Asia report: Markets mostly lower as oil disappoints

Shares in Asia ended mixed on Wednesday, as traders concentrated on rollercoaster crude prices and looked towards a slew of Chinese data due this week.

Japan’s Nikkei 225 lost 0.18% to close at 16,735.12, reversing earlier gains, while the Topix was 0.2% lower at 1,314.83.

Fresh data out in Japan showed a higher-than-expected rise in machinery orders in June, which suggested firms have been keener to increase capital expenditure.

Core orders were up 8.3% month-on-month, well ahead of the consensus forecast for a 3.1% rise.

Manufacturer orders were up 17.7%, and services sector orders increased 2.1%.

The increases were looked on sceptically by many analysts, however, who still saw weakness in the country’s manufacturing economy.

“These numbers are at best an aberration as the manufacturing sector in Japan remains quite weak,” sais Compass Global Markets senior vice president of foreign exchange Tony Boyadjian.

The yen was stronger against the greenback, and was last 0.55% ahead at JPY 101.32 per $1.

That dragged the major exporters lower, with Honda losing 1.02%, Nissan down 0.1% and Toyota off 1.1%.

On the mainland, the Shanghai Composite was down 0.21% at 3,019.29, while the Shenzhen Composite finished off 0.33% lower at 1,976.16.

Investors in China were eagerly awaiting a raft of important data due on Friday, including retail sales, industrial production and fixed asset investment.

South Korea’s Kospi closed virtually flat, adding 0.04% to 2,044.64, while the Hang Seng Index in Hong Kong added 0.12% to 22,492.43.

Oil prices retreated during Asian trading after surging earlier in the week, with West Texas Intermediate last down 1.04% at $42.33 per barrel and Brent crude losing 0.81% at $44.62.

The declines came after a surprise increase in US stockpiles last week, with preliminary data from the American Petroleum Institute suggesting inventory rose 2.1 million barrels in the week to 5 August.

Analysts were picking a one million barrel drawdown, according to research by Reuters.

“It's a slow grind in markets at present, which will please many in the investment community but frustrate the day traders out there,” said IG chief market strategist Chris Weston.

Australia’s S&P/ASX 200 finished down 0.16% at 5,543.70, led by declines in the weighty finance and energy sectors.

The major oil stocks were dragged by oil prices, with Oil Search losing 1.34% and Santos sliding 1.68% in Sydney trading.

Reserve Bank of Australia governor Glenn Stevens made his last speech in that role during the session, in which he talked down market concerns that the central bank will need to take a more active role in meeting inflation targets.

Stevens also stressed the limits of monetary policy, paying particular attention to the high levels of household debt in Australia.

The country’s biggest bank, the Commonwealth Bank of Australia, released earnings on Wednesday and reported a 3% rise in full-year cash profits to AUD 9.45bn.

It also posted a final dividend of AUD 2.22 per share.

Chief executive Ian Narev did put a warning on top of the good news, however, saying “the combined effect of weaker demand, strong competition and increasing regulation” was looming over the bank and the sector at large.

Commonwealth Bank shares lost 1.29% by end-of-play.

In New Zealand, the S&P/NZX 50 was pushed from its record-high perch, dropping 0.2% to 7,349.61.

It was led lower by large-scale international casino operator SkyCity, which dropped 3.5% after reporting a 13% gain in full-year profit to NZD 146m, off sales of NZD 1.1bn.

Analysts in Wellington had expected a profit of NZD 156m.

Both of the down under dollars managed to gain on their American cousin, with the Aussie last ahead 0.71% at AUD 1.2941 and the Kiwi gaining 0.85% at NZD 1.3835 per $1.