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Japan Stocks Up Amid Weaker Asian Trade

Published 08/31/2016, 11:18 AM
Updated 03/09/2019, 08:30 AM

Asian equities were mostly down on Wednesday with the exception of Japan, where shares edged higher after a stronger greenback pressed the yen lower.

The Nikkei Stock Average rose 0.8 percent in the previous session, while Australia’s S&P/ASX 200 lost 1.1 percent and Korea’s KOSPI declined 0.3 percent.

“Overall, the market is more cautious than bearish,” a market analyst stated.

The US dollar soared on expectations that the Federal Reserve was hanging closer to increasing interest rates. The greenback jumped 1.1 percent against the Japanese currency in US trade, while the US dollar index – which measures the strength of the currency against a basket of major currencies – reached a one-month high.

This boosted shares of Japanese exporters, which gain from a weaker yen. Toyota Motor Corp Ltd Ord (NYSE:TM) climbed 2.1 percent and Nissan Motor Co., Ltd. (T:7201) was up 1.4 percent. On the other hand, leading camera maker Canon Inc. (NYSE:CAJ) added 1.7 percent.

The hike in Japanese stocks came even as the most recent data suggests that the country’s industrial output remained unchanged in July, underperforming economists estimates for an increase of 0.8 percent, following a 2.3 percent jump in June.

While the country’s stocks have pulled back on concerns of higher US interest rates, market experts claim that fears of capital outflows are excessive. That is due to strong growth and high yields in Japan’s markets would sustain capital in emerging markets.

“The result of U.S. payrolls data will drive market speculation over the upcoming rate hike,” an investment analyst said. The data will possibly determine whether the Federal Reserve will increase interest rates as early as September.

Elsewhere in Asia, the Shanghai Composite Index inched 0.1 percent higher. Hong Kong’s Hang Seng was roughly lower, as Chinese lenders got a lift from their first-half earnings reports.

Hong Kong-traded equities of the Bank of China soared 1.2 percent after it announced late Tuesday a 2.5 percent on-year hike in the first half net profit, boosted by strong growth in fee income.

In Korea, shares of shipping company Hyundai Merchant Marine (KS:011200) rose 21 percent after the government motivated the company to acquire the healthy assets of Hanjin Shipping Co. (KS:117930), which is wavering on the verge of bankruptcy after a move by its creditors to slash financial support.

“The government will actively look for ways for Hyundai to take over ships, business networks and its workforce if Hanjin files for receivership,” explained Jeong Eun-bo, vice chairman of South Korea’s Financial Services Commission.

Meanwhile, shares of Singapore Airlines Ltd. (OTC:SINGY) traded lower for the fourth consecutive session, and was previously down 0.2 percent on the escalation of the Zika virus in the city state.

The company claims almost half of the market share of passenger traffic through Singapore’s Changi Airport.

Mining Equities Led Declines In Asia

Crude Oil traded at $46.33 per barrel on the New York ahead the release of government data on Wednesday, which is a forecast to show US stockpiles added 1.3 million barrels in the previous week. The price soared 11 percent this month amid theory that informal talks among OPEC members in Algeria next month will lead to a production freeze.

On the other hand, gold was on track for a monthly loss of nearly 3 percent as the potential of a Fed rate increase dims the appeal of assets that don’t bear interest.

Copper declined over 6 percent in London since July on fears that global oversupply is worsening. The red metal rose as much as 0.5 percent on Wednesday after Codelco stopped one mine and endured the possibility of a strike at another, threatening interruptions from the world’s top supplier of mined metal.

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