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Asia markets close mostly lower as dollar slides post-ECB and China exports were softer than expected

  • The euro extended overnight gains following the ECB's Thursday meeting
  • The dollar posted broad losses
  • China's August trade data was a mixed picture
  • Markets were wary of North Korea's national holiday on Sept. 9

Equities in Asia closed mostly lower on Friday as the dollar posted broad losses a day after the European Central Bank putting tapering on the table on Thursday.

Japan's Nikkei 225 slipped 0.63 percent, or 121.7 points, to close at 19,274.82, after touching its lowest levels since May this year. Second-quarter gross domestic product data released earlier in the morning showed the economy grew 2.5 percent on-year, below the 4.0 percent growth estimated in a preliminary reading.

Across the Korean Strait, the Kospi edged down 0.11 percent to close at 2,343.72.

Down Under, the S&P/ASX 200 shed 0.3 percent, or 17.282 points, to close at 5,672.6. Losses in the energy and heavily-weighted financials sub-indexes weighed on the broader market.

Hong Kong's Hang Seng Index advanced 0.48 percent by 3:23 p.m. HK/SIN. On the mainland, the Shanghai Composite erased earlier gains to close flat at 3,365.4406, and the Shenzhen Composite gained 0.159 percent to end at 1,975.8693.

In China-related headlines, the country's exports in August rose 5.5 percent in dollar terms, compared with a year earlier. Imports increased 13.3 percent in dollar terms. Those compared with the 6 percent rise in exports and 10 percent rise in imports forecast by analysts in a Reuters poll.

Tepid moves in the market could also be due to investor concerns over North Korea. The hermit state will celebrate a national holiday on Saturday and experts believe it could launch another missile then.

"The next event risk for global markets is North Korea's Foundation Day tomorrow, Sept. 9, possibly the key date for the highly publicized intercontinental ballistic missile launch. Markets may decide to close off positions ahead of this possible event," ING Asia Head of Research Rob Carnell said in a note.

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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The European Central Bank held interest rates steady at 0 percent on Thursday. ECB President Mario Draghi said the central bank would be prepared to make a decision on its quantitative easing program at its October meeting. For now, the central bank's net asset purchases of 60 billion euro a month would continue to the end of the year "or beyond, if necessary," Draghi said.

In reaction, the euro extended gains to trade at $1.2046 at 3:26 p.m. HK/SIN after hitting a fresh 2-1/2-year high of $1.2092.

"The euro shot higher because Draghi made it very clear that it is not a question of if, but a question of when they would start tapering asset purchases," said Kathy Lien, managing director of FX strategy at BK Asset Management, in a note.

The dollar extended losses on Friday after falling sharply overnight. The dollar index, which tracks the greenback against six currencies, last stood at 91.265, compared with levels around the 92 handle over the past two weeks.

Against the Japanese currency, the dollar fetched 107.77 yen, touching the pair's lowest levels since November 2016. The dollar also slid against other Asian currencies, with the New Zealand dollar gaining almost 1 percent against the greenback by 3:29 p.m. HK/SIN.

Stephen Innes, APAC head of trading at OANDA, said traders were concerned with the impact Hurricane Harvey might have on data that could eventually lead "the Fed to sit on their hands for the rest of 2017." Higher-than-expected U.S. jobless claims and geopolitical concerns also weighed on the currency, Innes said.

In corporate news, Apple is being pursued as a potential partner by three separate groups — including a consortium which counts Western Digital as a member — making offers for Toshiba's memory chip business, Nikkei Asian Review said Friday.

Western Digital is attempting to secure just below 16 percent of Toshiba's chip unit on the assumption of a future listing, Reuters quoted Japanese media as saying.

Taiwan's Hon Hai Precision Industry Co, or Foxconn Technology Group, has also continued to push its case for buying Toshiba's memory unit, according to media reports. Hon Hai's bid has support from Apple, Softbank and Sharp, Bloomberg said, citing a Hon Hai spokesperson. Toshiba's shares closed flat, while Hon Hai shares finished 1.3 percent higher.

In individual stocks, South Korean automaker Hyundai Motor closed down 1.81 percent and auto parts supplier Hyundai Mobis tumbled 4.66 percent. The moves followed Reuters headlines that the automaker had resumed operations at its China plant on Thursday after an incident earlier in the week over payment issues with a German supplier. Hyundai Motor's joint venture partner BAIC Motor reportedly preferred more affordable local suppliers, Reuters said.

Still, the tiff was likely "more of a show," Daiwa Capital Markets analyst Sung Yop Chung wrote in a Sept. 7 note. BAIC was unlikely to terminate its joint venture with Hyundai as the sunk cost burden would be great, but sentiment could remain "choppy" in the short term, Sung added.

On the energy front, Brent futures edged up 0.15 percent to trade at $54.57 a barrel and U.S. West Texas Intermediate crude shed 0.18 percent to trade at $49.00.

Energy markets were also cautious about the approach of Hurricane Irma, which could disrupt crude shipments, Reuters added.

Meanwhile, China foreign exchange reserves added almost $11 billion in August to $3.092 trillion, Reuters reported on Thursday. That was the seventh consecutive month in that China's reserves have risen, Reuters said.

Before the market open in China, China's central bank set the yuan midpoint stronger for a tenth consecutive day, according to Reuters. Friday's midpoint stood at 6.5032 to the dollar. The People's Bank of China allows the yuan spot rate to rise or fall a maximum of 2 percent against the dollar, relative to its fixing rate.

The on-shore yuan traded at 6.4492 to the dollar at 3:31 p.m. HK/SIN after strengthening to trade as high as 6.4346 earlier. In the offshore market, the Chinese currency traded at 6.4669 to the dollar.

Stateside, major indexes closed mostly flat after financials and media stocks weighed on the broader market. The Dow Jones industrial average declined 0.1 percent, or 22.86 points, to close at 21,784.78.