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Asian Markets at Close Report

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Dec 29, 2016

Asian Markets at Close Report on December 29, 2016: Asian Stocks Close Mixed Following Wall Street Losses

marketwatch.com

Willa Plank


Major Asian markets closed mixed Thursday amid broad dollar weakness and disappointing U.S. home sales data.

Japan's Nikkei NIK, -1.32%  fell 1.3%, Australia's S&P/ASX 200 XJO, +0.25%  closed up 0.3%, Singapore's FTSE Straits index STI, -0.32%  slid 0.4% and Hong Kong's Hang Seng Index HSI, +0.17%  closed up 0.2%.
The WSJ Dollar Index BUXX, -0.27%  , which measures the U.S. currency against 16 others, traded 0.4% down in Asian trade after data from the National Association of Realtors showed pending home sales dropped in November, a sign of weakening momentum for the U.S. housing market.
An index tracking pending home sales in the U.S. dropped to 107.3 in November from 110.0 in October, according to the association's data.
"This was the first time [since the U.S. election] that there was some weak data," said Masashi Murata, a senior currency strategist at Brown Brothers Harriman. "Investors are cautious about the strong rally in the U.S.," he said.
The data broadly saw the dollar drop against Asian currencies.
A 0.7% strengthening of the yen against the dollar USDJPY, -0.41%  Thursday hit Japan's export stocks, with Toyota Motor 7203, -1.89%  off 1.9% and Mazda Motor 7261, -2.66%  down 2.7%.
Shares of Toshiba 6502, -16.98%  slumped 17%, hit by continuing concerns about write-downs in its nuclear business. The stock is down 42% for the week.
Tomoichiro Kubota, senior market analyst at Matsui Securities, said traders were nervous because they don't know how much Toshiba would eventually write down, although Toshiba acknowledged on Tuesday it could amount to several billion dollars.
The market also does not know how much Toshiba might need to raise to restore its capital base, or where it would find the money.
Toshiba is on a Tokyo Stock Exchange watch list because of an accounting scandal in 2015, when the firm was found to have overstated operating profits by at least 151.8 billion yen between 2008 and 2014.
The fact it is on a watch list makes it difficult to raise funds by issuing new shares to the public, market participants say. Japanese media also reported that Toshiba was going to discuss possible financial support with its banks, including a debt-for-equity swap.
For the third day in a row, the Shanghai Composite Index SHCOMP, -0.20%  closed with losses. The main board in Shanghai closed down 0.2%.
An apparent glitch on Bloomberg's terminal that showed China's yuan USDCNY, -0.0474%  briefly broke below the widely watched 7.0000 level against the dollar Wednesday night drew a rare and quick response from Beijing. Without naming names, the People's Bank of China wrote via its Twitter-like Weibo account 12 minutes before midnight that the dollar-yuan exchange rate stayed steady in the 6.9500-6.9666 range Wednesday, but that "certain irresponsible media reported" otherwise.
"We hereby express our condemnation of such behavior and we reserve the right to further investigate the matter and accountability." According to Chinese media, Bloomberg has since corrected its yuan pricing.
Anxiety has been brewing as the yuan inches closer to the psychologically crucial 7.0000 level against the dollar. A breach of that threshold would further hit investor confidence in the yuan and trigger even sharper capital outflows from the world's second-largest economy.
Korea's Kospi SEU, +0.10%  closed up 0.1%, despite the fact the South Korean government cut its growth forecast for next year. The 2017 gross domestic product growth estimate for South Korea was lowered to 2.6% from an earlier projection of 3%.
Weakening domestic demand will likely be a major drag on Korea's economy in 2017, South Korea's Ministry of Strategy and Finance said, with growing household debt, continuing corporate restructuring and cooling home construction expected to weigh on consumer spending and growth.