Asia report: Markets finish lower ahead of Fed rate decision

Markets in Asia finished in the red on Wednesday, with investors closing their wallets ahead of the US Federal Reserve’s July decision on interest rates later in the global day.

In Japan, the Nikkei 225 was down 0.86% at 21,521.53, as the yen strengthened 0.02% against the dollar to last trade at JPY 108.59.

Of the major components on the benchmark index, automation specialist Fanuc was down 1.71%, fashion firm Fast Retailing lost 1.96%, and technology conglomerate SoftBank Group shed 0.92%.

Electronics giant Sony rocketed ahead 5.31%, after the firm turned in a record first-quarter profit a day earlier.

The broader Topix index was 0.66% weaker in Tokyo, to finish its trading dat at 1,565.14.

On the mainland, the Shanghai Composite was off 0.67% at 2,932.51, and the smaller, technology-heavy Shenzhen Composite declined 0.68% to 1,571.30.

Property development stocks were weaker in China, after a communist party statement suggested that housing should be “used for living, not for speculation”.

The comments also stated that real estate in China would not be used to stimulate the economy on a short-term basis.

Shenzhen-listed shares in China Vanke were down 3.55% on the reports.

New official economic data out of the People’s Republic showed a contraction in factory activity for the third month on the trot, with the manufacturing purchasing managers’ index coming in at 49.7 for July.

That was slightly better than the 49.6 anticipated by economists surveyed by Reuters, but was still indicative of a contraction as the reading was below 50.0.

South Korea’s Kospi was 0.69% weaker at 2,024.55, while the Hang Seng Index in Hong Kong was down 1.31% to 27,777.75, in a session that was truncated as the city prepared for a battering from a tropical cyclone.

Both of the blue-chip technology stocks were weaker in Seoul, with SK Hynix down 2.53%, and Samsung Electronics off 2.58%.

Samsung fell out of favour during the session, after it reported a 56% fall in second-quarter profit year-on-year.

Sentiment was weaker in general at the start of the Asian day, after a series of tweets from the US president suggested China was not maintaining its word to buy more agricultural products from America.

The comments - which Beijing has refuted - came amid trade talks between the two economic superpowers, taking place in Shanghai on Tuesday and Wednesday.

“Donald Trump talked China down via his tweets, meanwhile the US officials were in Shanghai trying to negotiate a trade deal with China,” noted London Capital Group senior market analyst Ipek Ozkardeskaya, adding that he had “slaughtered” investor hopes for a suitable progress at the first face-to-face meeting between the US and China since May.

“His untimely tweets confirmed once again his reluctance to get a trade deal done in the foreseeable future.

“Hence the slowing China story will continue occupying the headlines for some more time.”

Investors were also looking across the Pacific to the US Federal Reserve, which is set to announce its latest decision on interest rates later in the day.

Most market watchers were anticipating a 25 basis point cut to the central bank’s target interest rates, and were also keen to hear any hints around the prospect of more rate cuts in 2019 from chair Jerome Powell.

Oil prices were higher as the region went to bed, with Brent crude last up 0.84% at $65.27 per barrel, and West Texas Intermediate adding 0.97% to $58.62.

In Australia, the S&P/ASX 200 was down 0.47% by end-of-play, finishing its session at 6.812.60.

Fresh economic data out of Canberra showed consumer prices rose faster than expected in the second quarter in the sunburnt country.

The headline consumer price index was up 0.6% in the June quarter, coming in higher than the 0.5% consensus forecast reported in a Reuters poll of economists.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 was down 0.2% at 10,857.75, led lower by construction conglomerate Fletcher Building, which was off 2.6%.

The down under dollars were presenting a mixed picture against the greenback, with the Aussie last 0.31% stronger at AUD 1.4506, and the Kiwi weakening 0.15% to NZD 1.5143.