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Asian Markets Mostly Lower Amid Cautious Trades

asiancommentary jan02 08jul19 lt

Asian stock markets are mostly lower on Tuesday following the negative cues overnight from Wall Street on waning optimism about a near-term interest rate cut by the Federal Reserve and reflecting a notable drop by shares of Apple and Boeing.

Investors remained cautious as they look ahead to the U.S. Federal Reserve Chairman Jerome Powell's congressional testimony later this week for clues on monetary policy. Powell is due to testify before the House Financial Services Committee on Wednesday and before the Senate Banking Committee on Thursday.

The Australian market is flat following the weak cues from Wall Street. Gains by miners were offset by weakness in the banking and oil sectors.

The benchmark S&P/ASX 200 Index is declining 3.20 points or 0.05 percent to 6669.00, after touching a low of 6,666.50 earlier. The broader All Ordinaries Index is down 1.40 points or 0.02 percent to 6,756.00. Australian stocks pulled back sharply on Monday to suffer their biggest intraday fall in five weeks.

Among the major miners, BHP Group and Fortescue Metals are advancing almost 2 percent each, while Rio Tinto is higher by more than 1 percent after a surge in iron ore prices.

The big four banks - ANZ Banking, National Australia Bank, Westpac and Commonwealth Bank - are lower in a range of 0.2 percent to 0.7 percent.

The Australian Prudential Regulation Authority or APRA said that the big four banks will have to lift total capital by 3 percentage points for risk-weighted assets by 2024, compared to a 4 percent to 5 percent increase in an initial proposal in November.

In the oil sector, Santos is lower by 0.4 percent, Oil Search is declining 0.3 percent and Woodside Petroleum is down 0.2 percent despite a modest increase in crude oil prices.

Gold miners are mixed after gold prices edged down overnight. Newcrest Mining is lower by more than 1 percent while Evolution Mining is adding 0.7 percent.

Bega Cheese said its executive chairman Barry Irvin will extend his leave by six months as he undergoes chemotherapy and it has appointed Max Roberts as his alternate director and chairman in his absence. The dairy processor's shares are rising 0.2 percent.

In economic news, Australia will see June results for the indexes of business confidence and conditions from National Australia Bank today.

In the currency market, the Australian dollar is lower against the U.S dollar on Tuesday. The local currency was quoted at $0.6973, compared to $0.6986 on Monday.

The Japanese market is advancing despite the weak cues from Wall Street, as a weaker yen boosted shares of exporters. Nevertheless, investors are cautious ahead of Powell's congressional testimony this week.

The benchmark Nikkei 225 Index is adding 89.29 points or 0.41 percent to 21,623.64, after rising to a high of 21,687.29 earlier. Japanese shares fell on Monday.

The major exporters are mostly higher on a weaker yen. Sony and Mitsubishi Electric are adding 0.5 percent each, while Panasonic is rising 0.4 percent. Canon is down 0.3 percent.

Among tech stocks, Advantest is unchanged and Tokyo Electron is declining 1 percent.

Shares of Apple suppliers are weak following a notable drop by shares of the tech giant overnight. Nitto Denko is lower by almost 2 percent, while Alps Alpine and TDK Corp. are declining more than 1 percent each. Nidec is losing almost 1 percent and Kyocera is down 0.6 percent.

In the oil sector, Inpex is adding almost 1 percent and Japan Petroleum is advancing more than 1 percent.

Market heavyweight SoftBank is rising more than 1 percent and Fast Retailing is higher by 1 percent. In the auto space, Honda Motor is adding 0.4 percent and Toyota Motor is up 0.1 percent.

Among the other major gainers, FamilyMart UNY is gaining almost 4 percent, Terumo Corp. is higher by more than 3 percent and JXTG Holdings is advancing almost 3 percent.

On the flip side, Yaskawa Electric and Suzuki Motor are declining more than 2 percent each, while Toray Industries, Taiyo Yuden and Mitsui Chemicals are lower by 2 percent each.

In economic news, the Bank of Japan said that the M2 money stock in Japan was up 2.3 percent on year in June, coming in at 1,029.6 trillion yen. That was shy of expectations for a gain of 2.6 percent, which would have been unchanged from the May reading following a downward revision from 2.7 percent.

The M3 money stock was up an annual 2.0 percent to 1,362.4 trillion yen - again missing forecasts for 2.3 percent, which also would have been unchanged from the previous month.

Japan will also release May numbers for labor cash earnings today.

In the currency market, the U.S. dollar is trading in the upper 108 yen range on Tuesday.

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

On Wall Street, stocks closed lower on Monday, partly reflecting waning optimism about a near-term interest rate cut following last Friday's much better than expected jobs data.

A notable drop by Apple also weighed on the markets after Rosenblatt Securities downgraded its rating on the tech giant's stock to Sell from Neutral. Fellow Dow component Boeing also fell after Saudi Arabia's flyadeal became the first airline to officially cancel an order for the beleaguered aerospace giant's 737 MAX aircraft.

The Dow slid 115.98 points or 0.4 percent to 26,806.14, the Nasdaq slumped 63.41 points or 0.8 percent to 8,098.38 and the S&P 500 fell 14.46 points or 0.5 percent to 2,975.95.

The major European markets showed more modest moves to the downside on Monday. While the German DAX Index dipped by 0.2 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index both edged down by 0.1 percent.

Crude oil futures settled modestly higher on Monday amid rising geopolitical tensions and on hopes there will some monetary easing by the Federal Reserve this month. WTI crude for August added $0.15 or about 0.3 percent to close at $57.66 a barrel.

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