Asia report: Markets mostly lower ahead of US debate

Markets in Asia ended lower on Monday, as investors turned their attention towards the first presidential debate in the run-up to the US elections, and an informal meeting of producing members of the OPEC oil cartel.

In Japan, the Nikkei 225 lost 1.25% to 16,544.56, with a speech from Bank of Japan governor Haruhiko Kuroda sending the yen soaring.

Kuroda told a meeting of business managers in Osaka that the central bank was prepared to use any means it possibly could to reach its inflation target of 2%.

“There is no better opportunity than now to completely get out of deflation,” Kuroda said.

He reiterated that the main tool in his kit was the cutting of short-term interest rates further into negative territory, as well as lowering the long-term interest rate target.

The comments sent the yen surging initially, and it headed towards the 101 level against the dollar, though it clawed its way back late in the day and was last 0.51% stronger at JPY 100.50 per $1.

Major exporters were mostly lower, with Honda down 2.14%, Nissan losing 1.26% and Toyota off 0.55%.

The big banks were also down after Kuroda’s suggestion that rates could sink further, with Mitsubishi UFJ off 2.06%, Mizuho Financial down 1.26% and SMFG losing 1.41%.

Mainland markets were also lower, with the Shanghai Composite down 1.74% at 2,981.24, and the Shenzhen Composite slipping 2.06% to 1,966.60.

South Korea’s Kospi slipped 0.34% to 2,047.11, while Hong Kong’s Hang Seng Index lost 1.56% by the close.

Shares in Seoul technology giant Samsung reversed some earlier gains to finish 0.19% lower, after it emerged the company was looking at delays to the relaunch of its Galaxy Note 7 smartphone.

The original version of the phone has been recalled worldwide, after reports the battery was prone to spontaneously combust.

Investors were keeping one eye towards the US presidential debate on Monday night in the US, with Hillary Clinton and Donald Trump neck-and-neck in the polls.

“A 'good' performance by Trump could see a rally in safe haven assets, Japanese government bonds/yen, gold, German bunds, and that further yield compression conversely may actually assist long duration 'riskier' assets such as emerging markets, high yield bonds and US equities,” noted IG market analyst Angus Nicholson.

Oil prices were higher during Asian trading on Monday, with Brent crude last up 0.61% at $46.17 per barrel, and West Texas Intermediate adding 0.63% at $44.76.

OPEC producers are slated to meet this week, behind the scenes at an Algerian energy conference, to once again discuss an elusive production freeze deal, though analysts were sceptical.

Australia’s S&P/ASX 200 was flat, finishing at 5,431.40, dragged down by the weighty financials subindex - which lost 0.13% - and the energy subindex, down 0.07%.

The materials sector gained slightly, however, rising 0.26% by the closing bell in Sydney.

Major regional banks managed a higher finish, with Australia and New Zealand Banking Group up 0.04%, Commonwealth Bank of Australia virtually flat, National Australia Bank rising 0.14% and Westpac adding 0.1%.

In New Zealand, the S&P/NZX 50 fell 0.4% to 7,264.86, with Ebos Group, Tower Insurance and A2 Milk leading the benchmark lower on light trading.

The down under dollars were both weaker against the greenback, with the Kiwi last 0.09% weaker at NZD 1.3816 and the Aussie retreating 0.11% to AUD 1.3128 per $1.