Asia report: Markets mixed after Beijing approves HK security bill

In Japan, the Nikkei 225 was down 0.18% at 21,877.89, as the yen strengthened 0.45% against the yen to last trade at JPY 107.17.

Automation specialist Fanuc was down 2.76%, while among the benchmark’s other major components, fashion firm Fast Retailing was up 2.4% and technology conglomerate SoftBank Group rose 0.1%.

The broader Topix index was 0.87% weaker by the end of trading in Tokyo, closing at 1,563.67.

In fresh data out of Japan on Friday, retail sales in the country were down 13.7% year-on-year in April.

The figure from the Ministry of Economy, Trade and Industry was a larger drop than the 11.5% anticipated by economists polled by Reuters.

On the mainland, the Shanghai Composite was ahead 0.22% at 2,852.35, and the smaller, technology-heavy Shenzhen Composite was 0.95% firmer at 1,786.51.

Late on Thursday, China’s National People’s Congress approved a controversial security bill for Hong Kong - a move which had caused condemnation from various countries earlier in the week as it was alleged that the law undermined the special administrative region’s autonomy from Beijing.

The bill also brought US-China tensions back into the fore, with president Donald Trump expected to hold a media conference on Washington’s relations with the People’s Republic later in the global day.

“Having spent most of this week ignoring the prospect of an escalation of US-China tension over Hong Kong, despite various smoke signals throughout the week suggesting a confrontation was brewing, US markets turned tail sharply late last night on reports that President Trump was going to be holding a press conference later today on China,” said CMC Markets analyst Michael Hewson.

“Earlier this week US Secretary of State Mike Pompeo said that the US no longer considered Hong Kong as no longer autonomous from China, and as such would mean that the region would no longer be subject to the favourable trade relationship currently in place.”

Hewson noted that the US House of Representatives also passed a bill earlier in the week authorising sanctions against senior Chinese officials for human rights abuses against Muslim minorities, adding that Trump’s press conference later could “up the ante” further.

“This sharp reversal in the last hour of US trading, merely goes to show that markets not only see what they want to see and hear what they want to hear, but that they also choose when they want to as well.”

South Korea’s Kospi eked out gains of 0.05% to end the session at 2,029.60, while the Hang Seng Index in Hong Kong lost 0.74% to 22,961.47.

The blue-chip technology stocks were mixed in Seoul, with Samsung Electronics up 0.6%, while chipmaker SK Hynix lost 2.86%.

Oil prices were lower as the region entered the weekend, with Brent crude last down 2.41% to $34.44 per barrel, and West Texas Intermediate off 2.91% to $32.71.

In Australia, the S&P/ASX 200 was 1.63% lower by end-of-play, settling at 5,755.70, as the country’s major banking plays slid.

Australia and New Zealand Banking Group was down 4.54%, Commonwealth Bank of Australia was off 3.01%, National Australia Bank lost 5.22%, and Westpac Banking Corporation slumped 6.36%.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 was 0.24% firmer at 10,882.41, with cinema industry technology firm Vista rising 7.1%.

A day earlier, the company told shareholders that it was beginning to see the first signs of post-Covid recovery in the sector, having previously raised NZD 65m on the assumption that movie theatres would by and large remain closed globally for the rest of 2020.

Both of the down under dollars were stronger on the greenback, with the Aussie last ahead 0.43% at AUD 1.5003, and the Kiwi advancing 0.2% to NZD 1.6069.