Asia report: Most markets fall amid boiling political tensions

Most markets in Asia finished in the red on Monday, with Australasian bourses being the exception, as political and trade tensions remained extraordinarily tight in the region.

In Japan, the Nikkei 225 was down 0.26% at 23,331.84, as the yen strengthened 0.27% against the dollar to last trade at JPY 108.96.

Of the major components on the benchmark index, automation specialist Fanuc was down 1.57%, fashion firm Fast Retailing lost 0.87%, and technology conglomerate SoftBank Group slid 1.01%.

The broader Topix index was 0.07% firmer, ending the Tokyo session at 1,704.03.

On the mainland, the Shanghai Composite was 1.83% lower at 2,909.97, and the smaller, technology-heavy Shenzhen Composite slid 2.62% to 1,611.44.

South Korea’s Kospi was off 0.61% at 2,124.09, while the Hang Seng Index in Hong Kong slid 2.62% at 26,926.55.

Tensions reached boiling point in the special administrative region during the day, after at least two demonstrators were injured as police opened fire on ongoing mass protests.

The latest round of protests came after the arrest of three pro-democracy politicians in Hong Kong over the weekend.

Both of the blue-chip technology stocks were weaker in Seoul, with Samsung Electronics down 0.96% and SK Hynix losing 1.22%.

Trade tensions remained serious on Monday, after US president Donald Trump said late on Friday that he had not agreed to drop tariffs on Chinese imports - something a number of sources were suggesting had occurred earlier in the week.

AxiTrader analyst Stephen Innes said the increasing intensity of protests posed a risk to any trade deal drawn up by Washington and Beijing, with the US Senate already set to pass legislation in support of Hong Kong's pro-democracy activists.

"China has already said it will retaliate once the bill is passed,” he said.

“In the past, however, the US and China have isolated issues like this from broader tariff negotiations but will this latest incident where a protester was shot by the police - on Veterans Day no less - factor into the overall trade negotiations. It’s hard to imagine how it won’t.”

Oil prices were lower as the region went to bed, with Brent crude last down 0.87% at $61.97 per barrel, and West Texas Intermediate falling 1.02% to $56.66.

In Australia, the S&P/ASX 200 gained 0.72% to finish its trading day at 6,772.50, while across the Tasman Sea, New Zealand’s S&P/NZX 50 was 0.4% firmer at 10,919.79.

The down under dollars were a mixed picture against the greenback, with the Aussie last 0.14% weaker at AUD 1.4594, while the Kiwi strengthened 0.47% to NZD 1.5726.