Asia trades lower as Nikkei slips 2.2%
Major markets in Asia were mostly down on Friday, with the Japanese market falling behind its regional peers.
The Japanese benchmark Nikkei 225 index shed 2.18 percent in the afternoon trade with shares broadly trading in the red. The yen strengthened against the dollar with the dollar-yen pair falling 0.38 to 112.8. Exporters, predictably, were down with the likes of Toyota,Nissan, and Sony trading lower between 3.04 and 3.13 percent.
A stronger yen is a negative for exporters as it reduces their overseas profits when converted into local currency.
Across the Korean Strait, the Kospi was flat while Hong Kong’s Hang Seng index slipped 0.55 percent.
Down Under, the S&P/ASX 200 was down 0.92 percent, dragged by the energy and financials sectors, both down 3.24 and 0.26 percent, respectively.
Chinese markets started the day lower as well, with the Shanghai composite down 0.47 percent while the Shenzhen composite was flat.
Overnight in the U.S., major indexes closed down. The Dow Jones industrial average closed down 40.40 points, or 0.25 percent, at 16,413.43. The S&P 500 was down 8.99 points, or 0.47 percent, at 1,917.83 while the Nasdaq composite slipped 46.53 points, or 1.03 percent, at 4,487.54.
Tom White, head trader and chief market strategist at Red Option Advisors, told CNBC’s “Squawk Box” that movements on Wall Street overnight were also partly due to consolidation in the overall market, following the rapid movements in equities over the last month and a half.
“What we’re seeing here is people taking a break from these massive swings we have had recently,” he said. He added that it’s likely that in the month leading up to the U.S. Federal Reserve’s meeting in March, there will be some range-bound trading unless a new catalyst emerges to move markets such as another sharp dip in oil prices.
Evan Lucas, market strategist at IG, said in a morning note there were some upsides in overnight trade.
“The US was unable to have four consecutive 1 [percent] gains, which it has only done once since 1982,” he wrote, adding, “However, the snap back is a positive too big to ignore and even if it lost 1 [percent] tonight, it will still have had its best week of 2016.”
In Europe, Lucas said the bank ‘capitulation’ trade was closing as “markets respond to the fact money markets and TLTRO [Targeted Longer-Term Refinancing Operations] loans are not showing any signs of distress and the ‘whatever it takes’ line is trotted out again by the ECB shoring up default concerns.”
Earnings season continues in Asia with shares of Japan’s Trend Microdropping 15.43 percent in afternoon trade. Overnight, the security software maker announced its fourth quarter earnings result and consolidated revenue for fiscal year 2015, ending Dec. 31.
For the fiscal year from January 1, 2015 through December 31, 2015, the company’s net income was 21.43 billion yen ($189 million), down 3.9 percent on-year.
In Australia, oil and gas producer Santos reported a net loss of 2.7 billion Australian dollars ($1.93 billion) for 2015 due to impairment charges of as much as A$2.8 billion.
The company’s core profit before charges fell 91 percent to A$50 million, below a Reuters analysts’ forecast of about A$94 million.
Baby formula maker Bellamy’s also reported its earnings, where net profit in the six months ended December 31 was at A$13.66 million, up 325 percent from A$3.21 million the previous year due to growing Chinese demand.
But shares of Bellamy’s traded down 13.72 percent.
During Asian hours, oil prices were down more than 1 percent. U.S. crude fell 1.1 percent at $30.43 a barrel while the global benchmarkBrent was lower by 1.14 percent at $33.89 a barrel as of 1p.m. HK/SIN time.
Energy plays were mostly lower across the board, with Santosshedding 4.52 percent, Woodside Petroleum down 2.50 percent, andInpex dropping 10.57 percent.
Chinese mainland oil producers were mostly down with China Oilfieldshedding 1.21 percent.
Oil prices were mixed overnight after government data showed a rise in U.S. crude stockpiles, contradicting an earlier industry report that said inventories fell by 3.3 million barrels in the week to Feb. 12.
The Energy Information Administration reported crude inventories rose by 2.1 million barrels in the last week.
There are no major economic data due today.
Source: CNBC
