Asia report: Markets mixed as oil prices remain high

Markets in Asia finished in a mixed state on Tuesday, as concerns around geopolitical tensions in the Middle East and the associated rise in oil prices continued to linger.

In Japan, the Nikkei 225 eked out gains of 0.6% to 22,001.32, as the yen weakened 0.05% against the dollar to last trade at JPY 108.17.

Of the major components on the benchmark index, automation specialist Fanuc was down 0.93% and technology conglomerate SoftBank Group slid 3.04%, while fashion firm Fast Retailing added 0.36%.

The broader Topix index was ahead 0.29% in Tokyo, to close its trading session at 1,614.58.

On the mainland, the Shanghai Composite was 1.74% lower at 2,978.12, and the smaller, technology-heavy Shenzhen Composite lost 2% to 1,651.35.

Fresh reports out of China led to renewed concern around the country’s real estate and residential construction market, with new home prices growing at their slowest pace in almost a year in August.

A slowing economy, combined with restrictions from Beijing around speculative purchases, have led to weakened demand in the sector.

South Korea’s Kospi was 0.01% higher at 2,062.33, while the Hang Seng Index in Hong Kong lost 1.23% to settle at 26,790.24.

Both of the blue-chip technology stocks were weaker in Seoul, with Samsung Electronics falling 0.42% and chipmaker SK Hynix off 0.13%.

Oil prices had come off their session highs as the region went to bed on Tuesday, but remained strong, with Brent crude last down 1.65% at $67.90 per barrel and West Texas Intermediate off 1.6% at $61.91.

Prices for the thick black stuff had leapt on Monday, following a series of drone attacks on the biggest oil processing facility in the world, located in Saudi Arabia, over the weekend.

The attacks led to a stoppage on the production of around 5.7 million barrels of oil per day, or around half of the country’s daily exports and more than 5% of the world’s production.

Houthi rebels from Yemen had claimed responsibility for the attack on Saturday, although US president Donald Trump has chosen to blame Iran - something backed up by Saudi Arabian military, who said it was carried out using “Iranian weapons”.

“The supply shortage in Saudi Arabia should keep oil prices sustained above the pre-attack levels for the weeks to come,” said London Capital Group senior market analyst Ipek Ozkardeskaya.

“We could see a floor building near $60 in WTI crude and near $65 in Brent.

“Meanwhile, the expectation that the trade talks between the US and China could lead to a temporary agreement should give an additional boost to energy prices.”

In Australia, the S&P/ASX 200 managed gains of 0.33% to 6,695.30, with most subindices in the green, and the energy sector adding 1% by the end of Sydney’s trading day.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 broke out of its six-day losing streak to gain 0.3%, closing at 10,868.03.

Both of the down under dollars were weaker on the greenback, with the Aussie last off 0.51% at AUD 1.4635, and the Kiwi weakening 0.31% to NZD 1.5811.