Japanese and Australian shares lost ground on Wednesday, while Chinese and South Korean markets posted mild gains, as US debt worries continue to grip Asian equity markets.
Japan’s Nikkei Stock Average JP:NIK -0.50 percent ended the session down 0.5 percent amid strong levels for the yen, while Australia’s S&P/ASX 200 index AU:XJO -0.78 percent closed down 0.8 percent after a stronger-than-expected reading on consumer prices raised the possibility of another interest-rate hike and sent the Australian dollar to a fresh post-float high. Read report on Australian consumer inflation
Hong Kong’s Hang Seng Index HK:HSI -0.01 percent traded up 0.2 percent, and the Shanghai Composite index CN:000001 +0.76 percent rose 0.5 percent. South Korea’s Kospi KR:0100 +0.26 percent turned around in the session to gain 0.2 percent.
Overall, equity markets “remain on the back foot as the US debt impasse continues to dominate the agenda,” said Chris Weston, strategist at IG Markets. “The expectation is that negotiations will be ongoing into next week, right up to that August 2 deadline. With this backdrop it seems unlikely that we’re going to see much activity in the markets.”
US shares fell on Tuesday, as lawmakers continued to haggle over raising the US debt ceiling. The process has become entwined with demands for reducing the country’s debt, which in turn has been linked to the country’s ability to retain its AAA credit rating. Read more on US stocks.
“The spectacle of House leader Boehner and President Obama both giving finger-pointing press conferences late on Monday night finally had foreign-exchange markets taking fright and selling dollars across the board,” said strategists at BNP Paribas.
As the US dollar languished below the JPY 78 mark on Wednesday, Japanese exporters moved lower. Nintendo Co. JP:7974 -1.13 percent NTDOF -2.85 percent lost 1.5 percent, Honda Motor Co. JP:7267 -1.72 percent HMC -0.10 percent gave up 1.7 percent, and Toyota Motor Co. JP:7203 -1.21 percent TM -0.04 percent fell 1.2 percent.
Nissan Motor Co JP:7201 -1.85 percent NSANY +0.92 percent fell 1.9 percent ahead of its after-market earnings announcement.
Banks were also under pressure in Japan, with Sumitomo Mitsui Financial Group Inc. SMFG +0.78 percent down 1.2 percent, and Daiwa Securities Group Inc. DSEEY +1.34 percent declining by 2.3 percent.
The highly volatile shares of Japanese electric utility Tokyo Electric Power Co. JP:9501 -15.82 percent TKECY -12.47 percent tumbled 15.8 percent after the Nikkei business daily reported that the firm may sell its majority stake in a data-centre business and about JPY 230 billion ($2.95 billion) of shares in various companies, including KDDI Corp. JP:9433 -0.69 percent KDDIY -2.06 percent
KDDI shares were down 0.7 percent. Read report on possible Tepco asset sale.
Several Hong Kong-listed exporters were also weaker amid concern about how the US debt situation will play out, with apparel group Esprit Holdings Ltd HK:330 -1.07 percent ESHDF +2.24 percent down 0.6 percent.
However, some banks and property firms advanced on bargain hunting, with Henderson Land Development Co. HK:12 +1.33 percent up 1.9 percent, China Resources Land Ltd HK:1109 +1.46 percent CRBJY 0.00 percent up 2.3 percent, and Agricultural Bank of China Ltd HK:1288 +0.96 percent CN:601288 +0.38 percent higher by 1.7 percent.
Hong-Kong listed financial stocks appear to have bottomed out, with negative news now likely to have been factored into share prices, said Conita Hung, head of equity markets at Delta Asia Financial Markets,
In addition, expectations for earnings are likely helping support the Hong Kong market, she said. Some heavyweight US companies have put out well-received results in recent weeks, including Apple Inc. AAPL +1.23 percent, International Business Machines Corp. IBM -0.42 percent and Morgan Stanley MS +0.94 percent.
“Most expect that corporate results announcements will be quite good,” said Hung.
South Korean electronics giant LG Electronics Inc. LGEIY 0.00 percent gained 2.6 percent on Wednesday after reporting a return to profit, helping to lift the Seoul market out of early gloom that followed the release of a below-forecast reading on economic growth. Read report on South Korean GDP.
Australian consumer discretionary stocks were weak after the CPI data, with department-store owner Myer Holdings Ltd AU:MYR -2.80 percent down 2.8 percent, and electronics and appliance retailer Harvey Norman Ltd AU:HVN -2.60 percent surrendering 2.6 percent.
“Today’s 0.9 percent CPI reading is above expectations, and we think it will be hard for the Reserve Bank of Australia to dismiss,” said Peter Esho, market analyst at City Index. -By Sarah Turner