Asia report: Volatile oil makes for choppy trading

Markets in Asia made for choppy trading on Wednesday, following oil’s sliding lead as the yen pushed against the dollar.

Japan’s Nikkei 225 reversed most of its earlier gains to close virtually flat, gaining 0.08% to 16,579.01.

Shares in the island nation came under fresh pressure as the yen pushed back against the dollar, hovering around the 108 mark against the 109 it was at on Tuesday.

It was last 0.59% stronger at JPY 108.63 to the greenback.

The movement in the currency pair came after Japan’s finance minister, Taro Aso, suggested there may be further intervention in the markets to quell the yen’s rampant strength.

He reportedly told the country’s parliament on Tuesday that, although Japan did not plan to use currency manipulation on a long-term basis, it was prepared to intervene if things continues this way.

The yen had rocketed as strong at JPY 106 to the dollar after the Bank of Japan surprised markets by standing pat on monetary policy last month.

"While we are surprised that more Japanese officials are trying to talk up the currency at 108-109 than 106-107, this could be a strategic move to give speculators reason to cover their shorts at a time when the dollar/yen was struggling to extend its losses below 106," said BK Asset Management managing director of foreign exchange strategy Kathy Lien.

The strong yen saw most Japanese exporters give up earlier gains to finish down. Toyota lost 0.76% and Nissan slid 0.15%, while Sony saw some of its gains reverse to close up 1.81%.

In corporates, Toyota reported net income for financial year 2016 of JPY 2.31trn, a rise of 6.4%, but said it expected a 35% drop in net income for the next year,

Airbag maker Takata also reported - this time a full-year net income loss of JPY 13.1bn as it faced ongoing costs of replacing all of its faulty and potentially deadly airbag inflators.

On the mainland, the Shanghai Composite Index closed up 0.18% at 2,837.63, while the Shenzhen Composite mixed it up by finishing down 0.62% at 1,791.05.

In South Korea, the Kospi reversed some earlier losses of over 0.5% to close down 0.12% at 1,980.10, while Hong Kong’s Hang Seng Index lost 0.93% to finish at 20,055.29.

After advancing in the US on Tuesday, oil retreated again during Asian trading. Brent crude was last down 0.46% at $45.30 per barrel, while West Texas Intermediate was down 0.97% at $44.23.

In Australia, the S&P/ASX 200 pared back some of its earlier gains to close 0.55% higher at 5,372.30, with the weighty financials subindex dragging it down, losing 0.15%.

Energy equities in the country were mixed, with Woodside Petroleum flat but Santos adding 0.74%. Metals were all up after an uptick in iron ore prices overnight, with Rio Tinto adding 1.34%, Fortescue up 2.11% and BHP Billiton improving 4.04%.

One of Australia’s largest grain storage firms, GrainCorp, was down 2 % after revealing a net profit of AUD 20.7m for its first half.

New Zealand shares reached another fresh record, as the S&P/NZX 50 gaining 0.5% to close at 6,944.33. Two major companies were suspended from trading during the session - casino operator SkyCity, which was looking to raise NZD 263m through existing investors, and APN News and Media, which confirmed it was in talks with rival Fairfax to create the country’s only surviving major newspaper group.

The Kiwi rose during the session and kept going as New Zealand went to bed, last hitting 0.6% stronger at NZD 1.4710 per USD. The Aussie made similar gains early on in the session, before dropping sharply. It was last 0.1% weaker at AUD 1.3595.