Asia mixed in afternoon trade, Australian retail sales record unexpected fall

Asia traded mixed on Thursday, with some Australian retailers faltering after lower-than-expected sales data showed consumers Down Under were cutting back.

Data from the Australian Bureau of Statistics showed the country’s retail turnover fell 0.6 percent in August. There were declines in food retailing, cafes, restaurants and takeaway food services, household goods and clothing, footwear and personal accessory. Sectors that saw an increase included department stores.

According to Reuters, the August number fell short of a market expectation for a 0.3 percent increase and was the worst sales figure since early 2013. Meanwhile, July’s retail sales figure was revised down to 0.2 percent fall.

“The big question for the outlook is why retail sales as a whole fell in August?” Tapas Strickland, an economist at the National Australia Bank (NAB), wrote in a note. “NAB’s transaction data suggested this, however there was no obvious macro events to explain such weakness.”

Strickland added it was possible that higher energy prices and “warnings that the next move in interest rates is likely to be up” could have played a role in the downward trend.

“Overall, the trend in retail is likely to remain subdued until wages begin to strengthen given debt levels and a hesitant consumer, while online retail will continue to challenge bricks and mortar retailers,” Strickland said.

Australian retail stocks were mixed following the data, with Myer shares closing down 1.3 percent, Harvey Norman off 0.52 percent and JB Hi-Fi down 0.74 percent. Shares of of Metcash rose 1.63 percent, Wesfarmers added 0.32 percent and Woolworths gained 0.53 percent. The broader benchmark ASX 200 finished flat at 5,651.8. The heavily-weighted financial sector slipped fractionally, down 0.2 percent.

Shares of the so-called Big Four banks were lower: ANZ was down 0.51 percent, Commonwealth Bank was down 0.11 percent, Westpac off by 0.44 percent and the National Australia Bank declined 0.45 percent.

On a more positive note Down Under, Australian trade recorded a seasonally adjusted surplus of 989 million Australian dollars ($774.81 million) in August, topping a Reuters market forecast of A$875 million.

“The improvement in the trade balance was driven by a solid rise in the value of exports — up 0.5 percent (on-month) in August — with stronger exports of metal ores and minerals … and a solid pickup in export services driving the gains,” said economists Giulia Specchia and Daniel Gradwell from ANZ in a note.

The Australian dollar slipped from levels near $0.786 to below $0.784 following the data release, but it then recovered slightly. At 1:12 p.m. HK/SIN, the Aussie traded at $0.7831.

Elsewhere, Japan’s Nikkei 225 gave up early gains of more than 0.1 percent to trade near flat, while the Topix index was down 0.17 percent.

The session in Asia followed a record-high close for U.S. equities overnight. Markets in China, Hong Kong and South Korea are shut for public holidays.

“It seems markets are treading water ahead of [U.S. nonfarm] payrolls on Friday given more than usual uncertainty over the numbers due to possible hurricane effects,” NAB’s Strickland wrote in an earlier note about the overnight session in the U.S.

The dollar traded at 93.467 against a basket of currencies, climbing from levels near 93.25 previously. The greenback was still off from levels above 93.600 reached earlier in the week.

“Stronger than expected U.S. data helped the greenback shake off its initial weakness to end the New York trading session much closer to its highs than lows,” Kathy Lien, managing director of foreign exchange strategy at BK Asset Management, said in a note. Lien added that the greenback “should actually be trading much higher given the unexpected strength of the non-manufacturing ISM report.”

Among other currency majors, the Japanese yen traded at 112.73 to the dollar and the euro last traded at $1.1761.

The Indian rupee last traded at 65.12 to the dollar, after the Reserve Bank of India held rates on Wednesday, which was largely in line with expectations. The central bank, however, reduced India’s growth outlook for fiscal 2018 from 7.3 percent to 6.7 percent.

Morgan Stanley analysts said in a note that it was unlikely the central bank would “take up any further easing measures.”

“This has been reaffirmed by the [Monetary Policy Committee] statement, which highlighted an inflation trajectory that is expected to rise above the central bank’s target,” the analysts wrote.

Meanwhile, oil prices traded mixed on Thursday afternoon Asia time. U.S. crude was below the psychologically key $50 mark, trading down 0.1 percent at $49.93 a barrel. Global benchmark Brent was near flat at $55.82 a barrel.

Russia’s energy minister told CNBC recently that OPEC has successfully implemented its agreed production cuts to tackle the global supply glut in the oil market that had dampened prices.

Along with de-facto OPEC leader Saudi Arabia, Russia made waves last year when they agreed — alongside the rest of OPEC — to cut output in order to stabilize and support prices. In June 2017, the oil producers agreed to extend those cuts until March 2018.

Source: CNBC