Asia Markets

Asian stocks close mixed; Trump comments on trade, defense riles Kospi


Asian markets traded weaker on Friday as comments from President Donald Trump on an existing free trade pact with Seoul to payment for a sophisticated anti-missile system caught investors by surprise.

A businessman looks at an electronic share indicator at the window of a securities company in Tokyo on April 24, 2017.
Toshifumi Kitamura | AFP | Getty Images

South Korea's Kospi index, initially in the green, dipped on news that Trump was threatening to terminate a trade agreement with the country. Trump also warned that conflict with North Korea was possible, even though he said he preferred a peaceful resolution.

South Korean officials told Reuters that the U.S. government had not yet "requested anything" from them regarding the agreement.

FX markets unwinding Trump trade

The Kospi closed 0.18 percent or 4.02 points down at 2,205.44. Dollar/won traded lower after Trump's remarks, with the greenback fetching 1,136.35 won.

"I think what we're going to see now is markets perhaps need to price in a little bit more potential trade tension between the U.S. and (South) Korea. Even though we don't think the worst will happen — it's just a negotiating tactic — I think this is the start of more to come," said ANZ Research's Khoon Goh.

Shares of Korean automakers moved after the news, with shares of Hyundai Motors eventually closing 2.04 percent lower. Korean retailers were also hit, with Lotte Himart down by 2.83 percent and E-mart dropping by 2.13 percent at the close.

Over in Japan, the Nikkei 225 shed 0.29 percent or 55.13 points to close at 19,196.74. Australia's benchmark ASX 200 index closed 0.04 percent or 2.619 points higher at 5,924.1.

Markets in greater China were mixed. The was up 0.08 percent or 2.3794 points to close at 3,154.5663 and the Shenzhen Composite gained 0.362 percent or 6.8813 points to close at 1,906.9151. The was 0.45 percent lower.

Japan: 'Inflation is nowhere near BOJ's target'

Japan earlier reported that March CPI had increased by 0.2 percent from one year ago. This was below expectations of a 0.3 percent rise.

"(March CPI) excluding fresh food and energy ... has turned negative for the first time since 2013 ... While economic data seems to be doing okay, exports seem to be doing okay, but inflation is definitely not going the direction the Bank of Japan wants," Japan Macro Advisors Chief Economist Takuji Okubo told CNBC.

The dollar/yen strengthened slightly to trade at 111.3 earlier in the session but later reversed those gains to trade at 111.2. The greenback fetched 109.68 yen at the beginning of the week.

Over in Europe, the ECB left its monetary policy unchanged even as ECB President Mario Draghi acknowledged the economy recovery taking place in the Euro zone.

'ECB meeting was a non-event'

Following the news, euro/dollar declined for a third consecutive session, trading at $1.0877 at 2:40 p.m. HK/SIN. The euro had jumped to a five-and-a-half month high at the beginning of the week after the first round of the French presidential election.

Meanwhile, shares of Japanese gaming giant Nintendo rose 2.11 percent after the company said yesterday that it was forecasting a 121 percent surge in operating profit for the new fiscal year. Nintendo expects to sell 10 million units of its latest Switch console. Nintendo shares traded at 28,045 yen a stock at the end of the session.

The dollar strengthened against a basket of rivals at 99.17, higher than the 98-handle seen earlier in the week. The Aussie gained against the dollar at $0.7473, but was in a general downward trend for the week.

Oil prices recovered but look set to end the week lower. U.S. crude was 1 percent higher to trade at $49.47 per barrel while Brent crude rose 0.95 percent to trade at $51.93.

Australia Q1 PPI and Singapore bank lending numbers were announced earlier in the session.

In the U.S., Amazon and Alphabet both beat Street expectations, causing Nasdaq 100 futures to surge after hours. The Nasdaq closed at a record high before the earnings were reported, rising 0.39 percent or 23.71 points to end at 6,048.94.