Translate

Search This Blog

Search Tool




Asian Markets at Close Report

European Markets at Close Report

Aug 26, 2016

Asian Markets Closing Report, by MarketWatch on August 26, 2016: Nikkei Drops, Preparing For Bad News From Fed

www.marketwatch.com


marketwatch.com
 
Kenan Machado 
 
Shares in Asia drifted lower Friday, as investors largely held fire ahead of guidance from U.S. Federal Reserve Chairwoman Janet Yellen.

The S&P/ASX 200 XJO, -0.48%  dropped 0.5%, while South Korea’s Kospi SEU, -0.27%  and Singapore’s FTSE Straits Times Index STI, -0.67%  fell 0.3% each. However, the Shanghai Composite Index SHCOMP, +0.06%  was up 0.1% and Hong Kong’s Hang Seng Index HSI, +0.41%  closed 0.4% higher.
Yellen is speaking later Friday at the Jackson Hole gathering of central bankers.
Read: Yellen to say ‘ready’ for another rate hike in Jackson Hole
In Japan, the Nikkei Stock Average NIK, -1.18%  closed down 1.2%, with automobile and insurance stocks hurt by worries that Yellen would deliver gloomy news about the U.S. economy.
That would push down bond yields and weaken the dollar. Lower yields reduce insurers’ returns. A weaker dollar pushes the yen higher, which hurts export competitiveness.
Toyota Motor Corp. 7203, -3.35% TM, -0.50%  was recently down 3.4%, Honda Motor Co. 7267, -2.17% HMC, +0.07%   fell 2.2% and Nissan Motor Co. 7201, -0.87% NSANY, +0.99%  slid 0.9%.
The yen also weighed on Japan’s $1.3 trillion Government Investment Pension Fund. The fund said on Friday it took a hit again last quarter, as Brexit fears and the yen’s resulting surge hurt its strategy of shifting into equities and foreign assets.
A December rate increase has become more likely, said Hisao Matsuura, chief strategist at Nomura Japan’s equity strategy team.
Chicago Mercantile Exchange data on Fed Fund futures showed expectations for a rate increase in December inched higher.
Initial jobless claims in the U.S., a rough measure of how many workers were recently laid off, fell to a seasonally adjusted 261,000 for the week ended Aug. 20, the Department of Labor said. Economists surveyed by The Wall Street Journal had expected 265,000 new claims.
“I hope that August nonfarm payroll [data] would be more important rather than Jackson Hole,” Matsuura said.
In Asia, Japan’s core consumer price index—which excludes fresh food—slid 0.5% from a year earlier in July, following a revised 0.4% drop in June. That was greater than a 0.4% fall forecast by The Wall Street Journal and the Nikkei.
Electricity and gasoline led price declines, weighing on the index, data showed.
This prompted speculation that the Bank of Japan might have to lurch back into action, to reignite inflation.
But it is possible to put a positive spin on events—Japanese consumer confidence may be rising as prices fall and wages inch higher. Renewed confidence might eventually be good for Japanese reflation, analysts say.
“In Abenomics since 2013, price rises preceded wage increases, so households couldn’t feel the economic recovery. However, finally a rise in real wages should improve their feeling,” said Société Générale economist Takuji Aida.
In Hong Kong, shares in Li & Fung Ltd. 0494, -3.55%  were down 3.6% after one of the world’s largest factory middlemen said first-half net income dropped 51% to $72 million for the first half, while revenue fell 6.5%.
The more than 100-year-old company, based in Hong Kong, has contracts with 15,000 factories globally to make apparel, toys and other goods. Shoppers’ move online is squeezing profits throughout the retail industry.
China Resources Land Ltd.’s Hong Kong-listed shares 1109, +3.87% jumped 4.4% after it reported a 19% on-year rise in first-half net profit at 7.68 billion yuan ($1.15 billion), thanks to increased property sales. It also said it plans to buy some assets from parent China Resources (Holdings) Co. for 6.24 billion yuan.
Meanwhile, oil prices stayed weak in late Asian trade, as hopes of a production freeze among major oil producers faded. This pessimism comes after Saudi Arabia Oil Minister Khalid al-Falih said there had been no substantial discussion at the Organization of the Petroleum Exporting Countries of any action to rein in output.