Asia report: Markets mixed as Brexit chatter continues

Markets in Asia closed mixed on Wednesday, as investors continued the countdown to the Brexit referendum on Thursday.

In Japan, the Nikkei 225 closed down 0.64% at 16,065.72, with a stronger yen putting equities under pressure.

It was last 0.28% stronger against the greenback at JPY 104.46 per USD.

The stronger currency saw the major exporters close mainly lower, with Honda down 2.41%, Nissan losing 0.79%, Sony off 1.83% and Toyota dropping 0.53%.

Internet and telecoms behemoth SoftBank beat the market, rising 2.6% after it said its president Nikesh Arora has resigned.

Its board said CEO Masayoshi Son will remain in the post longer than initially planned, with Arora stepping into an advisor role.

The news came after SoftBank’s announcement on Tuesday that it is exiting Finnish game developer Supercell, selling its stake to Chinese company Tencent.

On the mainland, the Shanghai Composite Index was up 0.95% at 2,905.77 while the Shenzhen Composite added 1.67% to 1,921.38.

In Korea, the Kospi finished up 0.5% at 1,992.58, while Hong Kong’s Hang Seng Index was ahead by 0.61% at 20,795.12.

The eyes of the world were on the European referendum in Britain on Thursday, with the UK’s future membership of the 28-member bloc hanging on the vote.

A telephone poll conducted by Survation for IG, released late on Tuesday, showed support for the ‘Remain’ and ‘Leave’ votes neck-and-neck, after a series of polls published over the weekend suggested a swing of support back to the status quo vote of ‘Remain’.

“I'm not sure market levels are going to change much in the next 36 hours,” JPMorgan strategist Sally Auld told CNBC.

“It seems to be a widely accepted consensus that probably the best thing to do is to reduce risks, stay on the sidelines, wait and see what happens later this week and then proceed from there.”

US Federal Reserve chair Janet Yellen also touched on the Brexit issue as she began her two-day testimony before Congress, saying a UK vote to leave the EU could have serious economic repercussions.

Her prepared remarks also said that a cautious approach remained appropriate when it comes to monetary policy, asserting the importance not to overreact to recent labour reports from the US suggesting the market has seriously slowed.

Oil prices were down overnight before rebounding during Asian hours.

Brent crude was last up 0.71% at $50.98 per barrel, while West Texas Intermediate added 0.95% to $50.33.

Fresh data from the American Petroleum Institute shows crude inventories as falling by 5.2 million barrels last week, against analyst expectations for a drawdown of 1.7 million barrels.

IG market analyst Angus Nicholson said “news that the Niger Delta Avengers had not agreed to a peace deal with the Nigerian government and a much bigger than expected drawdown in API crude inventories helped see some buying come in just before the close.”

Regional security concerns also appeared during the session, as North Korea fired what appeared to be an intermediate-range Musudan missile from its east coast on Wednesday, though South Korean reports suggested it failed.

Defense stocks in Seoul were down, with Firstec losing 0.43%, Speco down 2.91% and Victek off 3.12%.

In Australia, the S&P/ASX 200 was almost flat, losing 0.06% to 5,270.95, while New Zealand’s S&P/NZX 50 lost 0.84% to 6,781.74.

The down under dollars both gained on the greenback, with the Aussie last ahead by 0.51% at AUD 1.3354 per USD, and the Kiwi 0.45% stronger at NZD 1.3978.