Asia report: Markets mixed as US-China tensions rise

Markets in Asia finished in a mixed state on Thursday, as investors held their breath around heightened geopolitical tensions between the United States and China.

In Japan, traders had the day off for Marine Day, as the yen remained stable against the dollar at JPY 107.15.

On the mainland, the Shanghai Composite was down 0.24% at 3,325.11, and the smaller, technology-centric Shenzhen Composite slipped 0.02% to 2,250.92.

South Korea’s Kospi was off 0.56% at 2,216.19, while the Hang Seng Index in Hong Kong added 0.82% to 25,263.00.

Both of the blue-chip technology stocks were weaker in Seoul, with Samsung Electronics down 1.1% and SK Hynix losing 0.96%.

Among the other major industrial stocks on the Korean peninsula, Hyundai Steel lost 5.16%, LG Electronics was down 1.2%, and Posco slid 1.01%.

Carmakers were a bright spot, however, with Hyundai Motor up 5.06% and Kia Motors 2.51% firmer.

In fresh data out of Korea, the country’s central bank said it estimated a 3.3% decline in gross domestic product quarter-on-quarter for the three months ended 30 June.

The Bank of Korea said private consumption was ahead 1.4% as consumers opened their wallets for durable goods, while exports plunged 16.6% as demand for coal, petroleum and vehicles fell off a cliff.

According to Yonhap News, such a rate of GDP decline has not been seen in the South Korean economy since 1998.

Tensions between Beijing and Washington were very much at the front of traders’ minds on Thursday, after the US State Department suddenly ordered Chins to vacate its consulate in Houston, Texas.

The move drew rapid anger from China, with its foreign ministry warning of retaliatory measures if the US did not reverse the decision.

“This morning it was being reported by the South China Morning Post that China would be closing the US consulate in Chengdu in response, which if true seems a fairly measured response,” said CMC Markets chief market analyst Michael Hewson.

Neil Wilson, chief market analyst for Markets.com, quipped that such “tit-for-tat” was nothing new.

“We have been dealing with a trade war for years and I think the market is fully expecting friction to increase, particularly as the US presidential election looms and domestic strife makes it all too convenient for the White House to bash China.

“UK-China tensions are something a little fresher and have led to Chinese authorities taking the English Premier League off air.”

Investors in the region did struggle for direction from other regions at the start of the session, after a dire Wednesday in Europe was countered by a surge for the Dow Jones Industrial Average on Wall Street.

The rosy feeling in New York was put down to hopes of further Covid-19 stimulus, as well as renewed optimism about a vaccine for the novel coronavirus after positive news from trials on both sides of the Atlantic earlier in the week.

A report from CNBC suggested Republicans were considering an extension of the current $400-per-month Covid unemployment benefit package to the end of December.

Oil prices were higher at the end of the Asian day, with Brent crude last up 0.93% at $44.70 per barrel, and West Texas Intermediate 0.98% firmer at $42.31.

In Australia, the S&P/ASX 200 rose 0.32% to settle at 6,094.50, as the hefty financials subindex managed gains of 0.18%.

The big four banks were mixed in Sydney, with Australia and New Zealand Banking Group down 0.05% and Commonwealth Bank of Australia off 0.53%, while National Australia Bank added 0.66% and Westpac Banking Corporation rose 0.44% after a turbulent session.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 was down 0.25% at 11,693.41, led lower by Oceania Healthcare, which was off 3.9%.

The company reported a net loss of NZD 13.6m for its financial year on Thursday, swinging from a profit of NZD 45.4m a year earlier, having also written down the value of its property portfolio by NZD 22.5m.

The down under dollars were a mixed affair against the greenback, with the Aussie last 0.05% weaker at AUD 1.4012, while the Kiwi strengthened 0.11% to NZD 1.4993.