"Remember that the Japanese population is dropping by probably half a million a year, so that's telling you there's just less people around, not that employment in itself is growing strongly," said Harman.

In the rest of Asia, markets mostly rose, with South Korea's Kospi closing up 7.39 points, or 0.36 percent, at 2,039.74.

In Australia, the ASX 200 added 9.08 points, or 0.17 percent, to 5,478.30, while Hong Kong's Hang Seng index was up 1.04 percent in late afternoon trade. Chinese mainland shares closed modestly higher, with the Shanghai composite up 6.16 points, or 0.2 percent, at 3,076.19, while the Shenzhen composite finished nearly flat at 2,028.35.

Analysts said the market would be closely watching the August U.S. nonfarm payroll data due on Friday, as it would likely be the last major data due stateside before the Federal Open Market Committee's policy meeting in September.

A strong jobs report could set the tone for the Fed's monetary policy meetings for the rest of 2016.

"Investor odds of liftoff [in U.S. interest rates] are hovering near 70 percent for December and Friday's jobs data will offer more information about the probability of a hike in September," said Stephen Innes, a senior trader at OANDA.

Last week, U.S. Federal Reserve Chair Janet Yellen said in a speech at Jackson Hole, Wyoming, that she was optimistic about the U.S. economy and that the solid labor market performance and outlook for economic activity and inflation had strengthened the case in recent months for an interest rate hike. Following her remarks, Fed vice chair Stanley Fischer told CNBC the August nonfarm payroll will likely weigh in the Fed's decision on when to hike rates.

In the currency market, the dollar index, which measures the greenback's performance against a basket of currencies, rose to 95.797 as of 3:30 p.m. HK/SIN, up from its previous close at 95.580. The dollar had climbed from levels below 94.500 to levels above 95.500 on Friday after Yellen's remarks and briefly traded near 95.800 overnight before paring gains.

Noriko Hayashi | Bloomberg | Getty Images

The Japanese yen weakened Tuesday afternoon, trading at 102.41 against the dollar, compared with the yen's earlier high of 101.73 in the session.

Oil prices fell more than 1 percent on Monday amid renewed oversupply concerns and a relatively stronger dollar compared with the previous week. But during Asian hours, U.S. crude futures added 0.28 percent to $47.11 a barrel, while global benchmark Brent was up 0.22 percent to $49.37.

Energy plays were mostly higher, with Santos shares up 0.22 percent, Oil Search adding 1.62 percent and Inpex up 0.44 percent. Fuji Oil in Japan, however, traded down 3.47 percent.

In Australia, data from the Australian Bureau of Statistics showed the seasonally adjusted approvals to build new homes in July rose 11.3 percent on-month, beating a Reuters poll forecasting no change.

National Australia Bank's economist Tapas Strickland, however, said building approvals were likely to moderate in the months ahead due to fears of oversupply emerging in certain cities and geographic areas.

Strickland added investors in the Australian stock market had little reaction to the data because of the upcoming U.S. nonfarm payrolls data and the Reserve Bank of Australia's focus on inflation and the labor market.

Stateside, the Dow Jones industrial average gained 107.59 points, or 0.58 percent, to close at 18,502.99. The S&P 500 index rose 11.34 points, or 0.52 percent, to 2,180.38, while the Nasdaq added 13.41 points, or 0.26 percent, to end at 5,232.33.

U.S. stocks received a leg up after consumer spending in the U.S. rose 0.3 percent in July, in line with expectations.

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