Asian markets cautious after US volatility

Asian stocks began Wednesday mixed after initial gains for Japanese shares fell back. (Photo: AFP (AFP pic)

HONG KONG: Asian markets were cautiously higher Wednesday, after a volatile session for US equities and as yields on Treasury bonds retreated from a seven-year peak.

Tokyo edged up, ending a four-day losing run on bargain buying despite the higher yen’s dampening impact.

“After four days of falling… Japanese shares are in a good place for bargain-hunting buys,” Yoshihiro Ito, chief strategist at Okasan Online Securities, said in a commentary.

Hong Kong added 0.1% while Shanghai closed 0.2% higher, both moving back into positive territory for the second day after Monday’s sell-off.

There were also gains in Mumbai, with markets leaping 1.5% after closing at a six-month low on Tuesday, and aviation stocks seeing a boost after domestic media reports that New Delhi may reduce a jet fuel tax.

“(Indian) markets will continue to be volatile in the coming days and will offer great long-term buying opportunities,” Soumen Chatterjee, head of research at Guiness Securities, told Bloomberg News.

There were gains in other Asian markets, with Taiwan up 0.1 percent, Sydney adding 0.1% and Bangkok rising 1.1%.

Eyes on China

But global markets remained cautious on several fronts.

US and European markets meandered on Tuesday, with investors nervous after 10-year US Treasury bond yields surged above 3.0% and the IMF sounded a cautious note on the global economy.

On Wall Street, the Dow closed down 0.2% at 26,430.57 with US shares facing another day of pressure over higher interest rates.

“Markets continued their tenuous voyage through a pothole-encumbered landscape, dealing with the fragile US-China relations… and Brexit developments providing more ambiguity,” said Stephen Innes, head of Asia-Pacific trading at OANDA.

“It’s no wonder investors have a high level of misgivings.”

Eyes were fixed on the Chinese yuan amid a backdrop of deepening US-China tensions and a weak yuan, following steps this week from authorities to spur lending in the economy.

Last week the yuan hit a 19-month low, with growing fears the currency was sliding towards the psychological milestone of 7 per dollar — a level not seen since the global financial crisis.

Traders are also waiting for the latest data around new lending and money supply, which will be closely watched as Beijing strives to support flagging growth.

Shares in Chinese internet giant Tencent were down for the ninth straight day, dropping more than 2.6 percent on the back of rumours about a gaming regulatory crackdown — costing the company its place as one of the world’s 10 biggest companies.

In London, the FSTE 100 dipped 0.2% in early trade to its lowest in six months.

Key figures around 0830 GMT

Hong Kong – Hang Seng: UP 0.1% at 26,193.07 (close)

Shanghai – Composite: UP 0.2% at 2,725.84 (close)

Tokyo – Nikkei 225: UP 0.2% at 23,506.04 (close)

London – FTSE 100: DOWN 0.2% at 7,223.31

Euro/dollar: DOWN at $1.1493 from $1.1494 at 2100 GMT on Tuesday

Pound/dollar: UP at $1.3161 from $1.3144

Dollar/yen: UP at 113.15 from 112.95 yen

Oil – West Texas Intermediate: DOWN 21 cents at US$74.73 per barrel

Oil – Brent Crude: DOWN 26 cents at US$84.74 per barrel

New York – Dow Jones: DOWN 0.2% at 26,430.57 (close)