Asia report: Down under tracks higher while others falter

Most markets in Asia ended Friday lower, as investors closed their wallets ahead of the US nonfarm payroll numbers for April - though Australia managed to reverse losses after official inflation forecasts for the country were lowered.

In Japan, the Nikkei 225 finished down 0.25% at 16,106.72, returning to trading after three days of national holidays.

The yen was still hovering around the JPY 107 level against the dollar, compared with the JPY 111 territory it settled in last week. After Tokyo trading it broke through the JPY 106 barrier, and was last 0.32% stronger at JPY 106.92.

"Given the perceived policy contrasts between the Bank of Japan and the Federal Reserve, look to the dollar-yen to continue to manifest shifting Federal Open Markets Committee expectations," said OCBC Bank foreign exchange strategist Emmanuel Ng.

Mainland China also ended the day lower, with the Shanghai Composite Index losing 2.82% at 2,913.41, and the Shenzhen Composite dropping 3.65% to close a 1,871.61.

Investors in Beijing were spooked later in the session by a Dow Jones report, which suggested Beijing regulators were looking to delay mainland listings of US-listed China companies.

In Hong Kong, the Hang Seng Index closed 1.66% lower at 20,109.87.

A number of Asian markets were on holiday, with Indonesia closed for the Ascension of the Prophet Muhammad and Thailand enjoying a second day off for Coronation Day. South Koreans were granted the day off in a government statement last week, bridging Thursday’s Children’s Day holiday and the weekend in a bid to give domestic consumption a small boost.

Analysts were looking toward the nonfarms as an indicator as to whether the Federal Reserve will raise interest rates in June.

"Ahead of the April nonfarm payroll numbers due to be released today, investors aren't taking any significant bets," said Julius Baer head of Asia research Mark Matthews.

Oil was down during Asian trading and fell further still as the region headed out for Friday drinks. Brent crude was last down 0.2% at $44.92 per barrel, and West Texas Intermediate lost 0.07% to sit at $44.29.

Down under, the S&P/ASX 200 finished up 0.25% at 5,292, reversing losses of as much as 1.5% during the session after the Reserve Bank of Australia released its monetary policy statement.

In it, the central bank slashed its interest rate outlook, and said further interest rate cuts were still a possible part of their strategy.

The Aussie dollar weakened sharply on the news, reaching AUD 1.3585 per USD. It was last 1.25% weaker against the greenback at AUD 1.3563.

"The clear implication is that monetary policy will need to do more to boost underlying inflation. It is looking increasing likely that interest rates won't be raised at all next year," said Capital Economics chief Australia economist Paul Dales in a note.

On the Sydney bourse, energy shares dragged the index down with that subindex closing down 1.3%, and the financials down 0.2%. Materials offset some of those losses, rising 1.02% during the day.

Investment banking and financial services firm Macquarie Group fell 0.31% after it posted a record full-year net profit, rising 62.5%, and raised its dividend by 21% to AUD 4.00 per share.

Macquarie’s shares had been some of the benchmark’s worst performers so far this year, with analysts and investors worried about its exposure to resources.

Two of the region’s ‘big four’ banks finished higher - Westpac gaines 1.02% and National Australia Bank rose 1.26%.

On the energy front, Origin Energy fell 3.42% and Santos lost 4.64%, while resources producers Fortescue Metals and BHP Billiton gaines 2.64% and 0.16% respectively. Rio Tinto lost 0.65% in Australian trading.

Equities in New Zealand rode the coattails of Australia’s inflation forecasts, with the S&P/NZX 50 gaining 0.32% to sit at 6,898.11.

Local analysts pointed to the fact many New Zealand companies were also listed in Sydney, forming part of the “investable universe” for fund managers on the other side of the ‘ditch’ (Tasman Sea).

“It just naturally tends to feed over,” Salt Fund Management’s Matthew Goodson told the National Business Review.

The country’s biggest local oil and fuel company Z Energy added 2.6% to close at a new record price, with investors still reacting to last week’s regulatory approval for it to take over Chevron’s local operations including two fuel retail chains.

On the currency front, the Kiwi moved further away from the greenback, and was last 0.63% weaker at NZD 1.4619 per US dollar.