Asia report: Markets retreat as investors watch Fed

Most markets in Asia ended lower on Tuesday, with Japan and China leading the pack lower as investors in the region took after their US counterparts in playing wait-and-see with the Federal Reserve.

In Japan, the Nikkei 225 finished down 0.94% at 16,498.76, with the yen strengthening against the greenback and putting pressure on equities.

The yen did weaken sharply after local markets closed, however, and was last off 0.42% at JPY 109.70 per USD.

Earlier in the day, Japan’s finance minister was quoted as saying that the pair moving five yen within two days would be a one-sided move, but that there were no government plans to devalue the yen sharply.

On the mainland, the Shanghai Composite lost 0.76%, finishing at 2,822.04, while the Shenzhen Composite closed down 0.9% at 1,804.60.

In Korea, the Kospi ended 0.9% lower at 1,937.68, while Hong Kong’s Hang Seng Index added 0.11% to finish at 19.830.43.

“The talk on the trading floors this morning centers on the limited moves in markets, although some will welcome this, notably the Fed who have had a hand in creating these conditions,” noted IG chief market strategist Chris Weston in the morning.

Oil prices fell during Asian trading, with Brent crude last down 0.35% at $48.18 per barrel and West Texas Intermediate losing 0.21% at $47.98.

Australia’s S&P/ASX 200 finished down 0.44% at 5,295.60, with the energy subindex dragging on the benchmark losing 1.28%.

Oil Search closed down 1.51% and Santos lost 1.88% by end of play.

Reserve Bank of Australia governor Glenn Stevens told the Trans-Tasman Business Circle that the Sydney-based central bank remained committed to flexible, inflation-targeting monetary policy.

In New Zealand, the S&P/NZX 50 lost 0.5% to close at 6,872.65, led lower by insurer Tower, which lost 11.9% after posting a wider first-half loss of NZD 8.7m.

Flag carrier Air New Zealand also continued its downhill tumble, settling down 2.8% to its lowest levels since November 2014.

Investors seemed to be airing their disapproval of the airline’s plans to sell its major stake in Virgin Australia - shares in the airline have lost 20% since the plans were signalled on 30 March.

The down under dollars retreated, with the Kiwi retreating 0.57% to NZD 1.4871 and the Aussie weakening 0.89% to AUD 1.3966.