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Asian Markets Mostly Lower On U.S.-China Tensions

asiancommentary jan22 28may20 lt

Asian stock markets are lower on Friday as worries about rising U.S.-China tensions more than offset optimism about a recovery in growth as more economies reopen.
China approved a controversial national security law for Hong Kong on Thursday, triggering concerns that the new law will end the city's autonomy. In response, U.S. President Donald Trump said he plans to hold a news conference about China later today.

The Australian stock market is declining on worries about rising U.S.-China tensions.

The benchmark S&P/ASX 200 Index is losing 73.10 points or 1.25 percent to 5,778.00 and the broader All Ordinaries Index is lower by 70.50 points or 1.18 percent to 5,887.30. Australian stocks closed notably higher on Thursday.

The big four banks are sharply lower after four days of strong gains. Westpac, National Australia Bank and ANZ Banking are lower in a range of 2.5 percent to 3.6 percnt, while Commonwealth Bank is down almost 1 percent.

Westpac said that the chief executive of its institutional bank, Lyn Cobley, is retiring and a search is on for her replacement.

In the oil sector, Woodside Petroleum and Oil Search are declining more than 1 percent each, while Santos is down almost 1 percent even as crude oil prices rose overnight.

Among the major miners, Fortescue Metals and Rio Tinto are adding 0.2 percent each, while BHP is down 0.5 percent.

Gold miners are higher even after gold prices edged up overnight. Evolution Mining is rising almost 3 percent and Newcrest Mining is higher by more than 1 percent.

Austal has raised its earnings and revenue outlook for fiscal 2020, citing continued strong performance across its business. The shipbuilder's shares are gaining more than 12 percent.

On the economic front, Australia will see April figures for private sector credit today.

In the currency market, the Australian dollar is higher against the U.S. dollar on Friday. The local unit was quoted at $0.6627, compared to Thursday's close of $0.6613.

The Japanese market is losing, while the safe-haven yen strengthened amid worries about rising U.S.-China tensions. Investors also turned cautious as they digested a raft of local economic data, including weak industrial output and retail sales data for April.

The benchmark Nikkei 225 Index is down 144.48 points or 0.66 percent to 21,771.83, after touching a low of 21,710.80 earlier. Japanese shares extended gains to close at a fresh three-month high on Thursday.

Market heavyweight SoftBank Group is adding 0.2 percent and Fast Retailing is edging up 0.1 percent.

The major exporters are mostly lower on a stronger yen. Canon is losing more than 3 percent, while Panasonic and Mitsubishi Electric are declining more than 1 percent each. Sony is adding almost 1 percent.

In the tech space, Advantest is lower by more than 3 percent and Tokyo Electron is declining more than 2 percent. Among automakers, Honda Motor is lower by more than 2 percent and Toyota is down 1 percent.

In the oil sector, Inpex is losing 2 percent, while Japan Petroleum is adding 0.2 percent even as crude oil prices rose almost 3 percent overnight.

Among the major gainers, Toppan Printing is rising more than 5 percent, Otsuka Holdings is gaining almost 3 percent and Daiichi Sankyo is higher by more than 2 percent.

On the flip side, Nikon Corp. is tumbling almost 10 percent after its full-year net profit plunged 88 percent from last year and the company said it cut 700 jobs in Southeast Asia as part of a restructuring of its digital camera business.

Nissan Motor is losing more than 8 percent after reporting a loss for the full year. Mitsubishi Motors is lower by more than 6 percent and Mazda Motor is down almost 6 percent.

In economic news, Japan's industrial output skidded a seasonally adjusted 9.1 percent in April. That missed expectations for a decline of 5.1 percent following the 3.7 percent drop in March.

The total value of retail sales in Japan was down a seasonally adjusted 9.6 percent on month in April, shy of expectations for a decline of 7.0 percent following the 4.5 percent drop in March.

The unemployment rate in Japan came in at a seasonally adjusted 2.6 percent in April, beneath expectations for 2.7 percent, but up from 2.5 percent in March.

Overall consumer prices in Japan were up 0.4 percent on year in May, exceeding expectations for an increase of 0.2 percent, which would have been unchanged from the April reading. Core CPI, which excludes volatile food costs, gained an annual 0.2 percent versus forecasts for a decline of 0.2 percent after easing 0.1 percent in the previous month.

In the currency market, the U.S. dollar is trading in the mid 107 yen-range on Friday.

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

On Wall Street, stocks closed lower on Thursday in a late-day pullback after President Donald Trump announced plans to hold a news conference about China on Friday. China has recently stepped up efforts to curtail Hong Kong's independence, raising concerns that Trump may announce new measures that ramp up recent tensions with China. The strength seen for much of the day came following the release of a report from the Labor Department showing a continued decrease in first-time claims for unemployment benefits in the week ended May 23.

The Dow fell 147.63 points or 0.6 percent to 25,400.64, the Nasdaq slid 43.37 points or 0.5 percent to 9,368.99 and the S&P 500 dipped 6.40 points or 0.2 percent to 3,029.73.

Meanwhile, the major European markets moved to the upside on Thursday. While the French CAC 40 Index surged up by 1.8 percent, the U.K.'s FTSE 100 Index and the German DAX Index jumped by 1.2 percent and 1.1 percent, respectively.

Crude oil prices moved higher on Thursday, driven by data showing a drop in gasoline inventories in the U.S, amid an increase in demand thanks to reopening of businesses in almost all the states in the country. WTI crude for July added $0.90 or about 2.7 percent at $33.71 a barrel.

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