Asia report: Most markets higher even after IMF warning

In Japan, the Nikkei 225 was down 0.56% at 22,455.76, as the yen weakened 0.05% against the dollar to last trade at JPY 107.37.

Technology giant SoftBank Group surged 5.02%, while among the benchmark’s other major components, robotics specialist Fanuc was down 1.12%, and Uniqlo owner Fast Retailing lost 0.22%.

The broader Topix index was off 0.4% by the end of trading in Tokyo, closing at 1,587.09.

Fresh economic data out of Tokyo showed exports from Japan plummeting 28.3% year-on-year in May, according to the Ministry of Finance.

On the mainland, the Shanghai Composite was 0.14% firmer at 2,935.87, and the smaller, technology-focussed Shenzhen Composite rose 0.29% to 1,903.77.

Sentiment was muted in China, as the fresh outbreak of Covid-19 cases in Beijing continued to make headlines, with a number of districts now in a new lockdown and many flights and trains in and out of the capital cancelled.

South Korea’s Kospi managed gains of 0.14% to 2,141.05, while the Hang Seng Index in Hong Kong was 0.56% higher at 24,481.41.

Both of the blue-chip technology stocks were higher in Seoul, with Samsung Electronics up 0.19% and SK Hynix ahead 1.64%.

Regional tensions remained a focus on the Korean peninsula, after the presidential Blue House in Seoul said it would no longer be so tolerant of unreasonable behaviour from Pyongyang.

That came after North Korea destroyed a building in its territory used for liaising with the South, reportedly by explosion.

Korean defence stocks were in the green on the developments, with Victek ahead 29.91%, while industrial plays exposed to the North were on the back foot, as Hyundai Elevator was down 3.88% and Hanil Hyundai Cement lost 4.17%.

Investors were met with a warning from the International Monetary Fund’s (IMF) chief economist Gita Gopinath overnight, that the body’s upcoming World Economic Outlook Update was set to show negative growth rates “even worse” than previous estimates.

Gopinath said the ‘Great Lockdown’ crisis was also looking to be “unlike anything the world has seen before”.

Traders were likely looking past the negative news to a positive coronavirus update from the UK, where trials showed that the widely available, inexpensive drug dexamethasone was helpful in seriously critical Covid-19 cases.

Rabobank global strategist Michael Every said Asia had a risk-off session on Wednesday, largely because investors realised that geopolitical events in Korea and China indeed mattered.

“It is not the immediate risk of war between the Koreas or between India and China, either of which would be devastating - yet both are necessarily still fat tail risks.

“It is more a recognition that Asia has fault-lines running through it which are only going to deepen now that the era of ‘Chimerica’-led globalisation is coming to an end.”

Oil prices were lower by the end of the Asian day, with Brent crude last down 1.15% at $40.49 per barrel, and West Texas Intermediate off 1.46% at $37.82.

In Australia, the S&P/ASX 200 added 0.83% to 5,991.80, with the hefty financials subindex putting in a middling performance as the big four banks finished in a mixed state.

Australia and New Zealand Banking Group was down 0.36%, while Commonwealth Bank of Australia added 0.72%, National Australia Bank advanced 0.58%, and Westpac Banking Corporation rose 0.33%.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 leapt 3,47% to settle at 11,341.31, led higher by specialist dairy exporter A2 Milk, which was 7.23% firmer.

Investors were in a rush to buy shares in the company, after it was announced on Friday that it would be included in the ASX 50 top-flight index in Sydney, replacing financial firm AMP.

Both of the down under dollars were marginally stronger on the greenback, with the Aussie last ahead 0.03% at AUD 1.4511, and the Kiwi advancing 0.06% to NZD 1.5491.