Asia report: Markets follow US, oil prices lower

Markets in Asia ended Tuesday mostly lower, following their US counterparts overnight, with Japan slumping as the yen gained.

The Nikkei 225 finished down 2.42% at 15,732.82. Japan’s safe haven yen swooped below the 111 level against the greenback during the afternoon in Tokyo, and was last 0.79% closer to the dollar at JPY 110.46.

That rush to the yen sent exporters even lower, with Honda down 2.41%, Nissan down 3.12% and Toyota closing down 3.31% by the end of the day.

Analysts were hesitant to make any predictions as to how strong the yen might get, with BK Asset Management managing director of FX strategy Kathy Lien saying it was nearing intervention territory against the dollar.

"With the high level of long yen-short dollar positions, this is prime time for the Bank of Japan to intervene. However Japanese policymakers have not confirmed any intervention thus far even though dollar/yen experienced unusual spikes every time it dipped below 111 over the past two months,” she noted.

Markets in mainland China pressed ahead after Monday’s holiday, with the Shanghai Composite reversing losses sustained in early trading to close up 1.46% at 3,053.38, and the Shenzhen Composite finishing up 2.6% at 1,951.10.

In Korea, the Kospi fell 0.82% to 1,962.74, while Hong Kong’s Hang Seng Index lost 1.57%, closing at 20,177.

Oil prices retreated during Asian trading, and were sliding further as the end of the session neared. Brent crude was last down 0.13% at $37.64 per barrel, while West Texas Intermediate was down 0.08% at $35.67.

Elsewhere, the Reserve Bank of India cut its repo rate by 25 basis points to 6.5% on Tuesday, which was within market expectations. Its reverse repo was raised by 25 basis points to 6%, however, in a move which surprised the market.

The country’s Sensex lost 1.56% on the news and the Nifty 50 was down 1.51% at close

Down under, the S&P/ASX 200 lost 1.42% to 4,924.38, with another selloff in the big Australasian banks dragging Sydney down. Australia and New Zealand Banking Group, Commonwealth Bank of Australia, National Australia Bank and Westpac were all down between 1.01% and 2.29%.

The Reserve Bank of Australia also made a call on rates, keeping the country’s official cash rate steady at 2%, which was also widely expected. The bank did express concern about the Aussie dollar’s recent appreciation against the greenback, however.

It was last 0.53% weaker at AUD 1.3221 per USD.

In Sydney corporates, television broadcaster and media company Nine Entertainment plummeted 23.68% after the company reported TV revenue as being down 11% year-on-year in the third quarter.

Energy plays were also mostly lower given the sliding oil prices, with Woodside Petroleum down 4.16% and Santos losing 5.33%.

New Zealand’s markets also fell, with the S&P/NZX 50 finishing down 0.4% at 6,715.81. It was dragged by companies also exposed to Australia’s markets, such as Fletcher Building, down 2.9%; Australia and New Zealand Banking Group, down 1.6%; and SkyCity Entertainment, down 1.4%.

The Kiwi moved further away from the greenback through much of the afternoon, with it last 0.81% weaker at NZD 1.4753 per dollar.