Asia report: Markets mixed as renminbi weakens further
Markets in Asia finished in a mixed state on Thursday, as investors continued to keep an eye on Treasury yields in the United States, and the yuan briefly shifted to its weakest point in almost 12 years.
In Japan, the Nikkei 225 was down 0.09% at 20,460.93, as the yen weakened 0.08% against the dollar to last trade at JPY 106.21.
Of the major components on the benchmark index, automation specialist Fanuc was up 0.67%, fashion firm Fast Retailing added 0.19%, and technology conglomerate SoftBank Group was 0.69% higher.
The broader Topix index lost just 0.01% to finish its trading day at 1,490.17 in Tokyo.
On the mainland, the Shanghai Composite was 0.1% weaker at 2,890.92, and the smaller, technology-heavy Shenzhen Composite slipped 0.17% to 1,591.08.
The closely-watched yuan renminbi weakened further during the session, with the onshore yuan breaking past the CNY 7.17 level against the dollar briefly for the first time in more than 11 and a half years.
China’s central bank had set its daily loose peg on the currency at CNY 7.0858 against the greenback before the session.
It allows the onshore currency to trade at 2% above or below its daily reference point.
South Korea’s Kospi was 0.4% lower at 1,933.41, while the Hang Seng Index in Hong Kong advanced 0.34% to close at 25,703.50.
The blue-chip technology stocks were mixed in Seoul, with chipmaker SK Hynix flat, and Samsung Electronics down 1.7%.
Shares of other companies under the Samsung chaebol were also in the red, after Korea’s Supreme Court partially overturned an appeals court ruling in the bribery case involving the conglomerate’s head figure Jay Lee.
Lee was released from prison in February last year, after his initial five-year sentence was halved, and then suspended for four years.
The ruling on Thursday threw his ability to lead Samsung Electronics in particular into doubt, given the firm was staring down the barrel of profitability issues amid a ban on the export of technology materials to South Korea from Japan.
Samsung Biologics was down 4.89%, and Samsung C&T fell 4.05%.
Investors in Asia began their day watching US Treasury yields on Thursday, after the 30-year note fell to a new record low of 1.907% briefly overnight, before recovering to above 1.96%.
The yield spread between the 10-year and two-year bonds was also being monitored, with the gap widening further overnight, extending from Tuesday when it reached its lowest level in 12 years.
Many analysts point to the phenomenon, dubbed a ‘yield curve inversion’, as a prelude to a recession in the United States.
“Recession fears and trade concerns dominated across the Asian session as investors digested the latest developments in the seemingly never-ending US-Sino trade dispute,” said London Capital Group head of research Jasper Lawler.
“The lack of clarity is making it extremely difficult for traders to judge where the dispute is heading.”
Lawler said instead, investors were focusing on the lack of urgency by the Trump administration to resolve the dispute, which was weighing on sentiment.
“There is little appetite for riskier assets such as equities right now.
“With the next round of tariffs to start from 1 September, investors are waiting to see if they are actually implemented- or again reduced and delayed.”
Oil prices were mixed as the region went to bed, with Brent crude last down 0.02% at $60.48 per barrel, and West Texas Intermediate rising 0.69% to $56.17.
In Australia, the S&P/ASX 200 managed gains of 0.1% to end its trading session at 6,507.40, while across the Tasman Sea, New Zealand’s S&P/NZX 50 was 0.4% lower at 10,580.07.
Both of the down under dollars were stronger on the greenback, with the Aussie last 0.23% firmer at AUD 1.4818, and the Kiwi advancing 0.13% to NZD 1.5762.