Asia markets trade lower, focus on oil, earnings and central banks
Asia markets closed mostly lower on Tuesday, weighed by declines in the energy sector as oil prices continued to tumble.
Japan’s Nikkei 225 lost 114.55 points, or 0.64 percent, to close down at 17,750.68, while South Korea’s Kospi slipped 18.22 points, or 0.95 percent, to 1,906.60.
Down Under, the ASX 200 fell 50.28 points, or 1 percent, to 4,993.30, extending declines after the Reserve Bank of Australia’s (RBA) decision to keep interest rates on hold at a record low of 2 percent. The energy sector saw the biggest loss, slipping 3.24 percent, following extended losses in oil prices.
Angus Nicholson, market analyst at spreadbetter IG, wrote in an afternoon note that equities sold-off despite prospects of further rate cuts providing greater stimulus. “If we had two more rate cuts by the RBA and inflation held at 1.7 percent, Australia would have negative interest rates,” he wrote.
Nicholson added, “This provides no incentive to put one’s money in bank deposits, and provides a strong incentive to seek out low-volatility, high-yielding stocks.”
Chinese markets bucked the broad trend and were mostly in positive territory, with the Shanghai composite up 2.03 percent, after two consecutive sessions of declines. The smaller Shenzhen composite was up 3.19 percent. But Hong Kong’s Hang Seng index followed much of the rest of Asia to trade lower by 0.67 percent.
Oil prices extended their overnight tumble as the optimism over a possible deal between OPEC and non-OPEC producers to reduce oversupply faded. Last week, expectations of a possible Russia-Saudi deal saw oil prices gain over 10 percent. Prices remain at multi-year lows.
In Asian trading hours, U.S. West Texas Intermediate (WTI) fell 1.74 percent to $31.07, after declining 5.95 percent overnight. Globally traded Brent April crude futures were down 1.61 percent at $33.69 a barrel, following losses of 4.9 percent in U.S. hours.
Energy plays across the region were mostly down, with Santos losing 4.26 percent, Oil Search down 2.75 percent and Woodside Petroleum lower by 3.26 percent. Inpex was 4.94 percent lower, while Japan Petroleum declined 3.67 percent and S-Oil closing down 2.09 percent.
Hong Kong-listed shares of CNOOC were down 1.97 percent, while A-shares of China Oilfield and China Petroleum traded up 1.93 and 0.47 percent, respectively.
Elsewhere, resource stocks in Australia finished mostly down, with Rio Tinto and BHP Billiton falling 3.67 and 2.16 percent, respectively. Sandfire Resources retraced early gains of as much as 2.59 percent to decline by 1 percent.
The Aussie dollar-U.S. dollar pair lost 0.63 percent, trading at 0.7065 as the Reserve Bank of Australia (RBA) left interest rates unchanged, in line with expectations, after meeting for the first time in 2016.
In a statement, the bank said monetary policy needs to be accomodative as low commodity prices have led to expansion of non-mining sectors in the Australian economy and contraction of spending in mining investment.
Paul Bloxham, chief economist for Australia and New Zealand at HSBC, told CNBC’s “Street Signs” that the tone in the RBA statement was very similar to their previous commentary.
“The added bit was a reference to the fact that we’ve seen financial turmoil recently and an open-ended statement saying we’ll have to see whether that means there’s going to be weaker global or domestic demand,” he said.
Bloxham added, “They’ve still got scope to be able to cut interest rates because inflation is still very low, but they don’t seem to have any appetite to do that as yet. And that’s largely because the labor market’s been improving and business conditions have been holding up. If those things weaken, then they may need to cut rates a bit further but for now they’re happy to sit still.”
In Japan, financial plays traded mixed after earlier halting their losing streak since Friday, when the Bank of Japan surprised markets with a negative interest rate policy move. Negative rates could affect their profit levels. Mitsubishi UFJ, which traded between down 1.87 percent and up 1.60 percent earlier, trimmed gains to close 0.40 percent higher. SMFG gave up gains of nearly 0.50 percent to finish 0.65 percent lower, while Mizuho Financial was up 0.21 percent.
Mitsubishi Electric, a core business of the Mitsubishi Group, released its consolidated earnings results for April-to-December 2015, the first nine months of its fiscal 2016. The results showed consolidated net sales for the period increased by 4 percent on-year.
At the same time, reports said Shuma Uchino, the chief financial officer of one Japan’s largest trading houses, Mitsubishi Corporation, said he does not expect a major recovery in resource prices for the next two to three years.
Shares of Mitsubishi Electric closed up 4.67 percent, while Mitsubishi Corp. shares were down 2.45 percent.
Other Japanese companies reporting their earnings today include Nintendo, Nomura Holding and Yahoo Japan.
South Korea’s Lotte Group, according to reports, will be investigated by the Fair Trade Commission over allegations of falsified reporting of stakeholders. Shares of Lotte Shopping were finished down 1.28 percent.
Among other blue chip stocks, Samsung Electronics closed lower 0.60 percent, while Kepco shares gained 0.19 percent.
Elsewhere, Hong Kong gaming stocks gave up some gains to trade mixed, with shares of Wynn Macau up 0.12 percent, after trading as much as 1.58 percent higher earlier, Sands China down by 0.74 percent and Galaxy Entertainment lower by 0.41 percent. Yesterday, reports showed that Macau’s gaming revenues for January declined for the 20 straight months, down 21.4 percent on-year to $2.33 billion.
Major indexes stateside closed mixed, with the Dow Jones industrial average down 17.12 points, or 0.10 percent, at 16,449.18. The S&P 500 fell 0.86 points, or 0.04 percent, to 1,939.38, while the Nasdaq composite closed up 6.41 points, or 0.14 percent, at 4,620.37.
Also on central bank watch, the Reserve Bank of India (RBI) kept its policy rate on hold at 6.75 percent, in line with expectations, ahead of the government’s annual budget statement at the end of t he month.
Source: CNBC – Asia markets trade lower, focus on oil, earnings and central banks
