Asia report: Most markets higher on France result, China plunges

Markets in Asia finished mixed on Monday, though most finished higher as the results of the first round of the French presidential elections became clear - though it was the worst day of the year so far for Chinese stocks.

In Japan, the Nikkei 225 benchmark added 1.37% to finish at 18,875.88, with the yen last weaker against the greenback but still clinging onto the 110 level.

It was last 0.94% weaker at JPY 110.11 per $1.

On the mainland, the Shanghai Composite lost 1.37% to 3,129.78, while the Shenzhen Composite plunged 2.44% to 1,873.37.

The losses in China came after local media reports suggesting the administration in Beijing was preparing to increase its tolerance for volatility, in a bid to stop shadow banking practices.

South Korea’s Kospi was up 0.4% at 2,173.74, while the Hang Seng Index in Hong Kong ended up 0.41% to 24,139.48.

Shares in Hong Kong jeweller Chow Tai Fook were down 1.54%, after its acquisition of Australian utility Alinta Energy cleared legal hurdles down under.

In France, centrist candidate and the favourite to win the presidency Emmanuel Macron won 23.86% of the first-round votes, ahead of controversial far-right candidate Marine Le Pen on 21.4% after 97.4% of the ballots were counted.

They would now go through to a second-round run-off.

“The most likely outcome of the second round vote remains a Macron presidency, which we think would benefit the French economy,” notes analysts at Capital Economics.

“His planned labour market reforms would help to boost growth, even if his target of an unemployment rate of 7% by 2022 is very ambitious, given its historical path.”

Geopolitical concern in Asia was set on the backburner as the news from France filtered through, even though tensions on the Korean peninsula continued to tighten.

North Korean authorities arrested a US citizen in Pyongyang at the weekend, before announcing it was prepared to sink an American aircraft carrier.

Japan’s Prime Minister Shinzo Abe spoke with US President Donald Trump about the Korea situation over the phone earlier on Monday, before Trump held a similar conversation with his Chinese counterpart Xi Jinping.

Oil prices were slightly higher in Asian trade on Monday after falling on Friday, with Brent crude last up 0.9% at $52.43 per barrel and West Texas Intermediate climbing back over the $50 level, rising 0.92% to $50.08.

Australia’s S&P/ASX 200 finished up 0.3% at 5,871.78, as the foreign investment regulator approved the sale of utility Alinta Energy to Hong Kong jeweller Chow Tai Fook.

It was closely watched by local traders, after the Foreign Investment Review Board blocked Chinese investment into the national electricity distributor Ausgrid in August last year.

In New Zealand, the S&P/NZX 50 was 0.4% higher at 7,222.94, led higher by broadband infrastructure operator Chorus, which added 3.2% after it was revealed it would be added to the Australian benchmark as well.

Local construction giant Fletcher Building was 1.3% firmer, extending its recovery from Friday after touching 12-month lows earlier last week.

Both of the down under dollars were stronger on the greenback, with the Aussie advancing 0.54% to AUD 1.3190 and the Kiwi ahead 0.04% at NZD 1.4225.