Asia’s major stock indexes struggled for direction on Tuesday with mixed cues on global interest rates, China’s stimulus plans and currency wobbles all contributing to contrasting sessions.
Investors across the region were also in unsettled mood ahead of Friday’s release of US inflation data and what the figures will mean for rates going forward into the rest of the year.
Japan’s Nikkei share average was little changed, though, as gains in chip-related stocks offset declines by heavyweights such as Uniqlo-owner Fast Retailing and Nissan Motor.
Also on AF: China’s Retaliatory Bans Could Cost US Tech Giants Billions
The Nikkei’s three biggest supports were in the semiconductor sphere, led by chipmaking-equipment giant Tokyo Electron, as they tracked a record rally in US peer Nvidia.
Nvidia, the company at the centre of the artificial intelligence fervour, notched a second successive all-time closing high on Monday, after extending its winning run to a sixth straight session.
However, Nissan slumped nearly 4% after an update to its medium-term business plan that underwhelmed investors.
The Nikkei share average edged down 0.04%, or 16.09 points, to close at 40,398.03, while the broader Topix was ahead 0.11%, or 3.16 points, to 2,780.80.
On Monday, the Nikkei slid 1.16% after hitting an all-time peak of 41,087.75 on Friday. This year, it has rallied more than 20%.
Meanwhile, BlackRock increased its overweight position on Japanese equities, citing the Bank of Japan’s (BOJ) continued dovish stance despite exiting negative interest rates last week.
China stocks edged higher despite the yuan’s recent weakness affecting investor sentiment, while focus was also on policy support for the country’s struggling property sector.
Fed Rate Wildcards
The yuan eased against the dollar, after a sharp bounce the previous day, pressured by underlying expectations that easier monetary policy at home and broad greenback strength will lead to more weakness in the local currency.
China’s blue-chip CSI300 index was up 0.51%, while the Shanghai Composite Index rose 0.17%, or 5.18 points, to 3,031.48. The Shenzhen Composite Index on China’s second exchange was up 0.18%, or 3.14 points, to 1,752.29.
Chinese H-shares listed in Hong Kong rose 0.17% to 5,764.42, while the Hang Seng index gained 0.88%, or 144.68 points, to close at 16,618.32.
Elsewhere across the region, in earlier trade, Singapore, Seoul, Manila and Bangkok all rose but Sydney, Wellington, Taipei, Mumbai and Jakarta were in the red.
On Monday, the mixed outlook from Federal Reserve officials threw a few wildcards into the policy outlook while markets wait on the next US inflation indicators.
Chicago Fed President Austan Goolsbee said he had pencilled in three rate cuts this year, while Fed Governor Lisa Cook urged caution and Atlanta Fed President Raphael Bostic reiterated Friday remarks trimming his expectations to one cut.
US interest rate futures price about three Fed rate cuts this year and about a three-in-four chance of the first cut in June.
China’s Yuan Steadies
US two-year yields, which track short-term interest rate expectations, rose in New York trade overnight then fell 3.5 basis points in Asia trade to 4.59%.
In foreign exchange, Monday’s rhetoric from Japan’s top currency diplomat, Masato Kanda, kept the yen steady as traders weigh the risk of Japan buying heavily. Kanda said the yen’s recent slide was “strange” and “speculative”.
The Bank of Japan lifted interest rates last week but the yen has fallen near to three-decade lows on the dollar.
China’s yuan opened steady after a stronger-than-expected fixing of its trading band but selling pressure soon drove it to the weak side of its 200-day moving average at 7.2184 per dollar.
Markets were unsettled by a sharp drop in the yuan on Friday, after months of tight trading, and some speculate China is loosening its grip on the currency to allow it to fall.
Later on Tuesday, US manufacturing, services and consumer confidence figures are due.
Gold and oil prices were broadly steady in commodities trade, with spot gold at $2,172 an ounce and Brent crude futures up 7 cents a barrel to $86.82. Bitcoin hovered just above $70,000 after rising sharply on Monday.
Key figures
Tokyo – Nikkei 225 < DOWN 0.04% at 40,398.03 (close)
Hong Kong – Hang Seng Index > UP 0.88% at 16,618.32 (close)
Shanghai – Composite > UP 0.17% at 3,031.48 (close)
London – FTSE 100 < DOWN 0.09% at 7,910.61 (0934 GMT)
New York – Dow < DOWN 0.41% at 39,313.64 (Monday close)
- Reuters with additional editing by Sean O’Meara
Read more:
Private Equity Deals in Asia Near The Worst in a Decade
China Presses Banks to Fast-Track Loans to Property Developers
China Told it Must ‘Reinvent Itself’ to Turn Economy Around
Nikkei Dips Despite Weak Yen, Hang Seng Slips on Policy Doubts
