Some Asian markets rebounded Thursday following Wall Street’s reversal of sharp intraday losses overnight on the back of higher oil prices, but it wasn’t enough to support the Chinese, Australian and Hong Kong markets.
China’s Shanghai composite was lower by 1.22 percent, while the Shenzhen composite dropped 1.4 percent. Concerns were raised over China this week after the People’s Bank of China set the yuan mid-point rate notably lower at 6.5273 to the dollar on Tuesday, down 0.17 percent from Monday’s fix.
Today’s mid-point was set at 6.5318. Francis Cheung, head of China and Hong Kong strategy at CLSA, told CNBC’s “Squawk Box” that Chinese markets are doing somewhat better, despite the sell-offs this week.
“We are seeing a little more support from the market, mainly because I think people are expecting more of a stimulus from the government.” Hong Kong’s Hang Seng Index was down 0.65 percent, while the Japanese benchmark Nikkei 225 index was up about 0.5 percent.
Across the Korean Strait, the Kospi gained 0.41 percent. The yen, which surged against the dollar in recent sessions, maintained the 112 handle; the pair traded at 112.12 as of 8.15 a.m. HK/SIN time. A stronger yen is usually a negative for Japan’s exporters as it reduces overseas profits when converted into local currency.
But exporters saw mixed fortune early on, with Toyota down 2 percent, while Canon gained 0.74 percent. Australia’s S&P/ASX 200, which saw gains of 0.37 percent early on, lost support and traded down 0.1 percent.
The heavily weighted financials sector was a drag, down 0.89 percent. The index previously suffered two consecutive sessions of declines, closing down 2.1 percent on Wednesday. “ASX suffered again at the hands of oil prices (overlay BHP’s share price and WTI), and it’s also under pressure due to valuations and a market that had added 329 points from the 10 February low to the high on Tuesday.
This was a 7 [percent] move, but there are no excuses for yesterday’s savagery,” Evan Lucas, market strategist at IG, wrote in his morning note. Online job-search company Seek, an early mover on the index, was up 6.34 percent. The company reported a 50 percent jump in interim net profit to AUSD275.1 million (USD 198.2 million), and a dividend of 21 Australian cents per share.
The sale of Seek’s education business, IDP Education, and strong revenues from China helped boost profit. Oil prices retreated again in Asian trading hours with US crude dropping 0.47 percent to USD 32 a barrel, after settling up 0.88 percent in overnight trade.
Global benchmark Brent was lower by 0.84 percent at USD 34.12 a barrel, following a 3.4 percent gain during US hours. The overnight bounce came as data showed US gasoline demand over the past four weeks rose more than 5 percent compared with a year earlier.
But US government data showed crude stockpiles rose 3.5 million barrels last week to more than 507 million barrels. “The market…was looking for some good news for once and took its cue from falling gasoline inventories and gasoline demand up 1.8 [percent], a hint that the long looked-for increase in consumer-led driving and spending might be afoot,” said David de Garis, a director and senior economist for fixed income, currencies and commodities at National Australia Bank, in a morning note.
Oil came under pressure this week after Saudi Arabia’s oil minister dashed hopes for a possible production cuts. Elsewhere, sterling remained weak against the dollar on concerns over a possible “Brexit.”
The pair traded at 1.3927 as of 6.10 a.m. HK/SIN. Stateside, the Dow Jones industrial average closed up 0.3 percent, erasing a 266-point intraday drop. The S&P 500 gained 0.44 percent after trading more than 1 percent lower intraday and the Nasdaq composite was up 0.87 percent.
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