Asia report: Markets mixed as New Zealand cuts interest rates

Markets in Asia ended mixed on Thursday, after US stocks closed lower overnight and as investors awaited a raft of data from China on Friday.

Japanese markets were closed, as traders spent the day getting familiar with and appreciating blessings from the country’s mountains for Mountain Day.

Markets on the mainland ended lower, with the Shanghai Composite down 0.53% to 3,002.68, while the Shenzhen Composite was down 1.28% lower at 1,950.92.

South Korea’s Kospi added 0.2% to close at 2,048.80, while Hong Kong’s Hang Seng Index also finished positive, up 0.43% to 22,588.90.

The Bank of Korea kept its base rate unchanged at 1.25% during the session, saying in its policy statement that the recovery trend in the US “has been sustained,” and that China’s moderate pace of growth was also continuing.

Expansionary macroeconomic policies were cited as reasons why the central bank was expecting South Korea to maintain its trend of modest economic growth.

The won was last 0.44% weaker against the dollar, at KRW 1,099.88 per $1.

Oil prices were lower during Asian trading, having slipped more than 2% during US hours on Wednesday as fresh data sparked renewed oversupply concerns.

Brent crude recovered as the region went to bed, however, and was last up 0.16% at $44.12 per barrel, while West Texas Intermediate lost 0.12% to $41.66.

Data from the US Energy Information Administration on Wednesday showed inventories in that country increased by 1.1 million barrels in the week to 5 August, at odds with the million-barrel drawdown that had been predicted.

“Oil is increasingly pulling back towards the $40 a barrel level again and many in the markets are concerned that the shorts may even be looking for prices to drop down towards the $35 level,” said IG market analyst Angus Nicholson.

Australia’s S&P/ASX 200 finished down 0.64% at 5,508.01, with the weighty financials subindex dragging the market lower as it lost 1.17%.

Westpac was the latest major Australasian bank to post quarterly numbers, reporting a 12% rise in stressed assets in the third portion of the year.

It put this down to increasing mortgage defaults in parts of the country affected by the recent slowdown in mining.

Shares in Westpac closed down 2.69% in Sydney.

In New Zealand, the S&P/NZX 50 rose 0.1% to 7,353.82, led higher by former state telecom monopoly Spark, which has rebranded and shifted away from its former identity in the newly competitive market in recent years.

Spark shares rose 2.8% by market close.

Earlier in the day, the Reserve Bank of New Zealand cut interest rates to a new record low, slashing 25 basis points off the official cash rate to 2%.

It was a move largely anticipated by the markets, but was not without criticism from analysts.

“The OCR was cut but it was not enough to satisfy the market, with the New Zealand dollar up and rates selling off,” said ANZ Research economists Cameron Bagrie and Philip Borkin.

“Expectations were growing prior that we could see something substantial, but what we got was an entirely balanced and appropriate response in our view.”

Westpac was one of the day’s big losers in New Zealand as well, with the stock dropping 2.84% in Wellington trading.

The down under dollars were both stronger against the greenback, with the Kiwi surging 0.68% to NZD 1.38 per $1 on the back of the country’s rate cut, while the Aussie strengthened 0.15% to AUD 1.2963.