Asia report: Markets mixed as Comm Bank accused of regulation breach

Markets in Asia ended mixed on Friday, with news that one of Australia’s biggest banks could have breached money laundering regulations taking some of the steam out if investor sentiment, while ongoing wrangling in the investigation into US President Trump’s campaign was also on the agenda.

In Japan, the Nikkei 225 was down 0.38% at 19,952.33, as the yen strengthened slightly against the dollar - it was last ahead 0.03% at JPY 110.02.

Shares in carmaker Suzuki were ahead 8.7% after surprisingly good first quarter earnings, with operating profit leaping 44% year-on-year to JPY 85.1bn.

Among its peers, Mazda was up 2.6% while Toyota fell 0.14%.

On the mainland, the Shanghai Composite lost 0.35% to 3,261.32, and the smaller, more technology-focussed Shenzhen Composite was 0.57% lower at 1858.49.

South Korea’s Kospi finished up 0.36% at 23,95.45, and the Hang Seng Index in Hong Kong was ahead 0.12% at 27,562.68.

In focus internationally was the news that Robert Mueller, the special counsel appointed to look after investigations into alleged collusions between Russia and Donald Trump’s campaign in last year’s presidential election, had impanelled a grand jury in Washington, DC.

The news was not the surprise of the century, according to analysts, although both the dollar and US Treasury yields fell towards the end of the Wall Street session overnight.

“While a grand jury is perhaps expected given the serious allegations, and it doesn't necessarily mean that criminal charges will be filed, it does make investors wonder where the investigation could go and deepen fears of political chaos,” noted analysts at Mizuho Bank.

Oil prices were lower, with Brent crude last down 0.76% at $51.62 per barrel, and West Texas Intermediate falling 0.78% to $48.65.

In Australia, the S&P/ASX 200 fell 0.25% to 5,720.58, with the hefty financials subindex leading the losses as it fell 1.07%.

One of the country’s largest banks, the Commonwealth Bank of Australia, was off 3.87%, after allegations on Thursday that it had breached money laundering laws.

The Australian Transaction Reports and Analysis Centre said the bank breached money laundering regulations, by allowing its “intelligent deposit machines” to accept more than 50,000 large cash deposits without checking the identity of users.

Those offending deposits allegedly included a number of deposits of more than AUD 10,000 - the threshold at which authorities should be automatically notified of the transaction.

Commonwealth Bank said in a statement that it was considering the claims, and was planning to defend it.

Among the region’s other major banks, Australia and New Zealand Banking Group was down 0.3%, National Australia Bank added 0.2% and Westpac fell 0.54%.

In other antipodean news, investors were also digesting the Reserve Bank of Australia’s monetary policy statement, which showed the central bank had become more confident on economic growth.

It did not, however, have any significant expectation that the country’s current wage growth or unemployment figures would improve very much.

The Reserve Bank had stood pat on interest rates earlier in the week, keeping the country’s official cash rate at 1.5%.

“We doubt GDP growth or inflation will live up to the bank's expectations, meaning that rates may stay at 1.5 percent for another two years yet,” noted Paul Dales at Capital Economics.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 fell from its record high, losing 0.1% to 7,746.12, as outdoor equipment and technical clothing retailer Kathmandu Holdings dropped 1.8%.

The company had indicated on Thursday that its full-year profit was expected to be up to 13% higher on last year.

Both of the down under dollars were stronger on the greenback, with the Aussie last ahead 0.29% at AUD 1.2546 and the Kiwi adding 0.21% to NZD 1.3423.