Asia report: Most markets lower as Japan stimulus disappoints

Markets in Asia closed lower on Wednesday, as Japanese stocks sold off on disappointment with the latest stimulus package from the government.

The Nikkei 225 finished down 1.88% at 16,083.11, while the Topix was off 2.17% at 1,271.98.

Investor in the country were disappointed after the government approved JPY 13.5trn in fiscal measures as part of Prime Minister Shinzo Abe’s JPY 28 trn package announced last week.

“Japan's keenly awaited fiscal stimulus proved to be a damp squib, disappointing yen bears who were hopeful for more forceful government spending to revitalise Abenomics,” said Mizuho Bank currency strategist Wei Liang Chang.

Chang added that expectations among investors were “too skewed towards a big bang helicopter announcement that would enable Bank of Japan to co-operate by expanding asset purchases.”

It was the second disappointment in barely a week, after the Bank of Japan revealed its smaller-than-expected monetary measures on Friday, increasing exchange-traded fund purchases, but stopping short of adjusting the interest rate or increasing government bond purchases.

The yield on the 10-year Japanese government bond was driven up during the session, hitting -0.082% during afternoon trading.

It also saw the yen jump towards the greenback, though it had weakened slightly in late trading and was last 0.32% behind earlier levels at JPY 101.21 per $1.

The stronger currency dragged the major exporters, with Nissan shares losing 3.02%, Sony off 1.66% and Toyota down 1.88%.

Honda was the odd-one out, as investors reacted to its first-quarter earnings released after the close on Tuesday.

The carmaker’s operating profit for the three months rose 11.5% to JPY 266.8bn, which its board put down to cost reduction and higher sales revenue.

On the mainland, markets closed up having reversed earlier losses, with the Shanghai Composite adding 0.27% to 2,979.17 and the Shenzhen Composite rising 0.42% to 1,934.81.

Before markets opened, the People’s Bank of China set renminbi at CNY 6.6195 per USD.

The central bank allows the onshore yuan to trade 2% above or below its loose peg.

In Korea, the Kospi fell 1.2% to 1,994.79, while Hong Kong’s Hang Seng Index finished 1.76% lower at 21,739.12, reopening after a one-day closure sparked by a typhoon warning.

Technology giant Samsung Electronics unveiled its latest toy on Wednesday, the seven inch Galaxy Note 7 - a so-called phablet, or phone-tablet hybrid - though it failed to win over investors with the stock losing 2%.

Hong Kong-listed shares of HSBC were up, as the London-based bank reported a 28.7% fall in profit before tax for the first half of 2016.

Crude prices were also up, with Brent last 0.76% higher at $42.12 per barrel and West Texas Intermediate adding 0.73% at $39.80.

Australia’s S&P/ASX 200 lost 1.35% to 5,465.70, dragged down by the weighty financials subindex.

Miner Rio Tinto posted its interim numbers, with first-half underlying earnings down 47% to $1.56bn, and declared an interim dividend of 45 cents per share.

The major Australasian banks sold off after the Reserve Bank of Australia cut its interest rate to a record low 1.5% on Tuesday, with National Australia Bank down 2.82% and Westpac falling 2.5%.

Retail lenders in the country were under fire, after it was found many of the banks were not passing on the savings of record low rates to customers.

“After the full pass through of the May rate cut, it looks like we are only seeing partial bank pass through to mortgage rates this time around, with a couple of major banks passing on just 0.1 to 0.13 percent,” said AMP chief economist Shane Oliver.

Shares in New Zealand were also down, with the S&P/NZX 50 losing 0.7% to 7,277.40 ahead of reporting season in Wellington.

Profit taking in some of the country’s major businesses was the theme of the day, with Sky Network Television (unrelated to the London-based company of the same name) losing 2.8%, Meridian Energy off 2.5% and telco Spark declining 2.1%.

All three stocks performed exceptionally well in July.

The major banks were also a source of pain, with declines in their New Zealand-listed shares echoing the losses seen across the Tasman Sea in Sydney.

Both of the down under dollars were weaker against the greenback, with the Aussie last 0.34% off at AUD 1.3187 per $1 and the Kiwi losing 0.97% at NZD 1.3988.