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Asian Markets Mixed Amid Cautious Trades

asiancommentary aug16 28jul20 lt

Asian stock markets are mixed on Wednesday following the negative cues overnight from Wall Street amid uncertainty about a U.S. coronavirus relief bill. Investors also turned cautious ahead of the U.S. Federal Reserve's monetary policy decision due later in the day.

While the Fed is widely expected to leave interest rates unchanged, investors may look to the accompanying statement for clues about future plans to provide additional economic stimulus.

The Australian market slipped into negative territory after opening higher.

The benchmark S&P/ASX 200 Index is declining 16.40 points or 0.27 percent to 6,004.10, after rising to a high of 6,051.10 earlier. The broader All Ordinaries Index is down 21.20 points or 0.34 percent to 6,125.60. Australian stocks gave up early gains to close lower on Tuesday.

Among the major miners, BHP Group is losing more than 1 percent, Rio Tinto is lower by almost 1 percent and Fortescue Metals is down 0.3 percent.

In the oil sector, Oil Search is lower by almost 1 percent, while Santos and Woodside Petroleum are down 0.5 percent each after crude oil prices declined overnight.

Meanwhile, the big four banks are notably higher. ANZ Banking, National Australia Bank and Westpac are higher in a range of 2.2 percent to 2.8 percent, while Commonwealth Bank is advancing almost 2 percent.

Australia's financial services regulator APRA has eased restrictions regarding dividend payouts by banks and insurers, but urged them to moderate payments to sustainable levels.

Gold miners are also higher after safe-haven gold prices rose to another record high overnight. Evolution Mining is adding more than 1 percent and Newcrest Mining is advancing almost 1 percent.

Downer EDI said it has won contracts worth A$324 million from companies such as BHP, Santos and Wesfarmers across the electricity, industrial and oil and gas sectors. However, the industrial services provider's shares are down 0.2 percent.

CIMIC Group said it is in advanced talks with an affiliate of investment firm Elliot Management regarding the sale of a 50 percent stake in its mining services business, Theiss. The engineering contractor's shares are rising more than 1 percent.

On the economic front, the Australian Bureau of Statistics said that consumer prices in Australia were down 0.3 percent on year in the second quarter of 2020. That beat expectations for a drop of 0.4 percent following the 2.2 percent increase in the previous three months.

In the currency market, the Australian dollar is higher against the U.S. dollar on Wednesday. The local unit was quoted at $0.7167, compared to $0.7132 on Tuesday.

The Japanese market is declining and the safe-haven yen strengthened following the negative cues from Wall Street. Weak earnings results from major Japanese companies also dampened sentiment.

The benchmark Nikkei 225 Index is losing 155.16 points or 0.68 percent to 22,502.22, after falling to a low of 22,471.16 in early trades.

The major exporters are lower on a stronger yen. Panasonic is declining almost 1 percent, while Sony and Mitsubishi Electric are down 0.7 percent each.

Canon is tumbling more than 11 percent after the digital camera maker reported a loss for the second quarter and forecast a 65 percent fall in full-year profit.

Automaker Nissan Motor is losing more than 9 percent after reporting a loss for the first quarter and projecting a loss for fiscal 2020.

Market heavyweight SoftBank Group and Fast Retailing are advancing almost 1 percent each. In the tech space, Tokyo Electron and Advantest are adding almost 1 percent each.

In the financial sector, Mitsubishi UFJ Financial is adding 0.4 percent, while Sumitomo Mitsui Financial is down 0.3 percent. Among automakers, Toyota is losing more than 2 percent and Honda is lower by 0.2 percent.

In the oil sector, Japan Petroleum is down 0.3 percent and Inpex is edging up 0.1 percent after crude oil prices declined overnight.

Among the other major gainers, Chughai Pharmaceutical is rising more than 3 percent, Tokyo Gas is higher by almost 3 percent and Sumitomo Realty & Development is advancing almost 2 percent.

Conversely, Fanuc Corp. is lower by more than 8 percent and Konica Minolta is declining almost 6 percent.

In the currency market, the U.S. dollar is trading in the lower 105 yen-range on Wednesday.

Elsewhere in Asia, Singapore, Indonesia and Taiwan are also lower. Shanghai is advancing more than 1 percent, while South Korea, New Zealand, Malaysia and Hong Kong are modestly higher.

On Wall Street, stocks closed lower on Tuesday as traders kept an eye on developments in Washington after Republicans unveiled their version of a new coronavirus relief bill, which includes another $1,200 stimulus payment to Americans as well as more funding for the Paycheck Protection Program. However, it also slashes unemployment benefits and provides liability protections for businesses and doctors, which could lead to an impasse in negotiations with Democrats. A negative reaction to earnings news from Dow components 3M and McDonald's also contributed to the weakness on Wall Street.

The Dow slid 205.49 points or 0.8 percent to 26,379.28, the Nasdaq tumbled 134.18 points or 1.3 percent to 10,402.09 and the S&P 500 fell 20.97 points or 0.7 percent to 3,218.44.

The major European markets ended mixed on Tuesday. The U.K.'s FTSE 100 Index rose by 0.4 percent, while the German DAX Index closed just below the unchanged line and the French CAC 40 Index dipped by 0.2 percent.

Crude oil futures settled lower on Tuesday amid concerns about the outlook for near-term energy demand due to the surge in coronavirus cases and fears of fresh lockdown measures. WTI crude for September declined $0.56 or about 1.4 percent to $41.04 a barrel.

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