Asia report: Markets higher despite stronger yen

Markets in Asia finished higher on Thursday, with Japanese shares advancing after a stronger yen led to a choppy start.

The country’s benchmark Nikkei 225 bobbed above and below the waterline for much of the day, but eventually settled 1.07% higher at 16,254.89, while the Topix rose 0.87% at 1,282.99.

It was dragged down initially by a stronger yen, although that weakened somewhat in later trading and was last 0.13% off the greenback at JPY 101.37 per $1.

Bank of Japan deputy governor Kikuo Iwata indicated that a review of the central bank’s policies due next month will focus on monetary transmission mechanisms, as well as obstacles in the way of its stimulus plan.

Yields on Japanese government bonds were at -0.076% by the end of the day, having risen as high as -0.058% earlier.

Carmaker Toyota posted its earnings after markets closed, with first quarter profits down 15% to JPY 642.23bn, weighed down by the stronger yen.

The major exporter said it expects profit to fall 43.9% year-on-year in fiscal year 2017.

On the mainland, the Shanghai Composite was up 0.14% at 2,982.65, and the Shenzhen Composite ended 0.72% higher at 1,948.91.

South Korea’s Kospi gained 0.26% to finish at 2,000.03, while Hong Kong’s Hang Seng Index added 0.43% to 21,832.23.

Oil prices rebounded overnight, though they soon lost ground again, with Brent crude last down 0.94% at $42.70 per barrel and West Texas Intermediate down 0.54% at $40.61.

The rise came after data revealed the US gasoline inventory fell 3.3 million barrels, against a forecast for a 200,000 barrel drop.

Last week, the Energy Information Administration reported a 1.4 million barrel rise in US crude inventories.

“Oil has once again established itself as the central thematic behind the world's financial markets and the fact we saw such a powerful reversal at the trend low, despite dollar strength, has driven a slight uplift in sentiment,” said IG chief market strategist Chris Weston.

In Australia, the benchmark S&P/ASX 200 was up 0.18% at the close at 5,475.80, boosted by a 2% rally from the energy subindex on the back of the rise in crude prices.

The big four regional banks were also in the spotlight, and ended mixed - Australia and New Zealand Banking Group lost 0.12%, Commonwealth Bank of Australia was down 0.49%, National Australia Bank was up 0.23%, and Westpac added 0.17%.

Prime Minister Malcolm Turnbull was reported as saying the federal government would now call the banks before the parliamentary economics committee every year, after they were roundly criticised on Wednesday for not passing on recent interest rate cuts to consumers.

Shares in Rio Tinto finished down 1.62% as investors digested the company’s poor first-half earnings, which were released after hours in Sydney on Wednesday.

The miner’s first half underlying earnings were down 47% to $1.56bn, but the biggest surprise to investors appeared to be the declaration of a 45 cent dividend.

In New Zealand, the S&P/NZX 50 added 0.28% to finish at 7,298.08.

The down under dollars were both stronger against the greenback, with the Aussie last 0.4% ahead on its American cousin at AUD 1.3126 per $1, and the Kiwi advancing 0.2% at NZD 1.3941.