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Asian Markets Mostly Lower Amid Geopolitical Tensions

asiancommentary dec21 13jun19 lt

Asian stock markets are mostly lower on Friday despite the positive cues overnight from Wall Street. Worries about rising tensions in the Middle East weighed on investor sentiment after two oil tankers were attacked in the Gulf of Oman on Thursday. The U.S. blamed Iran for the attacks and said it will defend its forces and interests in the Middle East.

The Australian market is modestly higher in choppy trade following the positive cues from Wall Street and higher commodity prices. Weakness in the banking sector was offset by gains in mining and oil stocks.

The benchmark S&P/ASX 200 Index is adding 6.40 points or 0.10 percent to 6,548.80, after touching a low of 6,533.00 earlier. The broader All Ordinaries Index is up 9.50 points or 0.14 percent to 6,628.60. Australian stocks fluctuated before ending lower on Thursday.

Among the big four banks, ANZ Banking, Westpac, National Australia Bank and Commonwealth Bank are declining a range of 1 percent to 1.6 percent.

The Australian Prudential Regulation Authority or APRA has issued new license conditions on AMP's pension fund units after the Hayne royal commission inquiry revealed misconduct by the company's management. The wealth manager's shares are losing almost 4 percent.

In the mining space, Fortescue Metals is rising more than 3 percent, while BHP Group and Rio Tinto are advancing more than 1 percent each.

Gold miners are higher after gold prices rose for a third straight session overnight. Evolution Mining and Newcrest Mining are higher by more than 1 percent each.

Oil stocks also advanced after crude oil prices rebounded overnight. Woodside Petroleum is rising more than 2 percent, while Santos is advancing almost 2 percent and Oil Search is higher by more than 1 percent.

McGrath said it expects a full-year core earnings loss of A$6 million to A$6.5 million due to challenging conditions in Australia's housing market and also announced the appointment of Howard Herman as chief financial officer with effect from June 24, 2019. The realtor's shares are unchanged.

In the currency market, the Australian dollar is edging lower against the U.S dollar on Friday. The local currency was quoted at $0.6912, up from $0.6909 on Thursday.

The Japanese market recovered after a weak start and is higher following the positive lead from Wall Street. However, gains are modest amid worries about rising tensions in the Middle East.

The benchmark Nikkei 225 Index is adding 55.41 points or 0.26 percent to 21,087.41, after touching a low of 20,971.18 in early trades. Japanese shares declined on Thursday.

The major exporters are mostly higher despite a stronger yen. Sony is rising more than 3 percent, Panasonic is adding 0.4 percent and Canon is up 0.2 percent, while Mitsubishi Electric is down 0.3 percent.

Among tech stocks, Tokyo Electron is losing more than 2 percent and Advantest is lower by almost 2 percent.

Market heavyweight SoftBank is up 0.2 percent and Fast Retailing is advancing more than 1 percent. In the auto space, Toyota Motor is up 0.7 percent and Honda Motor is adding 0.5 percent.

In the banking sector, Mitsubishi UFJ Financial is edging up 0.1 percent and Sumitomo Mitsui Financial is rising 0.3 percent. In the oil sector, Inpex and Japan Petroleum are advancing more than 1 percent each after crude oil prices rebounded overnight.

Among the other major gainers, Chiyoda Corp. is rising more than 5 percent, while Mitsui E&S, Idemitsu Kosan and Yamaha Corp. are all advancing more than 2 percent each.

On the flip side, Tokyo Dome is losing more than 4 percent, Okuma Corp. is lower by almost 3 percent and Nippon Yusen is declining more than 2 percent.

In economic news, Japan will see final April numbers for industrial production today.

In the currency market, the U.S. dollar is trading in the lower 108 yen-range on Friday.

Elsewhere in Asia, Shanghai, South Korea, Singapore, New Zealand, Indonesia, Malaysia, Hong Kong and Taiwan are all modestly lower.

On Wall Street, stocks closed higher on Thursday amid continued optimism that tame inflation will lead the Federal Reserve to cut interest rates after a Labor Department report showed bigger than expected decreases in U.S. import and export prices.

Meanwhile, a separate report from the Labor Department said first-time claims for U.S. unemployment benefits unexpectedly edged higher in the week ended June 8.

The Dow rose 101.94 points or 0.4 percent to 26,106.77, the Nasdaq advanced 44.41 points or 0.6 percent to 7,837.13 and the S&P 500 climbed 11.80 points or 0.4 percent to 2,891.64.

The major European markets saw modest strength on Thursday. While the German DAX Index rose by 0.4 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index both closed just above the unchanged line.

Crude oil prices rebounded on Thursday after closing at five-month lows in the previous session, as reports about attack on oil tankers in the Gulf of Oman suggested a likely fall in crude supply in the international market. WTI crude for July delivery jumped $1.14 or 2.2 percent to $52.28 a barrel on the New York Mercantile Exchange.

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