China approves a long-anticipated trading link between Hong Kong and Shenzhen’s stock markets. The move comes as China looks to open up its $6.5 trillion (£5 trillion) equity markets to foreign investors.
Tokyo, Japan (BBN) – Major Asian indexes closed mixed on Monday as investors digested earnings reports and President Donald Trump’s tour of the region got underway.
MARKETS ON THE MOVE
Japan’s Nikkei 225 finished the session just 0.04 percent above the flat line at 22,548.35 after markets re-opened for trade following a long weekend. Oil stocks rose while automakers were mixed, reports CNBC.com.
Mazda Motor declined 4.3 percent on a poorer-than-expected quarterly profit and Subaru closed down 2.71 percent after it revised downward its full-year operating profit forecast.
Minutes from the Bank of Japan released Monday showed most policymakers thought the central bank should keep its current policy guidelines, Reuters reported.
Across the Korean Strait, the Kospi came under pressure. The index declined 0.33 percent to close at 2,549.41 as a fall in blue-chip tech stocks weighed on the broader market: SK Hynix closed down 1.07 percent and Samsung Electronics was flat on the day. Cosmetics and oil stocks, however, notched gains.
Down Under, the S&P/ASX shed 0.1 percent to end at 5,953.78, with gains in utilities and information technology stocks offset by losses in the heavily-weighted financials sub-index.
Australia’s Westpac announced on Monday that its cash earnings rose 3 percent to 8.06 billion Australian dollars ($6.17 billion) for the year ending on Sept. 30. That was below the 4 percent rise forecast in a Reuters poll. Meanwhile, statutory net profit for the period rose 7 percent to A$7.99 billion ($6.11 billion). Westpac shares lagged other banking stocks to close down 2.16 percent.
Hong Kong’s Hang Seng Index was 0.22 percent lower by 3:00 p.m. HK/SIN, but off the lows it hit earlier in the session. Mainland markets fared slightly better and closed above the flat line: The Shanghai Composite ended the session up 0.52 percent at 3,389.12 and the Shenzhen Composite reversed early losses to close up 1.18 percent at 1,999.30.
MSCI’s broad index of shares in Asia Pacific excluding Japan were 0.17 percent lower on the day at 3:05 p.m. HK/SIN.
U.S. stocks closed at record levels on Friday, despite a mixed jobs report for October as markets focused on strong earnings. Apple shares jumped in the session following its earnings beat. The Nasdaq composite surged 0.74 percent, or 49.49 points, to close at a record 6,764.44 on those results.
THE LEAD UP
Data on Friday showed that a total 261,000 jobs were created in the U.S. in October, significantly below the 310,000 figure expected. The unemployment rate for the period, however, came in at 4.1 percent, a shade below the 4.2 percent forecast.
Elsewhere, several Saudi ministers and princes, including prominent investor Prince Alwaleed Bin Talal, were detained over the weekend as part of an anti-corruption probe in the country.
Saudi Arabia’s stock market initially fell on Sunday in reaction, but had edged higher by the end of the session.
Also in focus in the region was Trump’s tour of Asia, with Japan the first of the five nations on the itinerary. On his arrival in Japan, Trump warned that “no dictator” ought to “ever underestimate American resolve.” The president will also visit South Korea, China, Vietnam and Philippines during his trip.
In Asia, People’s Bank of China Governor Zhou Xiaochuan said the market ought to play a key role in resource allocation, but that regulation remained vital, Reuters said, citing local media. Zhou had warned in October of the risk of a crash in asset prices resulting from too much optimism.
CORPORATE NEWS
In other news, merger talks between telcos Sprint and T-Mobile have ceased, the companies announced on Saturday. Japan’s SoftBank, the parent of Sprint, is due to report earnings on Monday. SoftBank stock finished the session down 2.6 percent.
Qatar Airways announced it would be buying around 9.61 percent of Cathay Pacific Airways. Kingboard Chemical said in a filing on the Hong Kong Exchange that it would be disposing of those shares for consideration of 5.16 billion Hong Kong dollars ($661 million). Kingboard Chemical edged up 0.73 percent and Cathay shares were down 1.36 percent by 2:48 p.m. HK/SIN. Cathay shares had fallen more than 4 percent earlier in the day.
Elsewhere, DBS Bank said Monday its third-quarter net profit came it at 822 million Singapore dollars ($602 million), well below the S$1.13 billion forecast in a Thomson Reuters I/B/E/S poll. The bank also said its exposure to the oil and gas support services sector stood at S$5.3 billion ($3.8 billion). DBS shares tumbled 1.13 percent.
WATCHING THE DOLLAR
The dollar broadly held onto gains made in the last session following Friday’s stateside data releases. The dollar index stood at 94.934 at 2:49 p.m. HK/SIN after touching as high at 95.015 on Friday.
Against the yen, the greenback firmed to trade at 114.38, above Friday’s close of 114.06.
THE COMMODITIES TRADE
Oil prices touched their highest levels in more than two years as markets kept an eye on the developments in Saudi Arabia. Brent crude was up 0.48 percent at $62.37 a barrel and U.S. crude futures tacked on 0.34 percent to trade at $55.83.
While technical indicators showed both contracts were “severely overbought,” geopolitical risk was likely to override those fears in the short term and “maintain the upside bias to crude,” Jeffrey Halley, senior market analyst at OANDA, said in a note.
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