Asia report: Markets mixed amid focus on trade news

Markets in Asia were mixed as they closed on Friday, after trade news boosted sentiment and led to another record close on Wall Street overnight.

In Japan, the Nikkei 225 was down 0.2% at 23,816.63, as the yen strengthened 0.02% against the dollar to last trade at JPY 109.35.

Uniqlo owner Fast Retailing was a bright spot on the benchmark index, closing up 0.35%, while automation specialist Fanuc fell 2.19% and technology conglomerate SoftBank Group lost 0.62%.

Carmakers were on the back foot after the passing of the new North American internal trade deal, which will require manufacturers there to source 75% of parts from within the region, up from the 62.5% required by the previous trade deal.

Mazda was off 0.83%, Mitsubishi lost 1.04%, Nissan slid 1.13%, Suzuki was 0.84% weaker, and Toyota was down 1.11%.

The broader Topix index was off 0.18% by the end of trading in Tokyo, settling at 1,733.07.

In fresh data out of Japan, core consumer inflation was 0.5% on a year-on-year basis in November, which was still well below the government’s 2% target.

On the mainland, the Shanghai Composite was 0.4% weaker at 3,004.94, as the smaller, technology-heavy Shenzhen Composite slipped 0.7% to 1,700.99.

China stood pat on the loan prime rate, its new lending benchmark rate, on Friday, which was widely expected by markets, after it kept its medium-term loans on hold earlier in the month.

President Xi Jinping put a dent in gambling stocks while celebrating the 20th anniversary of Macau’s handover from Portugal, as he encouraged the special administrative region to diversify away from its casino-focussed economy.

Reuters reported that among the measures to encourage such a move, officials were anticipating the establishment of a new yuan-denominated stock exchange.

South Korea’s Kospi went against the regional trend, rising 0.35% at 2,204.18, while the Hang Seng Index in Hong Kong added 0.25% to 27,871.35.

Among the Hong Kong gambling plays affected by President Xi’s comments, Galaxy Entertainment was down 1.85%, Sands China lost 1.12%, and Wynn Macau was 0.21% weaker.

The blue-chip technology stocks were mixed in Seoul, with Samsung Electronics flat, and chipmaker SK Hynix ahead 1.5%.

Sentiment was positive at the start of the Asian session, after US traders brushed away news of President Donald Trump’s impeachment in the House of Representatives, and sent the main indices in New York to fresh record highs overnight.

It was also boosted by the passing of a new North American trade deal by the House, with the agreement between the US, Canada and Mexico expected to pass the Senate early in the new year.

The agreement replaces the North American Free Trade Agreement (NAFTA), which has been in place since the 1990s.

Investors were also watching developments in the ongoing US-China trade saga, after US Treasury Secretary Steven Mnuchin said he was confident that negotiators from Washington and Beijing would be able to sign a phase one trade deal in early January.

That, he said, would follow what he described as a "technical, legal scrub".

“I'm not quite sure what that means exactly, but hopefully this isn't the same ‘done’ as we were told in October because those final details took some time to iron out,” said Oanda analyst Craig Erlam.

Oil prices were lower as the region entered the weekend, with both Brent crude and West Texas Intermediate last down 0.38%, at $66.29 and $60.95 per barrel, respectively.

In Australia, the S&P/ASX 200 was 0.25% lower at 6,816.30, while across the Tasman Sea, New Zealand’s S&P/NZX 50 eked out gains of 0.02% to close at 11,482.29.

The down under dollars were mixed against the greenback, with the Aussie last 0.19% stronger at AUD 1.4496, while the Kiwi retreated 0.15% to NZD 1.5157.