Asian Shares Mixed as Oil Prices Fall and Dollar Drops 

Markets await policy details from the U.S. Federal Reserve’s annual meeting at Jackson Hole

Shares in Asia were mixed Tuesday, as oil prices fell and the U.S. dollar weakened ahead of a key meeting of Federal Reserve officials and other central bankers later this week.

The Nikkei Stock Average was down 0.4%, while Australia’s S&P/ASX 200 gained 0.8%. Hong Kong’s Hang Seng Index was down 0.3%, while the Shanghai Composite Index gained 0.2%. In oil-reliant Malaysia, the FTSE Bursa Malaysia KLCI was down 0.1%.

“There’s still a sort of ‘end of summer’ trade of low volumes and low volatility and I think in general we are seeing a bit of that continuing into the Asian session,” said Angus Nicholson, an analyst at IG Markets.

Crude-oil prices slipped overnight on skepticism the Organization of the Petroleum Exporting Countries would reach a deal to cut production, sending commodity stocks in Japan sharply lower.

Among those, oil explorer Inpex was down 1.9%, while Japan Petroleum Exploration slid 3.4%. Brent crude, the global benchmark, was recently down 1% from the previous close to $48.67 a barrel, a five-day low.

In Australia, lower oil prices were offset by demand for dollar-denominated metals, like copper and nickel, which increased as the weaker U.S. dollar made them cheaper to buy.

Copper three-month futures on the London Metal Exchange hovered near six-week lows, and share prices of mining companies on Australia’s benchmark index rose. Rio Tinto added 0.4%, while BHP Billiton gained 0.6%. Energy shares still took a hit, with Oil Search trading down 0.8% and Woodside Petroleum falling 0.2%.

Elsewhere, the U.S. dollar slipped against other major currencies as the yield on the 10-year U.S. Treasury note fell to 1.55% from around 1.60%. The U.S. dollar index was recently down 0.1%.

The yen rose 0.1% against the dollar, adding to pressure on Japanese exporters by making them less competitive, with auto makers Honda Motor falling 2.1% and Mazda Motor shedding 3% of its value.

The Korean won, in particular, was 0.5% firmer against the dollar on Tuesday. Still, shares of Korea’s biggest container-shipping operator, Hanjin Shipping, surged to their highest level in three weeks, after the ailing company said it would unveil fresh fundraising plans later this week.

Hanjin gained 8.2%, outperforming the benchmark Kospi’s 0.2% rise. The stock had risen as much as 14.2% earlier in the session.

For now, markets are awaiting policy details from Federal Reserve Chairwoman Janet Yellen when she speaks at the Fed conference in Jackson Hole, Wyo., on Friday.

Investors are looking for signals on whether the Fed sees enough economic momentum to support raising interest rates in September or the coming months. Any decisions made will likely affect the U.S. dollar and dictate its strength against regional Asian currencies.

“I don’t think there will be any surprises from Jackson Hole,” said William Ma, chief investment office at Noah Holdings, who doesn’t believe there will be an interest-rate rise before the U.S. presidential elections in November.

According to the Fed fund futures—contracts that estimate the likelihood of a U.S. rate increase—there was a low 18% chance of a September rate increase and a 41% chance of a December rate rise.

Source: WSJ

---