Asia report: Most markets fall on trade concerns, RBNZ cuts interest rate

Most markets in Asia finished in the red on Wednesday as trade concerns continued to weigh on sentiment, though New Zealand shares rallied after that country’s central bank slashed interest rates.

In Japan, the Nikkei 225 was down 1.46% at 21,602.59, as the yen strengthened 0.14% against the dollar to last trade at JPY 110.11.

Of the Tokyo benchmark’s major components, automation specialist Fanuc was down 2.24%, fashion group Fast Retailing was up 1.34%, and technology conglomerate SoftBank Group eked out gains of 0.04%.

The broader Topix index ended its session 1.72% below the waterline at 1,572.33.

On the mainland the Shanghai Composite was 1.12% lower at 2,893.76, and the smaller, technology-heavy Shenzhen Composite declined 0.65% to close at 1,530.31.

In fresh data out of China, both exports and the country’s trade surplus missed forecasts in April, while imports unexpectedly increased.

Exports for the month were down 2.7% year-on-year, falling far from a Reuters-polled forecast for a 2.3% improvement, while the trade surplus stood at $13.84bn, compared to the $35bn anticipated by analysts.

South Korea’s Kospi was off 0.41% at 2,168.01, while the Hang Seng Index in Hong Kong slid 1.23% to 29,003.20.

The blue-chip technology stocks were a mixed affair in Seoul, with Samsung Electronics falling 1.34%, while chipmaker SK Hynix ended the day ahead 0.5%.

Sentiment began negatively in the region, after a poor showing on Wall Street overnight as investors continued to consider the possibility of Washington hiking tariffs on Chinese goods as soon as Friday.

That scenario became a concern over the weekend, after Donald Trump tweeted that he would increase tariffs on around $200bn worth of Chinese goods to 25% from the current 10% at the end of the week.

“The overriding fear here is that global growth will take a hit should the US and China fail to hash out a trade deal and do so sooner rather than later,” said London Capital Group head of research Jasper Lawler.

“Just as the global economy was starting to show tentative signs of stabilising, a bigger slowdown is now back on the cards.”

Oil prices were mixed as the region went to bed, with Brent crude last unchanged at $69.88 per barrel, and West Texas Intermediate rising 0.28% to $61.57.

In Australia, the S&P/ASX 200 was down 0.42% at 6,269.10, with telecommunications retailer TPG Telecom plummeting 13.53%.

The company’s proposed merger with Vodafone Australia was blocked by Australian regulators, two years after a similar tie-up between Vodafone and Sky Network in New Zealand was abandoned on similar grounds.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 was ahead 0.4% at 10,063.05, after the Reserve Bank of New Zealand satiated most expectations by cutting its official cash rate to 1.5%.

Around three-quarters of analysts had predicted the rate cut, even after the Federal Reserve and the Reserve Bank of Australia chose not to cut their rates.

It was the first change in New Zealand’s base interest rate since November 2016.

“Domestic growth slowed from the second half of 2018,” the central bank said in its release, citing that reduced population growth through lower net immigration, and continuing house price softness in some areas, had tempered growth in household spending.

“Ongoing low business sentiment, tighter profit margins, and competition for resources has restrained investment.”

It also said employment was near its maximum sustainable level.

“However, the outlook for employment growth is more subdued and capacity pressure is expected to ease slightly in 2019.

“Consequently, inflationary pressure is projected to rise only slowly.”

Both of the down under dollars were weaker on the greenback, with the Aussie last off 0.09% at AUD 1.4275, and the Kiwi retreating 0.18% to NZD 1.5176.