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Asian Markets Mixed As Bond Yields Rise

asiancommentary dec03 16feb21 lt

Asian stock markets are mixed on Wednesday following the lackluster cues overnight from Wall Street. Optimism about more fiscal stimulus and the global economic recovery was offset by worries about rising U.S. bond yields and its impact on riskier assets. Overnight, the yield on the benchmark ten-year Treasury note ended the session at its highest closing level in almost a year.

The Australian market is declining after two straight days of gains, reflecting weakness in tech and gold mining stocks.

The benchmark S&P/ASX 200 Index is losing 39.30 points or 0.57 percent to 6,878.00 and the broader All Ordinaries Index is lower by 40.80 points or 0.57 percent to 7,148.50. Australian stocks rose to an eleven-month high on Tuesday.

In the tech space, Appen is falling almost 8 percent, Afterpay is lower by almost 6 percent and WiseTech Global is losing almost 3 percent.

Gold miners are also sharply lower after gold prices fell overnight. Evolution Mining is tumbling almost 9 percent and Newcrest Mining is losing more than 3 percent.

Meanwhile, the major miners are notably higher as copper prices climbed to a nine-year high. BHP Group is rising more than 3 percent, Fortescue Metals is higher by 3 percent and Rio Tinto is advancing more than 2 percent.

Oil stocks are also higher after crude oil prices rose overnight. Oil Search and Santos are declining almost 1 percent each, while Woodside Petroleum is down 0.3 percent.

Among the big four banks, ANZ Banking is advancing almost 1 percent and National Australia Bank is adding 0.2 percent, while Commonwealth Bank is declining more than 1 percent.

Shares of Westpac are gaining more than 5 percent after the bank said its first-quarter cash earnings surged 54 percent from last year to almost A$2 billion.

Coles Group reported an 8 percent increase in revenue for the first half of the year and also increased the interim dividend, but the supermarket giant's shares are lower by more than 5 percent.

Carsales.com reported a 17 percent increase in adjusted net profit for the first half of the year and raised the interim dividend. However, shares of the online car sales business are declining more than 1 percent.

In economic news, the latest survey from Westpac Bank and the Melbourne Institute revealed that the Australian economy is gradually starting to pick up steam in January, with a leading index forecast of 4.48 percent, up from 4.24 percent in December. The growth rate of the Index continues to point to above trend growth in the Australian economy through 2021.

The Japanese market is also lower after two straight days of gains and despite a weaker yen.

The benchmark Nikkei 225 Index is declining 224.92 points or 0.74 percent to 30,242.83, after touching a low of 30,191.01 in early trades.

Market heavyweight SoftBank Group is declining more than 1 percent and Uniqlo operator Fast Retailing is down 0.5 percent. Among automakers, Honda is adding almost 1 percent, while Toyota is down 0.5 percent.

In the tech space, Tokyo Electron is lower by more than 2 percent and Advantest is down 0.6 percent. In the banking sector, Sumitomo Mitsui Financial is adding 0.3 percent and Mitsubishi UFJ Financial is unchanged.

The major exporters are lower even as the yen fell to a four-month low against the U.S. dollar. Panasonic and Sony are declining almost 1 percent each, while Canon and Mitsubishi Electric are edging down 0.1 percent each.

Among the other major gainers, Nippon Steel is gaining almost 5 percent, while NTN Corp., ANA Holdings, Pacific Metals, Idemitsu Kosan, Citizen Watch and Eneos Holdings are rising more than 4 percent each.

Conversely, Bridgestone is losing more than 5 percent, while Cyberagent and M3 are lower by more than 4 percent each. Japan Steel Works and Bandai Namco Holdings are declining almost 4 percent each.

In economic news, the Cabinet Office said that the total value of core machine orders in Japan gained a seasonally adjusted 5.2 percent on month in December, standing at 899.6 billion yen. That beat expectations for a decline of 6.2 percent following the 1.5 percent increase in November.

The Ministry of Finance said Japan posted a merchandise trade deficit of 323.9 billion yen in January. That beat forecasts for a shortfall of 600 billion yen following the 751 billion yen surplus in December.

Exports advanced 6.4 percent on year to 5,779.832 billion yen, shy of expectations for an increase of 6.6 percent but still up from 2.0 percent in the previous month. Imports were down an annual 9.5 percent to 6,103.693 billion yen versus expectations for a decline of 6.0 percent after sinking 11.6 percent a month earlier.

In the currency market, the U.S. dollar is trading in the lower 106 yen-range on Wednesday.

Elsewhere in Asia, South Korea is declining more than 1 percent, while Singapore and Malaysia are also lower. Taiwan is rising more than 3 percent, while New Zealand, Hong Kong and Indonesia are all higher. The markets in China remain closed for the Lunar New Year holidays.

On Wall Street, stocks closed mixed on Tuesday, with the Dow managing to hold onto a modest gain, while the broader Nasdaq and the S&P 500 slid into negative territory. Optimism about additional stimulus from Washington helped prop up the markets in early trading as Democrats continue to move forward with President Joe Biden's proposed $1.9 trillion relief package. Buying interest waned over the course of the morning, however, leading some traders to cash in on the recent strength in the markets.

While the Dow crept up 64.35 points or 0.2 percent to a new record closing high of 31,522.75, the Nasdaq fell 47.98 points or 0.3 percent to 14,047.50 and the S&P 500 edged down 2.24 points or 0.1 percent to 3,932.59.

The major European markets also turned in a lackluster performance on Tuesday. While the French CAC 40 Index closed just above the unchanged line, the U.K.'s FTSE 100 Index edged down by 0.1 percent and the German DAX Index dipped by 0.3 percent.

Crude oil prices surged higher on Tuesday after a winter storm shut down oil wells and refineries in Texas. WTI crude oil for March delivery climbed $0.58 or about 1 percent to $60.05 a barrel.

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