Asia report: Region finishes Friday in the red

Asian markets finished Friday on a disappointing note after a volatile week of trading, with stocks in Japan under fresh pressure from the yen.

The Nikkei 225 dipped above and below the waterline throughout the trading day, before settling down 1.41% at clost to 16,412.21.

For the week, the benchmark managed gains of 1.89%.

Automaker Nissan closed up 4.09%, retracing some initial gains but still coming out a winner after taking a 34% stake in competitor Mitsubishi Motors on Thursday, worth JPY 237bn.

The stake was borne out of a deal between the two companies, following Mitsubishi’s admission that it faked mileage testing on cars it made under contract to Nissan.

Nissan also released earnings for the year to 31 March on Thursday, in which it reported a 14.5% rise in net income year-on-year.

Mitsubishi Motors had gained in early trading, but those were all but erased by close with the stock finishing down 1.74%.

In the slew of corporate news from Tokyo, Sharp announced changes to its management as part of the takeover by Taiwan’s Hon Hai Precision Industry - better known as Foxconn.

12 of Sharp’s directors are now to retire, the board’s size shrunk to nine, and Hon Hai’s Tai Jeung-wu will be appointed as the new president.

Shares in Sharp closed up 2.31%, and Hon Hai Precision Industry gained 1.5%.

Fresh strength in the yen also put pressure on the sharemarket, with the safe haven currency letting go of the 109 mark it clung to on Thursday. It was last trading 0.28% stronger at JPY 108.71.

The market was still reacting to the central bank’s release of late April meeting minutes on Thursday, in which it said Japan’s economy is looking to be on a moderate expansion trend with employment and income picking up.

Tokyo’s monetary regulator did add a caveat, however, saying the growth rate will be lower than previously thought, with a slowdown in exports and production growth off the back off sluggish emerging markets.

Analysts said the strong yen was just another burden to an already-weak Japanese economy, with BK Asset Management director of foreign exchange strategy Kathy Lien saying there was still widespread expectations that the Bank of Japan would add to its existing stimulus measures.

“Many economists expected the BoJ to add stimulus last month, and when they passed on doing so the expectations were pushed out to the summer.”

On the mainland, the Shanghai Composite Index lost 0.3% to close at 2,827.37, while the Shenzhen Composite was off 0.31% to 1,784.32.

The People’s Bank set renminbi weaker against the dollar before market open, with the yuan being moved 0.13% away from the greenback to JPY 6.5225. The onshore yuan is allowed to trade 2% either side of the loose peg.

In Korea, the Kospi finished down 0.53% at 1,966.99, while Hong Kong’s Hang Seng Index closed down 0.99% at 19,719.29.

The central bank in Seoul appeased market expectations and kept its monetary policy on hold on Friday, leading to a strengthening of the won against the dollar immediately after the decision.

It slipped back as the region went to bed, however, and was last trading 0.77% weaker at KRW 1,171.47 per USD.

Fresh data out of Kuala Lumpur on Friday showed Malaysia’s gross domestic product grew 4.2% year-on-year in the first quarter, with boosted public and private consumption offsetting a slowdown in external demand.

It was still slower growth than the 4.5% registered in the fourth quarter of 2015, however.

ANZ analysts Weiwen Ng and Glenn Maguire commented on the reading, saying they do not see the resilience in private consumption to be sustainable due to slower wage growth and weak sentiment.

“Malaysia’s near-term domestic and external demand profiles are likely to remain weak amid fiscal tightening and tighter credit conditions,” they noted.

It was deja vu for crude, with prices repeating Thursday’s pattern of advancing in the US overnight before falling in Asia. Brent crude was last down 0.8% at $47.70 per barrel, while West Texas Intermediate lost 1.17% to $46.16.

In Australia, the S&P/ASX 200 lost 0.57% to finish at 5,329, with renewed pressure from the resources sector.

The major miners saw their shares drop as the session wore on - Rio Tinto lost 2,72%, Fortescue Metals was down 1.71% and BHP Billiton closed down 2.1%.

Falling oil prices led to further declines in the sunburnt country’s energy sector as well, with Santos off 2.8% and Oil Search off 1.6%.

Across the Tasman Sea, the downward trends continued with New Zealand's S&P/NZX 50 losing 0.1% to close at 6,916.57.

Subscription television service Sky (unrelated to the British company) resumed its recent declines, falling 3.4% to lead the decliners.

The stock has dropped 26% in just a week, after it admitted subscriber numbers were falling and expected to fall further this financial year, as sports fans cut their cords after last year’s Rugby World Cup and entertainment fiends deserted it for online streaming.

Both of the dollars down under moved away from the greenback, with the Kiwi shifting 0.3% to NZD 1.4705 and the Aussie off by 0.56% to AUD 1.3730 per USD.