Asian stocks trade mixed as early gains fade; yuan softens

Asian stocks traded mixed on Thursday, with some markets losing steam after initially trading higher on the back of Wall Street’s earnings-led advance.

The Nikkei 225 slipped into negative territory after gaining during morning trade, with the index last lower by 0.11 percent. The mining sector rose 3.12 percent, but declines in consumer stocks weighed on the benchmark. Banks, steelmakers and semiconductor industry plays held onto gains, with Advantest rising 2.91 percent.

Over in South Korea, the Kospi edged lower by 0.19 despite large cap tech stocks advancing. Steelmakers dropped after the European Union said it would initiate measures to target steel imports after the U.S. administration imposed tariffs on steel and aluminum earlier this year. Posco traded lower by 1.72 percent.

Hong Kong’s Hang Seng Index hovered around the flat line as financials and energy sector gains were offset by declines in industrials and consumer stocks.

The index was last higher by 0.02 percent. On the mainland, the Shanghai composite shed 0.54 percent, with Thursday’s declines coming on the back of four consecutive sessions of losses.

Elsewhere, Australia’s S&P/ASX 200 advanced 0.43 percent as industrials and heavily weighted financials rose. Southeast Asian indexes were also in the money, with Singapore’s Straits Times Index gaining 0.96 percent and Malaysia’s KLCI higher by 0.47 percent.

MSCI’s index of shares in Asia Pacific outside of Japan added 0.13 percent in the afternoon.

The mixed trade came after markets stateside closed higher for the most part on Wednesday as stocks were buoyed by strong corporate earnings reports from Morgan Stanley and rail transportation company CSX. Both posted stronger-than-expected results in the second quarter. Sector-wise, financials led the climb, while technology stocks declined.

Analysts at FactSet expect S&P 500 earnings to have grown by 20 percent in the second quarter. With slightly more than nine percent of S&P 500 companies having released their latest set of results, earnings have grown 22.1 percent.

Meanwhile, Federal Reserve Chairman Jerome Powell mostly reinforced his upbeat view on the U.S. economy in his second testimony to congress in the week. Analysts, however, pointed out that Powell had said the U.S. was not quite at full employment.

On the trade front, White House economic advisor Larry Kudlow said trade talks with China have stalled.

“I think this is still part of the negotiation. We’re taking some kind of extreme views. I’m hoping cooler heads prevail and realize that we need to reach some kind of agreement because we do not want to derail the global economy. Obviously nobody is going to benefit if we teeter into a global recession,” Jack McIntyre, portfolio manager at Brandywine Global Investment Management, told CNBC’s “Squawk Box.”

However, negotiations with other trading partners could prove to be more promising, with Kudlow adding that a trade offer from the European Union was in the works. Also of note, Trump on Wednesday said the U.S. could “do a deal separately” with Mexico and Canada, raising questions over the fate of the North American Free Trade Agreement (NAFTA).

The dollar index, which tracks the dollar against a basket of currencies, slipped from a three-week high but stayed above the 95 handle at 95.021. Meanwhile, the yen was firmer by 0.1 percent to the dollar at 112.67 after touching its lowest level in around six months in the last session.

The Australian dollar got a boost on the back of better-than-expected jobs data, trading at $0.7426 at 12:11 p.m. HK/SIN, almost 0.4 percent above its Wednesday close.

Meanwhile, the yuan slipped further against the dollar after the Chinese central bank set the official mid-point at 6.7066 to the dollar, past the key 6.7 level.

The on-shore yuan traded at 6.7358 to the dollar at 12:08 p.m. HK/SIN, nearly 0.3 percent weaker than its last close.

On the energy front, oil prices were mostly steady after an unexpected rise in U.S. crude inventories was overshadowed by strong U.S. demand data for gasoline overnight.

U.S. crude futures edged up by 0.07 percent to trade at $68.81 per barrel and Brent crude was slipped 0.18 percent to trade at $72.77. Both contracts settled higher by one percent on Wednesday.

On the economic front, Indonesia’s central bank will announce its interest rates decision later in the day

Source: CNBC