Asia report: Most markets down, NZX reaches new record

Most markets in Asia ended Wednesday lower, as investors closed their wallets and played the waiting game as concerns grew that the US Federal Reserve may hike interest rates soon, with its April meeting minutes due on Wednesday night.

In Japan, the Nikkei 225 spent the day rocking back and forth above and below the line, before settling just in the green, up 0.05% at 16,644.69.

Traders in Tokyo spent much of the day digesting fresh GDP data, with the country’s figure growing faster than expected in the January to March quarter at 0.4%, and annualised growth hitting 1.7%.

A Reuters poll of analysts had quarterly growth forecast at 0.1% and annualised growth at just 0.2%, with the market expecting a poor reading as a catalyst for more easing measures from the Bank of Japan.

The yen tracked the benchmark for much of the day and wavered between losses and gains against the dollar after the GDP data was released.

It was last 0.24% weaker at JPY 109.40 per USD.

The GDP data also drove shares in the country’s banks, as the surprisingly good numbers led to speculation the BoJ would take smaller, targeted steps in stimulating the economy.

Mitsubishi UFJ was up 4.25%, Mizuho Financial added 2.68% and SMFG rose 3.42%.

BGC Securities director of Japan equity sales Amir Anvarzadeh said the anticipation now is that the central bank will pass on the benefits of negative interest rates to the banking sector.

"Negative rates until now have obviously hurt their earnings."

The Nikkei was also once again dragged down by a selloff in the shares of carmakers, with Suzuki leading the way after becoming the latest to be embroiled in efficiency test cheating allegations.

The firm’s shares plummeted 9.37% after reports of improper fuel economy testing methods surfaced.

A press conference was called after the closing bell in Tokyo, where a company executive told assembled journalists that it had used the improper methods from 2010, but only on domestic Japanese models.

Elsewhere in the sector, Honda was off 1.24%, but the scarred Mitsubishi Motors was up 3.93% after the Nikkei newspaper said its president would step aside following April’s fuel economy testing scandal.

On the mainland, the Shanghai Composite Index was down 1.28% at 2,807.15, and the Shenzhen Composite ended off 2.68% at 1,766.08.

In Hong Kong, the Hang Seng Index lost 1.45% to close at 19,826.41, while the Kospi in Korea finished down 0.58% to 1,956.73.

The Federal Open Market Committee is due to release the minutes to its April meeting on Wednesday evening, with analysts concerned the rhetoric could be more hawkish than the statement released immediately following the meeting.

Comments from Atlanta Fed president Dennis Lockhart and San Francisco Fed president John Williams in recent days, suggesting at least and possibly two more rate hikes could come this year, only added to the heat.

Crude prices rose slightly during Asian trading, though they began to turn sour as Asian traders handed the baton to their European colleagues.

Brent crude was last down 0.12% to $49.22, and West Texas Intermediate lost 0.04% to $48.29 per barrel.

Down under, the S&P/ASX 200 finished down 0.74% at 5,356.20, with a 0.83% decline in the weighty financials subindex dragging the benchmark down.

Energy stocks in Australia were up, however, with that subindex gaining 0.24% during the session, though the major players were down with Santos losing 0.46% and Woodside Petroleum off 0.83%.

New Zealand shares were the exception to the red rule, with the S&P/NZX 50 rising 0.1% to a new all-time record of 6,982.64.

Infrastructure conglomerate Infratil - which once owned Glasgow Prestwick and Manston International airports in the UK - led the charge, rising 2% after it posted a gain in full-year earnings and said it has around NZD 730m cash and NZD 270m in unused credit to pour into acquisitions.

The Kiwi moved further away from the greenback, however, and was last 0.52% weaker at NZD 1.4759 per USD, while the Aussie was 0.65% weaker at AUD 1.3739.