Asia report: Markets mixed as investors watch trade, Brexit developments

Markets in Asia once again finished in a mixed state on Thursday, with investors keeping their wallets in their back pockets as they awaited developments on both the US-China trade and Brexit fronts.

In Japan, the Nikkei 225 was down 0.09% at 22,451.86, as the yen strengthened 0.03% against the dollar to last trade at KPY 108.73.

Of the major components on the benchmark index, automation specialist Fanuc was down 0.36%, while fashion firm Fast Retailing rose 0.38% and technology conglomerate SoftBank Group added 1.06%.

The broader Topix index headed 0.45% lower in Tokyo, to finish its trading day at 1,624.16.

On the mainland, the Shanghai Composite lost 0.05% to 2,977.33, and the smaller, technology-heavy Shenzhen Composite eked out gains of 0.02% to 1,635.92.

South Korea’s Kospi was 0.23% lower at 2,077.94, while the Hang Seng Index in Hong Kong managed gains of 0.69% to close at 26,848.49.

Property development firms were among the winners in the special administrative region, after the city’s chief executive Carrie Lam announced fresh housing and land measures in an address on Wednesday.

CK Asset Holdings was up 0.28%, Henderson Land Development added 1.31%, and New World Development was 3.9% firmer.

Both of the blue-chip technology stocks were in the red in Seoul, with Samsung Electronics down 0.39% and SK Hynix losing 1.7%.

Investor attention leading into the Asian session was focussed on two areas - Brexit negotiations in Europe, and economic data in the US amid its ongoing trade war with China.

Negotiations between Westminster and Brussels hit a stumbling block on Wednesday night, as the two sides apparently struggled to come to agreement on some of the technical details.

A breakthrough appeared after the close of trading in Asia, however, with prime minister Boris Johnson claiming to have reached agreement with the European Union - although the Democratic Unionist Party, his confidence and supply partners in government, were still not supporting it.

“Either Johnson needs to compromise further, the EU needs to accept the DUP’s demands, or the DUP themselves need to back down,” said Spreadex analyst Connor Campbell.

“The party did end its statement claiming it will ‘continue to work with the government to try and get a sensible deal that works for Northern Ireland’, so progress is still possible.

“It just might need an extension to allow a deal to blossom.”

Over in the US, data published on Wednesday revealed that mortgage interest rates rose to 3.92% from 3.90% last week, leading to a slowdown in the growth of applications for loans to purchase a home.

The total volume of mortgage applications was basically flat - rising just 0.5% for the week, according to the Mortgage Bankers Association.

Elsewhere, Americans unexpectedly parked their urge to buy last month, splashing out less on both automobiles and at gasoline stations.

According to the Department of Commerce, in seasonally adjusted terms, the volume of US retail sales shrank at a month-on-month pace of 0.3% in September to reach $525.56bn.

The weak data added to recent concerns over the potential for a recession.

Oil prices were lower as the region went to bed, with Brent crude last down 0.61% at $59.06 per barrel, and West Texas Intermediate losing 0.76% to $52.96.

In Australia, the S&P/ASX 200 was off 0.77% to settle its trading session at 6,684.70, with the materials subindex falling by 2%.

Of the major miners, BHP was down 3.27%, Fortescue Metals was off 4%, and Rio Tinto lost 2.88% in Sydney trading.

The losses for BHP came after the Anglo-Australian company reported a 3% fall in iron ore production for the quarter through September, blaming planned maintenance at a key port in Western Australia.

BHP still maintained both its unit cost and production guidance for the 2020 financial year, however.

In fresh data out of the sunburnt country, seasonally-adjusted employment was up by 14,700 in the latest estimate from the Australian Bureau of Statistics - coming in just shorter than the 15,000 analysts polled by Reuters had expected.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 was down 0.3% at 11,141.86, led lower by payment technology provider Pushpay, which lost 3.1%.

It was among a number of tech firms in the red in both Wellington and Sydney, after analysts questioned the growth prospects of Aussie firms WiseTech and Afterpay.

J Capital Research issued a report questioning the growth in profits for logistics software maker WiseTech, while UBS launched coverage of Afterpay with a ‘sell’ rating, citing the threat of regulation to the tech-based consumer lender’s growth.

Both of the down under dollars were stronger on the greenback, with the Aussie last ahead 1% at AUD 1.4647, and the Kiwi advancing 0.62% to NZD 1.5796.