Asian stocks turn mixed as markets await MSCI decision on China A-shares
Asian indexes turned mixed on Tuesday as markets awaited MSCI’s decision on the potential inclusion of mainland Chinese stocks, even as the dollar strengthened.
The Nikkei 225 surged 1.1 percent and South Korea’s benchmark Kospi index edged 0.03 percent higher.
Down Under, the S&P/ASX 200 reversed earlier gains to trade lower by 0.4 percent.
Markets in greater China were mixed, with Hong Kong’s Hang Seng Index off by 0.05 percent. On the mainland, the Shanghai Composite edged higher by 0.02 percent and the Shenzhen Composite advanced by 0.383 percent.
Investors are keeping an eye on the decision on whether to include China A-shares in the MSCI Emerging Markets Index. This will be China’s fourth attempt at MSCI inclusion, after being passed over the first three times.
Overnight, the dollar strengthened and U.S. Treasury yields rose on comments from New York Fed President William Dudley expecting that inflation should rise faster going forward, allowing the Fed to proceed with tightening monetary policy.
Chicago Fed President Charles Evans however later said the Fed should move slowly to raise rates and trim its portfolio due to soft inflation.
The dollar edged lower to trade at 97.528 against a basket of rival currencies at 11:13 a.m. HK/SIN after trading as high as 97.615 overnight. Against the yen, the dollar traded at 111.67, hitting its strongest level in three weeks earlier in the session.
Meanwhile, the ratings downgrade of Australia’s banks, including the big four, by Moody’s Investor Services overnight is not expected to affect their funding costs, Reuters quoted Deutsche Bank analysts as saying. The Moody’s downgrade of the banks from AA2 to AA3 aligns with S&P’s existing AA- rating, said National Australia Bank Currency Strategist Rodrigo Catril in a morning note.
Shares of the big four Australian banks were in negative territory. ANZ edged lower by 0.76 percent, National Australia Bank traded 0.79 percent down and Commonwealth Bank of Australia shed 0.77 percent.
The Australian dollar, which initially sold off on the news, traded near overnight lows at $0.7587 at 11:14 a.m. HK/SIN.
As well, the Reserve Bank of Australia released the minutes of its June review that reflected that the central bank was concerned about household debt and wage growth, even though it was positive about growth going forward. The RBA had held cash rates steady earlier this month due to weak growth.
Over in Singapore, Noble Group announced it would be deferring payment on $400 million in perpetual capital securities as it focuses on liquidity. Shares of the commodity trader declined 2.11 percent.
In energy news, oil prices gained slightly after tumbling to a seven-month low overnight. Brent crude rose 0.21 percent to trade at $47.01 a barrel and U.S. West Texas Intermediate crude gained 0.04 percent to trade at $44.24.
Over in Europe, Brexit negotiations began on Monday between the U.K. and the European Union. Few headlines materialized from the talks.
Hong Kong CPI and jobless data for the month of May is due at 4:30 p.m. HK/SIN.
On Wall Street, stocks closed higher on the back of big name tech stocks strengthening.
Source: CNBC
