Asian Markets Mostly Lower Amid Cautious Trade

Asian stock markets are mostly lower on Tuesday, following the mixed cues from Wall Street overnight. Investors await key U.S. inflation data due on Thursday for more indications about the Fed’s policy outlook and cues about the global economic recovery. The coronavirus infection rate in the region is also keeping the underlying mood cautious. Asian stocks ended mixed on Monday.

The U.S. Treasury Secretary Janet Yellen said a “slightly higher” interest rate environment would be an advantage to the economy.

The Australian stock market is modestly lower after alternating between red and green in choppy trading on Tuesday, with the benchmark S&P/ASX 200 falling below the 7,300 level after hitting fresh all-time highs, as local data showed that business sentiment eased from last month’s record highs. Meanwhile, traders are optimistic as domestic new coronavirus cases declined.

New COVID-19 infection cases in the country’s second-most populous state of Victoria were just two, both linked to the current outbreaks. Currently, there are 92 active cases in the state after the lockdown was extended in Melbourne area.

The benchmark S&P/ASX 200 Index is losing 12.30 points or 0.17 percent to 7,269.60, after touching a high of 7,315.60 earlier. The broader All Ordinaries Index is down 10.40 points or 0.14 percent to 7,521.20. Australian markets ended slightly lower on Monday.

Among the major miners, BHP Group is losing almost 1 percent, Rio Tinto is edging down 0.2 percent, and OZ Minerals is down more than 1 percent, while Mineral Resources is gaining almost 1 percent. Fortescue Metals is flat.

Oil stocks are lower after crude oil prices tumbled overnight. Oil Search and Origin Energy are flat, while Santos and Beach energy are edging down 0.2 percent each. Woodside Petroleum is down 0.5 percent.

Among the big four banks, ANZ Banking is flat and National Australia Bank is gaining almost 1 percent, while Commonwealth Bank is edging down 0.3 percent. Westpac is edging up 0.4 percent after it joined rivals in raising interest rates on fixed mortgages.

Among tech stocks, Afterpay and WiseTech Global are gaining almost 2 percent each, while Appen is losing almost 1 percent. Xero is adding more than 1 percent.

Gold miners are mostly higher, with Gold Road Resources and Northern Star Resources gaining more than 1 percent each, while Newcrest Mining is adding almost 1 percent. Resolute Mining and Evolution Mining are flat.

In economic news, Australia’s business confidence index fell to 20 in April, down 3 points from the prior month, survey data from National Australia Bank showed Tuesday.

In the currency market, the Aussie dollar is trading at $0.774 on Tuesday.

The Japanese stock market is modestly lower after being in the green most of the morning in choppy trading on Tuesday, snapping the two straight sessions of gains, with the benchmark Nikkei index just below the 29,000 mark, after the first contraction in GDP since Q2 2020, amid a resurgence of COVID-19 cases and slow vaccine rollouts. The cues overnight from Wall Street were mixed.

Traders also remaining concerned after the extension of the COVID-19 state of emergency in several major areas until June 20.

The benchmark Nikkei 225 Index closed the morning session at 28,987.58, down 31.66 points or 0.11 percent, after touching a high of 29,140.68 and a low of 28,958.78 earlier. Japanese shares closed modestly higher on Monday.

Market heavyweight SoftBank Group is losing more than 1 percent and Uniqlo operator Fast Retailing is flat. Among automakers, Honda is gaining almost 1 percent, while Toyota is edging down 0.4 percent and Mazda is down almost 1 percent.

In the tech space, Advantest and Tokyo Electron are flat, while Screen Holdings is up almost 2 percent. In the banking sector, Mizuho Financial is flat, while Mitsubishi UFJ Financial is gaining almost 1 percent and Sumitomo Mitsui Financial is edging up 0.3 percent.

The major exporters are mixed, with Sony gaining almost 1 percent and Canon edging up 0.3 percent, while Panasonic is edging down 0.4 percent and Mitsubishi Electric is losing almost 1 percent.

Among the other major gainers, Daiichi Sankyo is gaining almost 5 percent, while Trend Micro, Sumitomo Dainippon Pharma and Kawasaki Kisen Kaisha are adding more than 4 percent each. Tokyu Fudosan and Sapporo Holdings are up more than 3 percent each, while Z Holdings, Kirin Holdings, Kansai Electric Power, Isuzu Motors, Yamaha Motor, Nippon Suisan Kaisha and Rakuten Group are all higher by more than 2 percent each.

Conversely, Sumitomo Metal Mining is losing more than 3 percent, while Daikin Industries is down almost 3 percent and Ebara is declining more than 2 percent. Oji Holdings, Taisei, Dai-ichi Life Holdings, Toho Zinc and Kajima are all lower by almost 2 percent each.

In economic news, Japan’s gross domestic product contracted an annualized 3.9 percent on year in the first quarter of 2021, the Cabinet Office said in Tuesday’s final reading. That exceeded expectations for a decline of 4.8 percent following the 11.7 percent surge in the three months prior. On a quarterly basis, GDP was down 1.0 percent – again beating forecasts for a decline of 1.2 percent following the 2.8 percent increase in the previous three months. Capital expenditure was down 1.2 percent on quarter, matching expectations following the 4.3 percent gain in the previous quarter.

Separately, the Ministry of Finance said that Japan posted a current account surplus of 1,321.8 billion yen in April. That missed expectations for a surplus of 1,500.6 billion yen following the 2,650.1 billion yen surplus in March. Exports were up 38.0 percent on year at 6,825.5 billion yen and imports gained an annual 11.3 percent at 6,536.0 billion yen for a trade surplus of 289.5 billion yen. The capital account showed a surplus of 3.4 billion yen, while the financial account saw a shortfall of 242.7 billion yen.

The Bank of Japan also said that overall bank lending in Japan was up 2.9 percent on year in May, standing at 578.366 trillion yen. That follows the 4.8 percent increase in April. Excluding trusts, bank lending gained an annual 2.2 percent to 501.954 trillion yen, slowing from the 4.3 percent expansion in the previous month. Lending from trusts climbed 7.5 percent on year to 76.411 trillion yen after rising 8.3 percent a month earlier. Lending from foreign banks rose 2.5 percent on year to 3.381 trillion yen, up from 1.2 percent in April.

In the currency market, the U.S. dollar is trading in the lower 109 yen-range on Tuesday.

Elsewhere in Asia, China, Indonesia, Singapore and Hong Kong is lower by between 0.4 and 0.7 percent each. New Zealand and Malaysia are higher by 0.2 and 0.5 percent, respectively. South Korea and Taiwan are little changed.

On the Wall Street, stocks showed a lack of direction over the course of the trading session on Monday before eventually ending the session mixed. The lackluster performance came on the heels of the advance seen last week.

While the tech-heavy Nasdaq climbed 67.23 points or 0.5 percent to 13,881.72, the Dow fell 126.15 points or 0.4 percent to 34,630.24 and the S&P 500 edged down 3.37 points or 0.1 percent to 4,226.52.

The major European markets also ended the day mixed. While the German DAX Index edged down 0.1 percent, the U.K.’s FTSE 100 Index inched up by 0.1 percent and the French CAC 40 Index rose by 0.4 percent.

Crude oil prices drifted lower Monday, coming off 30-month highs after data showed a drop in China’s crude oil imports in April. West Texas Intermediate Crude oil futures for July ended down by $0.39 or 0.6 percent at $69.23 a barrel.

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