Major stocks in Asia were mixed on Wednesday as the continued advance in oil prices and trade-related headlines took center stage for investors.
The Nikkei 225 slipped 0.46 percent, with the financials and utilities sectors trading in negative territory. Energy sector stocks, however, rose following the boost in oil prices overnight, but shippers and air transport names declined.
In Seoul, the Kospi reversed early gains to slip 0.17 percent as gains in blue chip technology stocks failed to buoy the broader index amid declines in other sectors, including automakers and steelmakers.
Index heavyweight Samsung Electronics and SK Hynix were up 0.32 percent and 1.78 percent, respectively, while Posco dropped 1.61 percent.
Elsewhere, greater China markets notched slight gains in morning trade, with Hong Kong’s Hang Seng Index up 0.19 percent on strength in the energy sector. Meanwhile, the Shanghai composite added 0.09 percent and the smaller Shenzhen composite was nearly flat.
In Sydney, the S&P/ASX 200 was little changed, with the index last trading 0.03 percent below the flat line. T
he energy sector subindex rose 1.35 percent as oil producers gained, with Woodside Petroleum adding 1.5 percent and Santos advancing 2.09 percent. Still, overall gains were capped as banks and telecommunications stocks slipped.
MSCI’s index of shares in Asia Pacific outside of Japan was lower by 0.23 percent in Asia morning trade.
The mixed picture in the Asian trading session came on the back of slim gains on Wall Street, with the move higher in energy shares contributing to gains there.
Those moves followed the slump in stocks stateside on Monday amid anticipation of further trade measures from the Trump administration against China, although messages from the White House have been conflicting.
Treasury Secretary Steven Mnuchin said on Monday that a Wall Street Journal report on restrictions on Chinese investment in U.S. technology was “fake news,” but added that those measures would apply to “all countries” instead of China alone. Despite that, White House economic advisor Peter Navarro told CNBC that there were “no plans” to curb foreign investments.
Uncertainties over trade policy, as well as an escalation in rhetoric in the U.S. trade spat with China in recent weeks, have weighed on market sentiment in Asian markets. On Tuesday, the Shanghai composite finished the session in bear market territory, meaning its declined more than 20 percent from their 52-week highs.
“In the short run, these negotiations and these threats are definitely having an influence. They’re raising volatility and they’re causing damage to individual sectors … What’s going to really matter is whether or not the trade measures impact the business cycle. Stock prices are basically a child of the business cycle and as long as the business cycle is expanding, then stock markets should be able to continue to rise,” John Greenwood, chief economist at Invesco, told CNBC’s “Squawk Box.”
Oil prices continued to firm after jumping overnight. Contributing to Tuesday’s gains was the U.S. State Department’s announcement that companies purchasing Iranian oil would be subject to sanctions if they did not completely slash those imports by November.
U.S. West Texas Intermediate crude futures tacked on 0.37 percent to trade at $70.79 per barrel after crossing the $70 level for the first time in two months overnight. Brent crude futures edged up by 0.31 percent to trade at $76.55.
In currencies, the dollar index, which tracks the greenback against a basket of currencies, mostly held onto overnight gains to trade at 94.610 at 9:34 a.m. HK/SIN.
Trade tensions were contributing to near-term strength in the dollar, according to analysts. Against the yen, the dollar softened slightly to trade at 109.90 after trading around the 110 handle on Tuesday.