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Sep 6, 2016

Asian Markets Closing Report on September 6, 2016: Asian Markets Rise, But Aussie Stocks Buck Trend After RBA Stands Pat

www.marketwatch.com


marketwatch.com
 
Ese Erheriene
 
Asian shares were broadly higher Tuesday, with export names buoyed by the U.S. dollar’s strength, though stocks in Australia extended declines after the central bank there kept interest rates unchanged.

The Nikkei Stock Average NIK, +0.26%  closed up 0.3%, hitting a fresh three-month high, and building on last week’s 3.5% gain. Singapore’s Straits Times Index STI, +1.57%  added 1.6% on rising oil prices, while Hong Kong’s Hang Seng Index HSI, +0.58%  gained 0.5%.
In Australia, the S&P/ASX 200 XJO, -0.29%  ended down 0.3%, following the Reserve Bank of Australia’s decision Tuesday afternoon to keep rates steady at 1.5%. The RBA eased monetary policy in May and August.
Australian banking stocks remained mixed following the rate decision, with National Australia NAB, +0.29%  rising 0.3%, Commonwealth Bank of Australia CBA, -0.76%  falling 0.8%, and Westpac Banking Corp. WBC, -0.27%  shares 0.3% lower.
The rate decision “wasn’t really very significant [as] it was exactly as expected,” said Paul Dales, chief economist for Australia & New Zealand at Capital Economics. “It now seems to be...that the RBA is suggesting it’s not keen to cut interest rates again,” he said.
Meanwhile, the yen USDJPY, -0.13%  yen was recently flat against the U.S. dollar after trading down for much of the day, with the greenback holding firm. A weaker yen helps boost the competitiveness of Japanese exports. Auto makers Nissan Motor Co. Ltd. ended up 1.5%, while Mazda Motor Corp. added 0.7%.
Japanese banking stocks drove gains on the Nikkei amid expectations that the Bank of Japan may cut back on longer-term bond buying at its next meeting, thus boosting bond yields. Mizuho Financial Group 8411, +0.88%  ended up 0.9%, Sumitomo Mitsui Financial Group 8316, +1.28%  added 1.3% and Shinsei Bank Ltd 8303, +1.81%  closed up 1.8%.
“The Japanese banking sector has been doing very well of late,” said Angus Nicholson, a market analyst at IG. “In the lead-up to the BOJ meeting on Sept. 21, there’s a lot of speculation that the BOJ is going to do a major recalibration of their [qualitative and quantitative easing] policy.”
Japanese banks have been some of the biggest victims of the BOJ’s monetary easing and negative-rates policy. They claim that their profits were suffering amid very low yields on all government bonds.
Diplomatic split
In the Philippines, the stock market benchmark PSEi PSEI, -0.58%  was one of the region’s biggest decliners Tuesday, falling 0.6%, after U.S. President Barack Obama abruptly canceled a first meeting with Philippine leader Rodrigo Duterte in a rare diplomatic rupture. Analysts point to concerns that rising tensions between the two close allies could affect future trade deals.
Obama scraps meeting after Duterte's tirade
President Barack Obama canceled a planned meeting with Rodrigo Duterte at a summit of Asian leaders in Laos after the Philippine president's outburst.
The decline in Philippine stocks came even as data Tuesday showed inflation in the country slowing unexpectedly in August, providing the central bank plenty of scope to keep monetary policy supportive of stronger economic growth.
Elsewhere in the region, shares in India were higher as the market played catch up to news of the weaker U.S. jobs report after being closed for a holiday Monday. The S&P BSE Sensex 1, +1.56%  was last up 1.1%, while the National Stock Exchange’s Nifty 50 NIFTY50, +1.51%  index also rose 1.1%.
Indian auto stocks outperformed after most of them reported higher sales growth in August. Among them, Tata Motors 500570, +0.71%  gained 3.3%, while Maruti Suzuki 532500, +1.99%  added 2.3%.
Looking ahead, investors will be watching for news from the annual summit of the Association of Southeast Asian Nations, which kicks off Tuesday in Laos and could move stocks in the region.
More broadly, uncertainty on the U.S. interest rate outlook may continue ahead of speeches by Federal Reserve officials, including one by Federal Reserve Bank of San Francisco President John Williams, later this week.