Asian indexes trade mixed as dollar firms

Most major Asian indexes edged higher on Tuesday, following a narrowly mixed close on Wall Street overnight. With little data due during the session, markets turned their attention to events later this week.

Japan’s Nikkei 225 reversed early losses to climb 0.32 percent as the dollar’s slide against the yen was stemmed. Major exporters, including automakers and tech names, were mixed. Toyota and Honda rose 0.71 percent and 1.2 percent, respectively. Energy-related names were most lower as oil prices edged down.

Across the Korean Strait, the Kospi rose 0.36 percent despite blue-chip tech stocks extending Monday’s declines. Samsung Electronics edged down a further 0.19 percent after closing lower by more than 5 percent in the last session following a Morgan Stanley report that downgraded its stock.

Other tech plays were mixed: SK Hynix fell 0.84 percent but LG Display rose 1.3 percent. Automakers and manufacturing plays traded higher.

Down Under, the S&P/ASX 200 reversed early losses to climb 0.19 percent, with most sectors trading higher in the morning session. Retailers climbed as major miners edged down, with Rio Tinto and BHP down 0.36 percent and 1.9 percent, respectively. Hong Kong’s Hang Seng Index came under slight pressure, trading 0.27 percent lower. That followed a South China Morning Post report that Beijing will limit southbound capital in the Stock Connect.

Chinese mutual funds intending to allocate less than half of their funds to the Hong Kong stock market will be approved, compared to earlier rules that allowed allocations above 80 percent, the Post said, citing sources.

On the mainland, the Shanghai Composite hovered around the flat line, trading lower by 0.07 percent. Meanwhile, the Shenzhen Composite rose 0.7 percent.

U.S. stocks closed mixed on Monday, with retailers rising as markets bet on a strong holiday shopping season following Black Friday. Shares of U.S. chipmakers, however, struggled overnight.

The Dow Jones industrial average tacked on 0.1 percent, or 22.79 points, to close at 23,580.78 while other major indexes finished the session a touch softer.

Tax reform was in focus stateside, with the U.S. Senate expected to vote on a bill on Thursday. Sen. Rand Paul, R-Ky., on Monday said he would vote in favour even though he still had some concerns. If the Senate bill is passed, joint legislation with the House — which passed its own version on November 16 — will have to be created.

New home sales in the U.S. rose to their highest level in a decade in October. The metric rose 6.2 percent to 685,000 units, compared to the 6 percent fall forecast in a Reuters poll and above the revised 645,000 figure for September.

Meanwhile, the Senate confirmation hearing for Jerome Powell, President Donald Trump’s nominee for Federal Reserve chair, is due to take place on Tuesday during U.S. hours. Markets are likely to keep watch for a sense of Powell’s views on inflation, among other issues.

The dollar was mostly stable against a basket of currencies. The dollar index stood at 92.926 at 10:02 a.m. HK/SIN, compared to Monday’s close of 92.899. Against the yen, the greenback edged up to trade at 111.29, after dipping as low as 110.92 earlier in the session.

“[A] bumpy ride is expected for the dollar if no clear progress is made on the tax bill,” Zhu Huani, an economist at Mizuho Bank, said in a note.

Chinese automaker Anhui Jianghuai Automobile on Monday signed a memorandum of understanding with Volkswagen to develop joint venture models in China. The companies had earlier set up a joint venture focused on developing electric vehicles.

Meanwhile, Japan’s SoftBank has proposed to buy Uber shares at $48 billion, Reuters reported, citing a source. That amount would be a 30 percent discount to Uber’s valuation, Reuters added. SoftBank shares were off 0.26 percent.

Oil prices edged down as investors weighed the impact of an upcoming meeting among major oil producers on U.S. shale prices. The slide in prices also came on the back of TransCanada announcing the Keystone pipeline would be restarted on Tuesday, Reuters said.

Ahead of the Thursday meeting, some analysts are expecting an OPEC-led agreement to curb output to be extended beyond its current March 2018 expiration.

“Based on the early readings of the OPEC meeting, and statements from Russia’s oil minister, it looks as if an agreement to extend to end-2018 is nearly concluded after talks ahead of the full session,” Anne-Louise Hittle, vice president of macro oils at Wood Mackenzie, said in a note.

Still, the decline in prices is seen to as a result of cautious sentiment ahead of the meeting, with other analysts highlighting uncertainty over Russia’s position. “It is believed Russia wants language in the new agreement that would link the size of the curbs to the health of the oil market,” Giulia Lavinia Specchia, an economist at ANZ, said in a morning note.

U.S. crude futures extended losses, slipping 0.46 percent to trade at $57.84 per barrel. U.S. crude had declined around 1 percent in the last session, having climbed to two-year highs in recent days. Brent crude futures edged down 0.17 percent to trade at $63.73.

Source: CNBC