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Financials lead Asian equities lower

Thursday 03.50 BST

What you need to know

  • Australian dollar drops to one-week low on exports contraction
  • Hong Kong financials led lower by dip in HSBC shares
  • Dollar recovers slightly from 15-month low
  • Crude oil walks back some of Wednesday’s gains

Overview

Asia Pacific equities were broadly lower on Thursday as financials and materials suffered, as crude oil pulled back from earlier gains and the dollar inched its way up from a fresh low touched during the previous session.

Hot topic

Equities were broadly lower in Asia amid relative softness for most regional currencies against the dollar.

In Hong Kong the Hang Seng index was off 0.6 per cent, led lower by a drop of 0.8 per cent by the financials segment. Among the worst performers in the sector was HSBC, which was down 1.6 per cent.

Australia’s S&P/ASX 200 index was off 0.2 per cent as the materials segment dropped 0.6 per cent on lower commodities prices overnight. Retailers were holding up reasonably well following Amazon’s announcement of a new retail logistics warehouse in Melbourne, with Wesfarmers recovering from a drop at the open to climb 0.1 per cent.

Tokyo’s Topix index was down 0.3 per cent, but soy sauce maker Kikkoman bucked the trend with a rise of as much as 5.2 per cent after it reported that strong first quarter sales had helped drive a near 15 per cent rise in operating profit.

Forex and fixed income

The Australian dollar was losing some of its shine after trade data for July showed exports shrank 1 per cent from the previous month as imports rose 2 per cent. The currency dropped to as low as $0.7916 on Thursday, having hovered just below the $0.80 mark for much of the previous two sessions.

That fall also came ahead of the Reserve Bank of Australia’s monetary policy statement on Friday, which may give more detail on comments it made on Monday suggesting a stronger currency could undercut inflation. With stocks underperforming Australian government bonds were gaining, as yield on the 10-year note fell 3 basis points to 2.67 per cent. Bond yields move opposite to price.

The dollar index, which tracks the greenback against a basket of currencies, was enjoying a mild rebound after touching a 15-month low on Wednesday. The index was up 0.2 per cent in the Asia morning session at just over 93. The yield on 10-year US Treasuries was down 2bp at 2.255 per cent.

Japan’s yen was among the only currencies in the region to gain on the greenback, up 0.1 per cent at ¥110.62 per dollar.

Commodities

Crude oil prices were pulling back from gains made during the previous session. Brent crude, the international benchmark, was off 0.3 per cent at 52.21 a barrel. US marker West Texas Intermediate was down the same amount at $49.47.

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