Asia markets mixed; Kospi falls as GDP growth slows

Markets in Asia traded mixed on Tuesday, as South Korea’s shares slipped after data showed economic growth slowed in the third quarter.

The Kospi index was lower by 0.48 percent, while the Korean won slipped from levels near 1132.80 to a low of 1139.40 against the dollar after the data was released.

As of 1:51 p.m. HK/SIN, the dollar/won pair traded lower at 1133.40, after the won saw renewed strength in the afternoon session, reaching a session high of 1132.77.

Bank of Korea data showed South Korea’s third-quarter gross domestic product (GDP) grew by a seasonally adjusted 0.7 percent on-quarter, beating a Reuters poll forecast for a 0.6 percent uptick. But on an yearly basis, GDP grew by 2.7 percent, slower than the second quarter’s 3.3 percent rise.

“The moderation [in GDP] was broadly expected, which was presaged by the sequential slowdown in industrial production in the first two months of the quarter,” said Eugenia Victorino, Asia economist at ANZ, in a note.

During the quarter, South Korea saw a massive workers’ strike at Hyundai Motor, as well as the collapse of container shipper Hanjin Shipping, which filed for court receivership on August 31.

In September, electronics giant Samsung was forced to recall shipments of its new Galaxy Note 7 handsets amid reports of the devices catching fire. In October, Samsung permanently halted production of the devices and announced it expected a more than $5 billion profit hit spread over second half of 2016 and first quarter of 2017.

Victorino said there was still space for the Bank of Korea to deliver another rate cut in the January-March quarter of 2017.

The rest of Asian markets were mixed Tuesday morning, despite a stronger dollar and falling oil prices tapering gains in the U.S.

Japan’s Nikkei 225 was up 0.79 percent, while the Topix index gained 0.71 percent. In Hong Kong, the Hang Seng index trimmed early declines to trade nearly flat at 23,599.99. Chinese mainland markets were relatively flat, with the Shanghai composite trading flat at 3,128.24, while the Shenzhen composite gained 0.35 percent.

In Australia, the ASX 200 index climbed 34.31 points, or 0.63 percent, to 5,442.80, with most sectors rising. The heavily-weighted financial sector closed up 0.74 percent, with the country’s so-called Big Four banks gaining.

Shares of ANZ gained 0.67 percent, Commonwealth Bank of Australia was 0.75 percent higher, Westpac rose 1.08 percent and the National Australia Bank added 0.62 percent.

The dollar traded at 98.72 against a basket of currencies on Tuesday morning during Asian hours, off an earlier session high of 98.83, climbing from levels below 98.00 last week.

Analysts said rising U.S. Federal Reserve interest rate hike expectations supported the dollar during U.S. hours; dollar strength pushed other currency majors lower during Asian hours.

The yen retreated to the 104 handle, trading at 104.41 against the dollar as of 1:55 p.m. HK/SIN, compared with levels as high as 103.20 late last week.

Analysts at Singapore’s DBS Bank said in a morning note the dollar/yen pair was looking to surpass the “ceiling of its 103.14-104.62 range established since 11 October.” The analysts said if successful, the pair could move higher toward the 107 handle.

The relative weakness in the yen likely helped major Japanese exporters rise. Shares of Toyota rose 1.33 percent, Nissan was up 1.33 percent and Mazda Motor gained 2.93 percent. Panasonic shares retraced most of their 0.7 percent early gain to trade nearly flat.

Japanese gaming giant Nintendo saw some reprieve from share price declines, adding 2.92 percent to 24,670 yen a share following two consecutive sessions of losses as investors appeared somewhat unimpressed by the introduction of its new gaming console, Nintendo Switch.

Japan’s Kyushu Railway made its trading debut on the stock market, with Reuters reporting the shares were initially untraded after the market open on a glut of buy orders. Kyushu Railway eventually opened at 3,100 yen a share, which was 19.23 percent higher than the initial public offering (IPO) price of 2,600 yen, according to Reuters.

As of 1:57 p.m. HK/SIN, Kyushu Railway prices were at 2,989 yen a share.

The Australian dollar fell as low as $0.7586, after climbing to levels near $0.7640 in the Monday session. As of 1:58 p.m. HK/SIN, the pair traded at $0.7631.

The drop in the Australian dollar may have followed declines in commodity prices as the greenback strengthened. But the Aussie recovered, likely as traders were turning their attention toward inflation data due Wednesday.

Markets have little expectation that the Reserve Bank of Australia (RBA) will cut interest rates again any time soon, Lee Sue Ann, an analyst at UOB, said in a note Tuesday.

“We believe it would take a very weak and disappointing inflation number to push the RBA into easing yet further,” she said. “Barring an extremely low third-quarter Australian consumer price index print, the currency pair is likely to stay supported around the 0.760-levels and may drift higher towards 0.770 in the near term.”

Oil prices were mixed in the afternoon during Asian hours after falling in the U.S. session amid renewed oversupply concerns. U.S. crude futures were up 0.10 percent at $50.57 as of 1:59 p.m. HK/SIN, after dropping 0.7 percent overnight and briefly dipping below $50.

Global benchmark Brent was down 0.08 percent at $51.42, after finishing down 0.6 percent during U.S. hours.

Reuters reported Britain’s Buzzard oilfield in the North Sea, which pumps about 180,000 barrels a day, was set to restart on Tuesday or Wednesday, following a month-long planned maintenance outage.

Reuters also reported that Iraq’s oil minister Jabar Ali al-Luaibi said OPEC’s second-largest producer wanted an exemption from output curbs as it needed more money to fight Islamic State militants.

Elsewhere, shares of South Korean memory chip maker SK Hynix climbed 1.62 percent, after the company announced third quarter earnings results for fiscal 2016. Operating profit for the July-September quarter was at 726 billion won ($640.02 million), up 60 percent on-quarter, but down 48 percent on-year. The number, however, beat a Thomson Reuters StarMine SmartEstimate that predicted 672 billion won in operating profit.

The company said shipments increased from new smartphone launches and a better-than-expected demand for personal computers.

The Dow Jones industrial average rose 77.32 points, or 0.43 percent, to close at 18,223.03. The S&P 500 index gained 10.17 points, or 0.47 percent, to end at 2,151.33, while the Nasdaq composite advanced 52.42 points, or 1 percent, to 5,309.83.

Source: CNBC