Japan’s Nikkei Stock Average NIK, -1.26% fell 1.3%, taking its week-to-date losses to 3.3%. Australia’s S&P/ASX 200 XJO, +0.23% recovered to end up 0.2% and Hong Kong’s Hang Seng Index HSI, +0.63% closed 0.63% higher. Elsewhere, South Korea, China and Taiwan were closed for a public holiday.
The U.S. Federal Reserve will kick off its two-day meeting on Tuesday, during which central bankers will vote on whether to raise interest rates. Higher rates would typically result in money flowing out of emerging markets.
The Philippine peso USDPHP, +0.3773% fell 0.8% against the dollar amid concerns over a U.S. interest rate rise as well as political tensions stoked by recent inflammatory comments from President Rodrigo Duterte, particularly with regard to the country’s alliance with the U.S.
The Malaysian ringgit USDMYR, +0.1452% and South Korean won USDKRW, +0.17% also fell Thursday, by 0.7% and 0.4% respectively, on the view that the U.S. will soon raise interest rates, or at the very least that there will be hawkish commentary from the Fed at its meeting.
Elsewhere, Japanese banking and real-estate stocks extended declines amid continued uncertainty about the Bank of Japan’s policy direction ahead of its meeting next week, which is set to clash with that of the Fed. Some speculate that the BOJ will cut purchases of late-dated bonds to allow the yield curve to steepen, which would raise long-term borrowing costs. This is bad for Japan’s property firms, which rely on long-term loans to develop property. Sumitomo Realty & Development Co. Ltd. 8830, -5.02% shed 5% of its value Thursday.
Meanwhile, a rebound in oil prices did little to lift shares in commodity companies following news that Libya and Nigeria were set to increase production. Australia’s Santos Ltd. STO, -2.85% fell 2.9% and Japan Petroleum Exploration Co. Ltd. 1662, -1.59% closed 1.6% lower. Brent crude LCOX6, +1.22% recovered in Asian trade and was last up 0.5% at $46.06 a barrel.
Libya and Nigeria are both members of the Organization of the Petroleum Exporting Countries. Increased production from the two countries could upset efforts by OPEC to bring supply in line with demand, as it is unclear if “other producers are prepared to offset that much of an increase,” said Tim Evans, a Citi Futures analyst, in a note.
In Hong Kong, Macau-based casinos extended their recent run of gains, with Wynn Macau Ltd. 1128, +6.05% ending 6.1% higher. There was little concrete news on which to pin the gains, but analysts expect the opening of a casino last Tuesday will draw more gamblers to the enclave, benefiting all casinos.
“We believe Macau gaming stocks outperformed the market recently due to the opening of the Wynn Palace and Parisian in Cotai [which] may bring in new visitations, market speculation of the gaming sector bottoming out, and a...holiday rally,” said Hayman Chiu, a research director at Cinda International Research Limited.
Hong Kong-listed shares of Chinese state-run CGN Power Co. Ltd. 1816, +2.17% closed up 2.2% after the U.K. approved the $23.8 billion Hinkley Point nuclear power station in Somerset, England, following an agreement with French power company Électricité de France SA EDF, -0.94% , subject to conditions.
Looking ahead, investors will be keeping a close eye on U.S. retail sales for August due later Thursday, which could color the Fed’s willingness to move rates.
Floyd Tyler of Preserver Partners talks about publicly traded bargains, like small industrial REITs, and non-traded ones, like photo royalties.