Asia report: Markets close higher after 'turnaround Tuesday'

Markets in Asia closed higher on Wednesday, following on from gains in Europe and the US on so-called ‘turnaround Tuesday’ in the wake of the UK’s shock decision to leave the European Union last week.

In Japan, the Nikkei 225 was up 1.59% to 15,566.83, as the yen traded slightly weaker through the session.

It was last 0.14% stronger however, at JPY 102.61 per USD, continuing the choppy trade of the previous days.

Major carmaking exporters were all higher, with Honda adding 1.72%, Nissan up 2.28% and Toyota 2.89% higher.

The rise for Toyota was despite an announcement on Tuesday that it was recalling 482.000 vehicles - including 2010 to 2012 model Prius cars - for safety reasons.

Sony shares were up 4.83%, as investors shrugged off an announcement that the electronics giant now expects its image sensor division to miss its revenue target for the 2017 financial year as global demand for smartphones weakens.

On the mainland, the Shanghai Composite added 0.69% to 2,932.51 and the Shenzhen Composite was 0.15% higher at 1,973.34.

A report from Bloomberg late in the session suggested Chinese authorities took the unprecedented step of intervening via banks to support the offshore yuan during morning trading.

The report cited “people with knowledge of the matter” as saying the People’s Bank of China was looking for stability in the currency.

Renminbi strengthened by as much as 0.26% against the greenback in mid-morning trading in Hong Kong, where the yuan floats freely, taking it closer to its loosely-pegged onshore stablemate.

The offshore currency had fallen 1.2% since the Brexit vote, which was the biggest loss among Asian currencies.

South Korea’s Kospi was up 1.04% to 1,956.36, while Hong Kong’s Hang Seng Index added 1.31% to 20,436.12.

BK Asset Management managing director Kathy Lien described it as “your typical turnaround Tuesday” during the session.

“Currencies and equities traded higher across the board at the start of the North American trading session, but as the day progressed, the move lost momentum when investors realized that the fundamental story hasn't changed.”

Asian markets also largely ignored an attack in Turkey in which explosions and gunfire killed dozens and injured many more at Ataturk Airport in Istanbul.

The aftermath of the Brexit vote was still being felt at home, with the triggering of Article 50 of the Lisbon Treaty looking further away as lame duck Prime Minister David Cameron said he wanted a “constructive” way forward for both the UK and the EU.

In Westminster, British politicians were causing further uncertainty over the future as they engaged in further infighting, with the Conservative party gearing up for a leadership election and the Labour party reeling as Jeremy Corbyn refuses to acknowledge a landslide vote of no confidence against him.

“The Brexit crisis looks like it may be heading into an awkward period of uncertainty as the cogs in the British and EU bureaucracies slowly begin to whir into action,” said IG market analyst Angus Nicholson.

Oil prices were ahead during Asian trading, with Brent crude last up 1.16% at $49.15 per barrel and West Texas Intermediate ahead by 1.32% at $48.49.

In Australia, the S&P/ASX 200 was up 0.77% to 5,142.40, spurred on by the weighty financials subindex which added 0.63%.

New Zealand’s S&P/NZX 50 had almost reversed its Brexit losses, closing 1.3% higher at 6,804.2 - just 17 points shy of its close the day before the referendum result.

Both of the down under dollars gained on the greenback, with the Aussie 0.36% ahead at AUD 1.3486 per USD and the Kiwi 0.58% closer at NZD 1.4105.