Asia report: Markets mixed as Korea tensions remain high

Markets in Asia finished mixed on Tuesday, with investors still clamoring for safe-haven assets amid heightened geopolitical tensions on the Korean peninsula.

In Japan, the Nikkei 225 was down 0.63% at 19,385.81, as the safe-haven yen strengthened on the dollar, last moving 0.38% to JPY 109.30.

The country’s carmakers were mixed, despite positive sales data to China for the month of August from most firms.

Toyota’s sales to the People’s Republic were up 13.2% year-on-year in August, while Mazda’s numbers were ahead 8.4% and Honda sold 20.6% more vehicles.

Of those three, Toyota stock finished up 0.81% and Honda was ahead 0.23%, while Mazda shares fell 0.95%.

On the mainland, the Shanghai Composite was ahead 0.16% at 3,385.13, and the smaller, technology-centric Shenzhen Composite added 0.2% to 1,972.14.

China’s positive mood could be put down to solid economic data, with the Caixin/Markit services purchasing managers’ index for August showing an improvement to 52.7 from 51.5 month-on-month.

South Korea’s Kospi was off 0.13% at 2,326.62, while the Hang Seng Index in Hong Kong was flat at 27,741.35.

The retail sector suffered in Seoul, with Lotte Himart and Lotte Shopping down 4.53% and 1.24% respectively.

It came after reports Lotte Duty Free was considering shifting out of the country’s main air hub - Incheon International Airport - amid a tough year for the country’s retail sector.

Geopolitical tensions around North Korea were still top of the agenda, after South Korean media reported early in the day that, according to intelligence, Pyongyang was transporting what could possibly be an intercontinental ballistic missile.

Overnight, US president Donald Trump’s administration called for the “strongest possible” sanctions against North Korea after the latter performed an underground hydrogen bomb test at the weekend.

Trump also spoke with South Korean president Moon Jae-in by telephone, giving his “conceptual approval” for the country to purchase billions of dollars worth of US-made weaponry.

And while prices for safe haven assets, such as the yen and spot gold, moved ahead, some analysts remarked how the market’s reaction was still relatively muted.

“Risk off sentiment has hardly become evident,” noted National Australia Bank director of economics David de Garis.

“Moves back to safe haven or risk-off currencies - the Japanese yen and the Swiss franc - have been very much at the margin.”

Oil prices were higher during Asian trading, with Brent crude last up 0.72% at $52.72 per barrel and West Texas Intermediate adding 1.21% to $47.98.

In Australia, the S&P/ASX 200 added 0.07% to close at 5,706.23, as the Reserve Bank of Australia left its official cash rate unchanged at 1.5%, satiating market expectations.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 fell 0.4% to 7,777.40, as uncertainty about the country’s upcoming general election grew.

The election had looked a shoo-in for the country’s ruling right-wing National party three months ago, but a change of leadership for the left-leaning Labour camp as well as some solid debate performances had seen a near turnaround in the polls.

New Zealanders take to the polling stations on 23 September.

Both of the down under dollars were stronger on the greenback, with the Aussie last ahead 0.4% at AUD 1.2537 and the Kiwi advancing 0.36% to NZD 1.3914.