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Asian markets flat as oil gains balance out Abenomics no vote

Monday 03:10 BST

Overview

Both stocks and bonds were fighting to find firmer footing in Asia-Pacific trading as oil consolidated gains made during a late rally on Friday, and Japan processed a perceived no-vote to Abenomics.

Hot topic

Stock markets in the region were struggling to gain traction in early trading.

Tokyo’s Topix gained 0.1 per cent despite a historic defeat by the party of Prime Minister Shinzo Abe in Tokyo elections over the weekend, interpreted by some as a no-vote on Abenomics.

Japan markets, however, were supported by a better-than-expected reading from the Bank of Japan’s Tankan survey of manufacturers.

In Sydney the S&P/ASX 200 was flat as a 0.2 per cent gain in the financials segment was offset by falls elsewhere. Fairfax Media sank as much as 17 per cent after the company announced it had ended discussions with private equity suitors that failed to produce any formal bids.

In Hong Kong, shares in Macau casino operators slipped after the release of lower-than-expected June revenue figures. Galaxy Entertainment was down 3.2 per cent, while Sands China fell 2.1 per cent. The benchmark Hang Seng index was off 0.2 per cent.

Forex

Currency movements were relatively muted, with the biggest gains and losses from outside of Asia Pacific.

The UK pound was down 0.2 per cent against the US dollar at $1.3003, while the South African rand gained 0.1 per cent to 13.059 per dollar.

The Japanese yen was virtually flat at ¥112.38 per dollar, while the Australian dollar shed 0.1 per cent against its US counterpart to $0.7685.

Fixed income

Most sovereign bonds in the region continued to retreat following last week’s sell-off.

The yield on Australian 10-year government bonds rose 8 basis points to 2.68 per cent while that on the equivalent South Korean note was up 2 bps at 2.23 per cent. Yields move in the opposite direction to price.

Japan’s 10-year government bonds were virtually flat with yield of 0.074 per cent, while the 10-year US Treasuries yield was up 1 bp at 2.314 per cent.

China and Hong Kong on Monday launched a bond trading link that brings the world’s third-largest debt market one step closer to widespread acceptance in international investors’ portfolios.

Commodities

Oil prices were edging upward following a late-session rally on Friday.

Brent crude, the international benchmark, was up 0.3 per cent at $48.91 a barrel, having closed 2.4 per cent higher the previous session.

US marker West Texas Intermediate was up 0.5 per cent at $46.26 after a rise of 2.5 per cent on Friday.

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