Asia report: Markets up after inconclusive Australia election

Asian markets closed higher on Monday, with Australian shares advancing even in the wake of an uncertain federal election outcome.

In Japan, the Nikkei 225 added 0.6% to 15,775.80, paring earlier losses of 0.44%.

The yen surged stronger on Monday, though it weakened at the end of the session in rocky trading.

It was last 0.14% behind the greenback at JPY 102.66 per dollar.

On the mainland, the Shanghai Composite Index closed up 1.9% to 2,988.14, and the Shenzhen Composite was up 1.57% to 2,001.68.

Before markets opened on Monday, the People’s Bank of China guided renminbi higher, setting the onshore yuan at CNY 6.6472 per dollar.

The onshore currency can trade 2% above or below the loose peg, while the offshore currency freely floats.

Shares in property developer China Vanke began trading again during the session after a six month suspension, which began on 18 December.

The company is battling a widely-reported power struggle - its board recently rejected a shareholder bid for an extraordinary general meeting, aimed at clearing out the board.

Vanke’s Shenzhen-listed shares dived 10% during the session, before trading was halted due to the daily movement limits.

Its Hong Kong-listed shares managed a 6.58% rise.

South Korea’s Kospi added 0.4% to 1,995.30, while Hong Kong’s Hang Seng Index was up 1.27% at 21,059.20.

There was still uncertainty around Brexit as Asia kicked off the week, despite the recent global rally after the shock election result more than a week ago.

“The ball is on the UK’s court to invoke Article 50,” said Mizuho Bank senior economist Vishnu Varathan.

“But until a new government is installed, this trigger is unlikely to be pulled.”

Officials and government leaders in the European Union have said that there will be no informal negotiations with the UK until Article 50 of the Lisbon Treaty is invoked, beginning the formal exit process for the UK.

Oil traded higher during Asian hours, with Brent crude last up 0.38% at $50.54 per barrel and West Texas Intermediate ahead 0.33% at $49.15.

The S&P/ASX 200 added 0.67% to finish at 5,281.80, having earlier been in the red by as much as 0.38%.

Its weighty financials subindex was down 0.12% as major Australasian banking stocks fell, with Westpac dragging the chain with losses of 1.02%.

The Australian federal election, held on Saturday, failed to produce a winner, with none of the major parties managing an outright majority.

Analysts and political commentators were pointing to the possibility of a minority government being formed by the Labor party, which could carry out a royal commission into the banking sector - putting the spooks on the financial stocks.

The Reserve Bank of Australia is due to meet this Tuesday, with wide expectations that the central bank will keep interest rates on hold.

In New Zealand, the S&P/NZX 50 edged to its highest level in almost a month, gaining 0.2% to close at 6,940.95.

Airport operator AIAL gained 1.4% after its primary asset - Auckland Airport - welcomed its 23rd overseas airline last week.

The down under dollars both gained on the greenback, with the Aussie last ahead 0.25% at AUD 1.3313 per USD, and the Kiwi 0.22% stronger at NZD 1.3909.