Asia report: Markets mostly lower as trade pessimism returns

Most markets in Asia finished in the red on Wednesday, as developments on the US-China trade front took a negative turn after fresh tariff threats emerged from the White House.

In Japan, the Nikkei 225 was down 0.62% at 23,148.57, as the yen strengthened 0.07% against the dollar to last trade at JPY 108.46.

The major components of the benchmark index were lower, with Fanuc down 0.84%, fashion firm Fast Retailing off 1.24%, and SoftBank Group 1.22% lower.

Tokyo’s broader Topix index ended the day down 0.33%, closing at 1,691.11.

Fresh data out of Japan’s Ministry of Finance on Wednesday showed the country’s exports were down 9.2% year-on-year in October.

That was much wider than the 7.6% decline forecast by economists polled by Reuters, disappointing investors.

On the mainland, the Shanghai Composite was 0.78% weaker at 2,911.05, and the technology-focussed Shenzhen Composite lost 0.71% to 1,635.16.

Early in the session, the People’s Bank of China took the wraps off its latest loan prime rates, cutting 0.05 percentage points off both the one-year and five-year rates.

The new rates were set at 4.15% and 4.8%, respectively.

South Korea’s Kospi was 1.3% lower at 2,125.32, while the Hang Seng Index in Hong Kong was off 0.75% at 26,889.61.

Both of the blue-chip technology stocks were negative in Seoul, with Samsung Electronics down 2.8%, and SK Hynix losing 3.05%.

Market sentiment turned negative for the week’s hump day, after US president Donald Trump said overnight that he was prepared to “just raise the tariffs even higher” on goods from China if a deal could not be reached between the two countries.

Investors have been searching for clarity on the likelihood of a planned round of punitive tariffs set by Washington on Chinese goods going into effect on the deadline of 15 December.

The development was in stark contrast to the relatively rosy outlook on the trade front last week, when Trump said he was hopeful a first phase trade deal would be signed sometime in November.

“Though hardly a surprising comment - it’s ripped straight from the Trump playbook - combine it with the reports that Beijing is feeling increasingly pessimistic, and the blunt fact that nothing has been signed yet despite a couple of weeks ago both sides suggesting talks were ahead of schedule, and it’s understandable that investors would have their concerns,” said Spreadex analyst Connor Campbell.

Oil prices were higher at the end of the Asian day, with Brent crude last up 0.6% at $61.28 per barrel, and West Texas Intermediate rising 0.49% to $55.62.

In Australia, the S&P/ASX 200 lost 1.35% to end its session at 6,722.40, as the big four banks led the hefty financials subinves down 2.15% in Sydney.

Australia and New Zealand Banking Group was down 2.05%, Commonwealth Bank of Australia lost 1.33%, National Australia Bank fell 3.21%, and Westpac Banking Corporation was 3.31% lower.

The losses for bank stocks came after AUSTRAC - Canberra’s anti-money laundering and terrorism financing body - filed orders for a civil penalty against Westpac.

“It is alleged that Westpac’s oversight of the banking and designated services provided through its correspondent banking relationships was deficient,” the regulator said in its statement.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 was the regional outlier, rising 0.8% to 10,975.49.

Retirement property developer Metlifecare leapt 12.8% in Wellington, after the company suspended a share buyback programme as it confirmed it was in talks with a potential suitor after receiving an undervalued offer.

Both of the down under dollars were weaker on the greenback, with the Aussie last off 0.23% at AUD 1.4681, and the Kiwi retreating 0.17% to NZD 1.5576.