Asia report: Most markets lower after weak Wall Street session

Markets in Asia were mostly lower on Wednesday, taking their cue from the US overnight where retailers dragged on Wall Street as questions remained around President Donald Trump’s handling of classified information.

In Japan, the Nikkei 225 was down 0.53% at 19,814.88, as investors rushed to the yen, seen as a safe haven asset in times of uncertainty.

The currency was last 0.65% stronger against the greenback at JPY 112.39.

Major exporters were hurt by the yen’s strength, with Fast Retailing down 1.11%, Sharp 1% off and Toyota slipping 0.97%.

On the mainland, the Shanghai Composite was off 0.26% at 3,104.74, and the smaller Shenzhen Composite managed a 0.13% gain to 1,867.68.

South Korea’s Kospi was 0.1% softer at 2,293.08, while the Hang Seng Index in Hong Kong finished 0.17% lower at 25,293.63.

Domestic political tension in the US was still at the fore during the Asian session, after allegations surfaced earlier in the week that President Trump divulged classified intelligence in a meeting with Russian officials.

The White House initially roundly denied the allegations, before Trump himself appeared to stop himself just short of confirming them, saying on Twitter that it was his prerogative to declassify and discuss any information he wants.

Markets and the electorate in general were also rocked by a report published by the New York Times and confirmed by NBC News suggesting former FBI director James Comey was asked by Trump to stop investigating former national security advisor Michael Flynn on his ties to Russia.

Trump fired Comey last week in a surprise move, for what the President initially said was a bungled investigation into Hillary Clinton’s email misuse during last year’s election campaign.

He later admitted in an interview that Comey’s investigations into the Trump administration’s ties with Russia - which he called ‘false’ - were on his mind at the time of terminating Comey.

“Investors are deeply concerned that all the political noise will morph into economic risk as the political back-fence talk, speculation and dirty laundry could detract from Trump's key agenda - tax reform,” noted OANDA senior trader Stephen Innes.

Oil prices were down during Asian trading, after fresh data suggested an increase in American stockpiles, though they picked up again during early European hours.

Brent crude was last up 0.52% at $51.92 per barrel, and West Texas Intermediate added 0.33% to $48.82.

Australia’s S&P/ASX 200 was down 1.1% at 5,786.03, with the major regional banks dragging on the benchmark through the weighty financials subindex.

Australia and New Zealand Banking Group was off 1.29% and National Australia Bank fell 2.13%.

The banking sector in Australia had come under pressure in the wake of the federal budget last week, which promised to impose a levy on the banks’ liabilities.

A fresh note from Moody’s on Wednesday also stoked the tension, as it described concerns about the country’s growing household leverage.

It said rocketing house prices, accompanied by stagnant wage growth, were creating risks for the region’s banks.

Resources were on the up in the sunburnt country, however, with Fortescue Metals up 4.15%, Newcrest Mining 4.55% higher, and Rio Tinto 2.22% firmer.

In New Zealand, the S&P/NZX 50 rose 0.2% to 7,422.50, beating the regional trend, with medical equipment manufacturer Fisher & Paykel Healthcare rising 1.7%.

It was boosted by the news its US competitor ResMed had dropped a complaint against it at the US International Trade Commission, though ResMed did say it still planned to replace the complaint with fresh action over the breathing mask patent dispute.

The down under dollars were mixed, with the Aussie last 0.33% weaker against the greenback at AUD 1.3509, while the Kiwi strengthened 0.06% to NZD 1.4522 per $1.