China shares drop, with the Shanghai Composite tumbling more than 5%
China markets tumbled Thursday, extending a long rout, but some Asian markets posted gains following Wall Street’s reversal of sharp intraday losses overnight on the back of higher oil prices.
Concerns were raised over China this week after the People’s Bank of China set the yuan mid-point rate notably lower at 6.5273 to the dollar on Tuesday, down 0.17 percent from Monday’s fix, indicating policymakers may want the Chinese currency to strengthen. Today’s mid-point was set at 6.5318.
China’s Shanghai composite fell 4.32 percent, while the Shenzhen composite dropped 5.36 percent and Hong Kong’s Hang Seng Index was down 1.25 percent.
Meanwhile, in Japan, shares of Sharp tumbled 20.11 percent after Reuters and the Nikkei reported that the troubled electronics maker has decided to accept a 659 billion yen ($5.9 billion) takeover bid by Taiwan’s Foxconn. Shares of Foxconn, also known as Hon Hai Precision Industry, were up 2.61 percent.
On the upside, the Japanese benchmark Nikkei 225 index was up about 1.5 percent. Across the Korean Strait, the Kospi gained 0.2 percent.
The yen, which surged against the dollar in recent sessions, maintained the 112 handle; the pair traded at 112.12 as of 8.15 a.m. HK/SIN time. A stronger yen is usually a negative for Japan’s exporters as it reduces overseas profits when converted into local currency. But exporters saw mixed fortune early on, with Toyota down 2 percent, while Canongained 0.74 percent.
Australia’s S&P/ASX 200, which saw gains of 0.37 percent early on, lost some of the support but closed up 0.13 percent. That followed two consecutive sessions of declines for the main index, which closed down 2.1 percent on Wednesday.
“ASX suffered again at the hands of oil prices (overlay BHP’s share price and WTI), and it’s also under pressure due to valuations and a market that had added 329 points from the 10 February low to the high on Tuesday. This was a 7 [percent] move, but there are no excuses for yesterday’s savagery,” Evan Lucas, market strategist at IG, wrote in his morning note.
Online job-search company Seek, an early mover on the index, was up 6.34 percent. The company reported a 50 percent jump in interim net profit to A$275.1 million ($198.2 million), and a dividend of 21 Australian cents per share. The sale of Seek’s education business, IDP Education, and strong revenues from China helped boost profit.
Oil prices retreated again in Asian trading hours with U.S. crudedropping 0.79 percent to $31.90 a barrel, after settling up 0.88 percentin overnight trade. Global benchmark Brent was lower by 0.90 percent at $34.10 a barrel, following a 3.4 percent gain during U.S. hours.
The overnight bounce came as data showed U.S. gasoline demand over the past four weeks rose more than 5 percent compared with a year earlier. But U.S. government data showed crude stockpiles rose 3.5 million barrels last week to more than 507 million barrels.
“The market…was looking for some good news for once and took its cue from falling gasoline inventories and gasoline demand up 1.8 [percent], a hint that the long looked-for increase in consumer-led driving and spending might be afoot,” said David de Garis, a director and senior economist for fixed income, currencies and commodities at National Australia Bank, in a morning note.
Oil came under pressure this week after Saudi Arabia’s oil ministerdashed hopes for a possible production cuts.
In foreign exchange markets, sterling remained weak against the dollar on concerns over a possible “Brexit.” The pair traded at 1.3927 as of 6.10 a.m. HK/SIN.
Stateside, the Dow Jones industrial average closed up 0.3 percent, erasing a 266-point intraday drop. The S&P 500 gained 0.44 percent after trading more than 1 percent lower intraday and the Nasdaq composite was up 0.87 percent.
Companies that will announce earnings in Asia today include South32, Galaxy Entertainment and CITIC Telecom.
Source: CNBC
