Asian shares cautious as investors digest the release of China July trade data

Big 5

Asian indexes reversed gains made earlier on Tuesday as investors digested the release of China July trade data during the session.

Japan’s Nikkei 225 slipped 0.30 percent while South Korea’s benchmark Kospi index erased earlier gains to slide 0.10 percent.

In Australia, the S&P/ASX 200 fell 0.72 percent, driven by losses in the energy and industrials sub-indexes, which were 1.38 percent and 1.53 percent lower, respectively. The heavily weighted financials sub-index was down 0.66 percent

Hong Kong’s Hang Seng Index reversed losses to climb 0.12 percent. Indexes on the mainland were mixed following the release of July trade numbers: The Shanghai Composite was off 0.20 percent but the Shenzhen Composite rose 0.183 percent.

With the Tuesday session light on data, investors focused their attention on the release of China July trade data. July exports rose 7.2 percent in dollar terms while imports increased 11.0 percent in dollar terms, Reuters said. Analysts polled by Reuters expected a 10.9 percent rise in Chinese exports in July from a year ago in dollar terms. July imports were forecast to increase 16.6 percent in dollar terms. Still, the miss in dollar-denominated numbers were “not entirely disappointing” as the moderation in trade growth had been anticipated to some extent, Mizuho Bank head of economic and strategy Vishnu Varathan told CNBC.

“The known unknown of how China manages its credit rationalization in view of financial de-risking is far more critical to the economy than an expected moderation in trade,” Varathan added.

The Australian dollar, which is sensitive to Chinese economic data, climbed ahead of the data release, but later gave up most gains. The currency traded at $0.7915 at 12:02 p.m. HK/SIN compared to a low of $0.7902 seen earlier in the session.

Losses eked out by major indexes Tuesday followed what market watchers characterized as a relatively lackluster session in Asia on Monday. ANZ Research attributed the slow Monday session to minimal market moves, a lack of major data releases and the European summer holiday season.

On the earnings front, Japan’s SoftBank said Monday that quarterly operating profits increased 50 percent on year to 479.2 billion yen ($4.33 billion). That followed the company’s inclusion of Vision Fund, a private equity fund, as a segment in its business. SoftBank stock was down 0.85 percent.

In other corporate news, fallout from a banking scandal Down Under remained in the spotlight, with Reuters reporting Tuesday that the Commonwealth Bank of Australia would be scrapping the bonus of its CEO.

CBA earlier blamed a software blunder for a series of transactions that reportedly breached anti-money laundering law, Reuters said. CBA shares fell 1.13 percent, in line with broader declines in Australian banking stocks: ANZ edged down 0.74 percent and National Australia Bank slid 0.36 percent.

Shares of Samsung Electronics shrugged off headlines that Samsung Group Vice Chairman Jay Y. Lee faced charges linked to the bribery of South Korea’s former president Park Geun-hye. A 12-year jail term is being pursued by prosecutors and the South Korean court is expected to make its ruling on Aug. 25, Reuters said Monday.

Samsung Electronics stock rose 0.55 percent while other companies in the group, including Samsung Heavy and Samsung Engineering, were pressured.

Other market movers included Korea Electric Power Corporation, which saw its stock climb 1.14 percent after tumbling more than 1.5 percent earlier in the session. The move in KEPCO shares came after the utilities firm announced Monday that second-quarter net profits had fallen close to 80 percent, according to Yonhap.

Asian corporates expected to report earnings during the day include Hong Kong’s Semiconductor Manufacturing International Corporation.

Meanwhile, the dollar index trended lower to stand at 93.331, a tad above a low of 93.302 seen overnight. The index tracks the dollar against a basket of rival currencies. The greenback was softer against the Japanese currency, with the dollar fetching 110.64 yen at 11:58 a.m. HK/SIN — below levels around the 110.7 handle seen in the previous session.

With the overnight “data void” putting a damper on forex markets, traders are likely focusing on the U.S. consumer price index print due Friday before making major moves, OANDA head of trading Stephen Innes said.

“Given the enormity of inflation metrics in the Fed’s rates outlook, I suspect traders will be reluctant to commit big views prior to the event (this Friday) and even more so given August’s sparse liquidity conditions,” Innes added.

Oil prices extended losses after slipping in the previous session due to supply concerns. Reuters reported Monday that production from Libya’s biggest oil field had recovered after it faced disruptions caused by protesters. Brent crude declined 0.44 percent to trade at $52.14 a barrel and U.S. crude slid 0.4 percent to trade at $49.19 a barrel.

Stateside, major indexes closed higher in the last session as the Dow Jones industrial average recorded its 9th straight record close. The index rose 0.12 percent, or 25.61 points, to close at 22,118.42.

Source: CNBC