Asia markets mostly higher; Sharp drops 15% on takeover deal
Asian markets were mostly higher Friday, with Japan extending gains from the previous session and Australia closing flat.
Market watchers will be focused on a two-day gathering of G20 finance ministers and central bankers in Shanghai that kicked off Friday to discuss global economic growth concerns.
Chinese markets opened in positive territory, with the Shanghai composite up 1.07 percent early on before paring some of the gains to trade 0.43 percent higher. The index dropped 6.4 percent in its previous session. The Shenzhen composite gave up early gains of as much as 1.2 percent to trade flat.
The benchmark Nikkei 225 was up 1.07 percent in afternoon trade, off its session high, while the broader Topix gained 0.68 percent. The yen, which strengthened against the dollar in recent days, retreated below the 113 handle, touched earlier in the session. Shares gave up some gains as the pair fell to 112.80 as of 10:00 a.m. HK/SIN time.
Across the Korean Straight, the Kospi was up 0.2 percent.
Down Under, the S&P/ASX 200 closed nearly flat at 4,880, with the energy and mining sectors down 0.93 and 0.77 percent, respectively. Miners finished mostly lower, with Rio Tinto, BHP Billiton andFortescue down between 2.56 and 3.19 percent.
While markets were fairly sanguine Friday, Stephen Innes, a senior trader for Asia Pacific at OANDA was, doubtful that would persist.
“Despite this glimmer of optimism that we are seeing leading up to this weekend’s G-20 summit, the likelihood of a coordinated policy pact is doubtful. Instead, the big fear is that whatever sliver of optimism investors currently have in an otherwise dreary outlook will be further eroded after the summit. So we could be in for some messy markets next week,” he said.
Troubled Japanese electronics maker Sharp saw steep losses, with its shares down 15.44 percent; on Thursday, its shares fell 14 percent. The sell-off started after Reuters and the Nikkei reported Thursday that the company accepted a 659 billion yen ($5.9 billion) takeover bid by Taiwan’s Foxconn. Since then, several media outlets reported the Taiwanese manufacturer said it would not sign the deal until Sharp clarified terms in a new document over previously undisclosed liabilities.
Shares of Foxconn, also known as Hon Hai Precision Industry, were down 1.66 percent.
There were other indications that Japan’s outlook could be rocky. Data reported Friday showed Japan’s core consumer prices for Januaryremained unchanged on-year, in line with expectations, and below the Bank of Japan’s inflation target of 2 percent. Last month, the central bank introduced negative interest rates in a bid to spur economic growth.
“Today’s Japanese CPI release underscores the need for further action by the BOJ if they are determined about the 2 percent inflation target,” Angus Nicholson, a market analyst at IG, wrote in an afternoon note, adding while energy prices were primarily responsible, the number also underscored lack of inflationary pressure in other parts of the economy.
“An increase in the BOJ’s asset purchases program seems to be what the market is demanding. But the BOJ’s QQE [Qualitative and Quantitative Easing] policy is at such extreme levels that they are beginning to run out of government bonds to buy,” added Nicholson.
One of Australia’s largest supermarket chains, Woolworths, retraced losses of as much as 2.7 percent to finish up 2.06 percent. The company reported its earnings before market open. Reports said the company’s fiscal first-half net income fell 33 percent, while first-half profit after tax was A$925.8 million, down from the $1.3 billion reported a year earlier.
Noble Group shares were up 2.99 percent after falling over 10 percent between February 23 – 25, following the company’s profit warning Tuesday. The commodities trader reported its first annual loss in nearly twenty years Thursday, saying it lost $1.67 billion after a $1.2 billion writedown on its coal assets.
After the profit warning, ratings agency Moody’sdowngraded Noble to Ba3 from Ba1 in the junk category. The agency had cut Noble’s investment grade rating in December.
Energy remained a focus for the markets. Oil prices retreated during Asian hours, with the U.S. West Texas Intermediate (WTI) crude down 0.33 percent at $32.96, after settling up 2.86 percent overnight. Global benchmark Brent futures were down 0.68 percent at $35.05 a barrel, following gains of 2.6 percent in U.S. hours.
David de Garis, a director and senior economist for fixed income, currencies and commodities at the National Australia Bank, wrote in a morning note that oil’s overnight gains were “on seemingly little fundamental news.”
In related news, OPEC members and Russia reportedly confirmed a meeting in March to discuss capping crude production at January levels. Earlier in the week, Saudi Arabia dashed hopes of oil production cuts to reduce the global supply glut. But analysts are skeptical that a freeze, without output cuts, will have much impact.
Energy shares were mixed. In Japan, Inpex added 0.35 percent, but in Australia, Woodside dropped 3.06 percent and Oil Search fell 0.75 percent. Hong Kong-listed Sinopec gained 4.30 percent,
Stateside, the Dow Jones industrial average closed up 1.29 percent, theS&P 500 gained 1.13 percent and the Nasdaq composite added 0.87 percent.
Companies expected to announce earnings include Nine Entertainment, AirAsia and Sun.
Source: CNBC
