Asian shares trade mixed as energy stocks take a hit; China leads losses

Asian shares were mixed on Tuesday, with Japan gaining amid the weaker yen and China markets overnight extending losses, as oil prices edged slightly higher after an overnight tumble.

Hong Kong’s Hang Seng Index fell 1 percent amid broad-based losses. Energy led the declines, with CNOOC dropping 2.62 percent and Petrochina losing 2.8 percent. Meanwhile, the Shanghai composite pulled back by 1.01 percent and the Shenzhen composite declined 0.87 percent.

The extended slide came a day after the release of China data, which showed economic growth slowed to 6.7 percent in the second quarter, compared to the 6.8 percent seen in the first three months of the year.

Elsewhere, the Kospi was little changed, last trading higher by 0.04 percent. South Korean auto stocks climbed, with Hyundai Motor up 1.98 percent, but major technology names traded lower. Index bellwether Samsung Electronics edged down by 0.22 percent.

Down Under, the S&P/ASX 200 eased 0.51 percent, with the 2.24 percent drop recorded by the energy subindex weighing on the benchmark after the overnight tumble in oil prices. Oil producers traded lower, with Woodside Petroleum declining 2.22 percent and Santos down 2.3 percent.

The lone bright spot among major markets in the region was the Nikkei 225, which edged higher by 0.92 percent as the yen remained weaker. Most sectors traded higher, with utilities sectors advancing around 2 percent. But amid the broader index climbing, miners and oil-related stocks declined.

MSCI’s broad index of shares in Asia Pacific outside of Japan slipped 0.27 percent in Asia afternoon trade.

Oil nursed its wounds after slumping overnight, with prices having extended losses after U.S. Treasury Secretary Steve Mnuchin said the U.S. will consider waivers on Iran sanctions for some crude importers. The overnight declines in price also came as Libyan ports reopened, although Reuters reported that output at the Sharara oilfield was still expected to fall.

U.S. West Texas Intermediate crude futures were higher by 0.07 percent at $68.11 per barrel after settling more than 4 percent lower on Monday. Brent crude futures tacked on 0.56 percent to $72.24 after touching its lowest level since mid-April overnight.

Even as corporate earnings took center stage, investors continued to keep a wary eye on recent trade disputes between the U.S. and several of its trading partners, most notably China.

“So far, we have not seen enough in the way of implemented tariffs to derail global economic growth … and that’s why you see earnings estimates continuing to rise for the third quarter and for 2018 overall … However, that could change,” Jeffrey Kleintop, chief global investment strategist at Charles Schwab, told CNBC’s “Squawk Box.”

The International Monetary Fund on Monday warned that there was an increased risk of “worse outcomes” amid recent international trade tensions, although it kept its forecasts for global growth this year the same at 3.9 percent.

Stocks stateside finished Monday mixed as earnings season shifted into high gear this week, with the financial sector getting a boost on the back of Bank of America reporting expectation-topping earnings and revenue.

On the whole, analysts expect second-quarter earnings to grow 20 percent from one year ago, according to a FactSet poll.

In currencies, the dollar index, which tracks the greenback against a basket of six major currencies, softened to trade at 94.473, compared to levels at the 94.5 handle on Monday. Against the yen, the dollar was a touch firmer at 112.37 at 12:20 p.m. HK/SIN, above the 112.2 handle seen in the last session.

Those moves came before Federal Reserve Chairman Jerome Powell’s semiannual congressional testimony on Tuesday during U.S. hours.

Source: CNBC