Asia report: Most markets lower after weak US session

Most Asian markets were lower on Friday after a red close on Wall Street overnight.

Japan’s Nikkei 225 was down 0.32% at 19,929.09, as the yen weakened against the greenback, last losing 0.43% to JPY 113.71.

The Bank of Japan increased its bond-buying programme as part of its quantitative easing strategy on Friday, having set a target of maintaining the 10-year yield at zero.

Long-term 30 and 40 year bonds reached their highest yield levels since February last year earlier in the week, and the 10-year bond hit a five month high of 0.105%.

On the mainland, the Shanghai Composite added 0.16%, while the smaller, technology-centric Shenzhen Composite managed gains of 0.19% to 1,918.13.

Fresh foreign exchange reserve data was released in China on Friday, showing Beijing’s reserves rose for the fifth month in a row, although they remained lower than market expectations.

China’s reserves rose $3bn to $3.057trn in June, just shy of the forecast for $3.06trn.

South Korea’s Kospi lost 0.33% to 2,379.87, and the Hang Seng Index in Hong Kong was off 0.49% to 25,340.85.

Shares in Seoul technology giant Samsung Electronics lost 0.42% after the firm said it expected second-quarter profits to improve 72% year-on-year.

Korea Air Lines finished 2.18% lower after reports emerged that police had raided the company’s head office in Seoul.

Bond markets were at the top of many traders’ agendas, as yields in sovereign bonds rose during the US session overnight as expectations increased for more hawkish central bank policy.

The 10-year US Treasury bond yield hit close to two-month highs during the US Thursday session, while the German 10-year bond yield surpassed the 0.5% yield level for the first time since the beginning of 2016.

“The clear implication here is that buyers have less appetite for European debt as they expect yields to head higher and for the ECB to gradually remove policy accommodation in the near future,” noted National Australia Bank economist Tapas Strickland on Friday morning.

Oil prices were lower during Asian trading, with Brent crude last down 3.04% at $46.69 per barrel and West Texas Intermediate off 3.13% at $44.14.

In Australia, the S&P/ASX 200 slipped 0.96% to 5,703.57, with all subindexes in the red, led lower by the energy sector which was 2.07% softer.

New Zealand’s S&P/NZX 50 finished down 0.1% to 7,622.13, led lower by accounting software provider Xero, which lost 2.3% ahead of its annual general meeting next week.

Both of the down under dollars were stronger on the greenback, with the Aussie advancing 0.17% to AUD 1.3161 and the Kiwi moving ahead 0.04% to NZD 1.3737.