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Asian Markets at Close Report

European Markets at Close Report

Jan 18, 2017

Asian Markets at Close Report on January 18, 2017: Asian Stocks Closed Mixed as Investors Warily Await Trump

marketwatch.com
 
Willa Plank 
 
Asian markets lacked direction Wednesday as traders grappled with the uncertainties about the policies of U.S. President-elect Donald Trump, whose inauguration looms.

“What will his inauguration speech be on Friday?” asked Andrew Bresler, a director at Saxo Capital Markets. “And [what] will his [first] 100 days will look like?”
Traders are focused on how Trump tackles China in his first week and whether he labels the country a currency manipulator, Bresler added.
“There is so much uncertainty,” said Alex Furber, sales trader at CMC Markets. “The prospect of [a] trade war...no one really knows what that is going to look like...how much damage that will do to China.”
Markets were struggling for a direction, either to stick to risk assets or go into safety, Furber said.
Japan’s Nikkei NIK, +0.43%  turned positive after spending most of the morning in the red— it closed up 0.4%. This is as the yen USDJPY, +0.72%  fell further during Asian trade; it was last down 0.7% against the dollar. A weak yen makes the country’s exporters more competitive.
Korea’s Kospi SEU, -0.06%  closed down 0.1% and Australia’s S&P/ASX 200 XJO, -0.36%   finished the day down 0.4%.
“The key focal point has been paring back on the global reflation trade…that has really been unwound,” said Chris Weston, chief market strategist at IG.
In an interview Friday with The Wall Street Journal, Trump said the U.S. dollar was already too strong, in part because China holds down its currency, the yuan.
“[Donald Trump] has taken a very, very unpresidential step [of] talking down the currency,” said Weston. “The market has taken it to heart.”
Elsewhere, Chinese President Xi Jinping made a strong defense of global trade on Tuesday at the Davos gathering, curiously--some say--positioning Xi as the bigger advocate of economic orthodoxy, including globalization.
The U.S. share market was closed on Monday for the Martin Luther King holiday. U.S. share traders had their first chance to react to Mr. Trump’s WSJ interview on Tuesday, and promptly sold off the market.
The Dow Jones Industrial Average DJIA, -0.30%   fell 0.3% on Tuesday. The bigger impact was seen in financial stocks in the U.S. thanks to a drop in the yield on the 10-year Treasury notes, with the S&P 500 financials sub index sinking 2.3% overnight.
Higher long-term yields tend to improve profits at lenders, which has boosted financial shares in the S&P 500 by 18% from Nov. 8 through to Friday’s close.
The 10-year Treasury yield settled at 2.327% Tuesday, down from 2.38% Friday.
This decline in financials was felt in Australia Wednesday. The nation’s four biggest banks--which make up about one-third of the weighting of the ASX 200--collectively knocked more than 12 points off the index.
Westpac Banking Corp. WBC, -1.04%   and Australia & New Zealand Banking Group ANZ, -0.95%   each lost 1%, Commonwealth Bank of Australia CBA, -0.83%   fell 0.8% and National Australia Bank NAB, -0.71%  was 0.7% lower. That offset gains among energy stocks as oil prices ticked higher in Asia.
Gains in banking shares also helped Hong Kong’s Hang Seng index HSI, +1.13%  breach the psychologically significant 23,000 mark Wednesday, with the benchmark closing up 1.1% on the day.
Financials led the Hong Kong gains, getting a lift today from a Morgan Stanley upgrade of the sector on Tuesday after market close. The broker said higher rates in the U.S. should aid net interest margins at Hong Kong lenders. BOC Hong Kong gained 3.1% Wednesday and Hang Seng Bank closed up 2.1%.
Blue chips in Shanghai rose early Wednesday after the central bank injected massive liquidity into the market. The People’s Bank of China put a net 270 billion Chinese yuan (US$39 billion) into the domestic money market.
This was done to address continued nervousness about the domestic share market following a sharp intra-day sell-off on Monday, and as regulators picked up the pace of approvals for initial public offerings. The Shanghai Composite SHCOMP, +0.14%   was up 0.1%. The Shenzhen Composite, however, slipped 0.5%.
The growth of home prices in China slowed in December from the month before, as a raft of property controls start to bite. The average price of new homes in 70 cities rose 0.3% in December from November, according to calculations by The Wall Street Journal based on data released Wednesday by the National Bureau of Statistics. That compares with a 0.6% gain in November.
On a yearly basis, average new home prices rose 10.8% in December, compared with a 10.4% gain in November.