Asia markets edge up, Toshiba shares tumble more than 10%

Big 5

Asian markets traded mostly higher Wednesday, tracking U.S. gains following remarks from Federal Reserve Chair Janet Yellen, but shares of Toshiba tumbled.

Toshiba shares dropped 10.4 percent in the morning session in Tokyo after Reuters reported the company expected to book a $6.3 billion hit to its U.S. nuclear unit and expected to sell more of its prized flash-memory chip business to urgently raise funds.

Reuters added, citing a source, that the Japanese company’s loans from banks and insurers stood at $7 billion.

Nomura said in a note dated Feb. 14, it was changing its rating on Toshiba from Buy to Suspended. Analyst Masaya Yamasaki said in the note that Nomura’s view on Toshiba had centered on the potential for the memory business.

“The company announced for the first time today that it is considering selling a majority stake in the memory business along with other options for injecting capital from outside sources, making it difficult to price in the memory business’ potential,” said Yamasaki.

Meanwhile, the Wall Street Journal reported that Toshiba chairman Shigenori Shiga would resign from his post effective Wednesday, while the former chief executive of Toshiba’s U.S. nuclear-plant business Westinghouse Electric, Danny Roderick, was stripped of his executive post, the Journal said.

In other Japanese corporate activity, internet and telecom giant SoftBank announced a $3.3 billion cash acquisition of asset manager Fortress Investment Group. SoftBank shares climbed 1.16 percent to 8,634.0 yen.

Japanese banks and financial companies beat the broader stock average, with Mitsubishi UFJ up 2.33 percent, SMFG up 2.17 percent and Mizuho Financial gaining 1.63 percent.

Broadly, the Nikkei Stock Average climbed 1.22 percent, while the Topix traded up 1.11 percent. Across the Korean Strait, the Kospi was up 0.42 percent.

In Hong Kong, the Hang Seng index added 1.26 percent, while Chinese mainland shares were mostly positive.

The Shanghai composite was up 0.25 percent, while the Shenzhen composite traded nearly flat at 1,963.88.

Australia’s benchmark ASX 200 climbed 1.03 percent, as most sectors traded higher.

The heavily-weighted financial sector was up 1.92 percent, with major banks gaining more than one percent for each.

Shares of ANZ gained 1.82 percent, Commonwealth Bank of Australia rose 2.65 percent, Westpac added 2.11 percent and the National Australia Bank climbed 2.36 percent.

Major miner BHP Billiton gained 1.56 percent in afternoon trade.

Reuters reported that striking workers at Chile’s massive Escondida copper mine and BHP, which operates the mine, have agreed to renew talks on Wednesday.

The mine produced over one million tonnes of copper, about five percent of the world’s total in 2016, according to Reuters.

Copper prices rose 0.58 percent to $6,056 a tonne on Wednesday morning, after falling to $6,021 in the previous session.

Fed Chair Yellen said in prepared remarks to Congress that waiting too long to raise interest rates would be unwise, given the rise in inflation and economic growth.

Rodrigo Catril, a currency strategist at the National Australia Bank, said in a note the remarks “triggered a sell-off in U.S. Treasury yields and a broad dollar rally as she left the door open for a rate hike as soon as the next Federal Open Market Committee meeting in March.”

The dollar climbed against a basket of currencies to trade at 101.20 at 11:30 a.m. HK/SIN on Wednesday, from levels below 100.8 in the previous session.

Among major currency pairs, the yen weakened slightly against the dollar to trade at 114.32, down from an earlier high of 114.19. The euro fetched $1.0577, while the Australian dollar traded at $0.7674.

Some analysts believe the dollar could extend gains as Yellen continues her testimony before Congress on Wednesday.

On Wall Street on Tuesday, the Dow Jones industrial average rose 92.25 points, or 0.45 percent, to end at 20,504.41.

The S&P 500 index gained 9.33 points, or 0.40 percent, to close at 2,337.58, while the Nasdaq advanced 18.62 points, or 0.32 percent, to end at 5,782.57.

Source: CNBC