Stocks in Asia pressured amid firmer dollar as investors await earnings
Ca-ssis | Getty Images. Asian indexes closed mostly lower on Friday as investors parsed through corporate earnings in the region. ·CNBC
Cheang Ming
Updated
Asian indexes were pressured in Friday trade after the dollar firmed overnight and as investors looked ahead to more corporate earnings due during the session.
Japan's Nikkei 225 (Nihon Keizai Shinbun: .N225) slid 0.42 percent and South Korea's benchmark Kospi (Korea Stock Exchange: .KS100) index declined 1.08 percent.
In Australia, the S&P/ASX 200 (ASX: .AXJO) fell 1.21 percent, driven by broad-based losses across its sub-indexes. The heavily-weighted financials sub-index was down 1.6 percent and the health care sub-index was lower by 1.77 percent.
Greater China markets trended lower. Hong Kong's Hang Seng Index (Hong Kong Stock Exchange: .HSI) was lower by 0.54 percent. On the mainland, the Shanghai Composite (Shanghai Stock Exchange: .SSEC) slipped 0.5 percent and the Shenzhen Composite was off by just 0.128 percent.
The greenback was mostly flat in Asia trade after firming overnight on the back of better-than-expected U.S. durable goods orders for the month of June. The measure of orders for U.S.-made capital goods last month showed the fifth consecutive monthly increase.
The dollar index (New York Board of Trade (Futures): =USD), which measures the dollar against a basket of six major currencies, stood at 93.913 at 9:39 a.m. HK/SIN, up from an overnight low of 93.152, but off Thursday's high of 94.103.
Uncertainty over the Trump administration's ability to push through proposed policies after the Republican health care bill failed repeated hurdles has weighed on the U.S. currency for the past few weeks. A slight change in the Federal Reserve's language in a statement released at the end of the Federal Market Open Committee meeting on Wednesday saw the dollar fall to its lowest point in more than a year on Wednesday.
More recently, the Republican plan to introduce a border adjustment tax was abandoned after GOP leaders acknowledged the "many unknowns associated" with the policy in a statement Thursday.
"Fading the GOP's progress seems to be the best bet," BK Asset Management Managing Director of FX Strategy Kathy Lien said in a note.
Ahead, the dollar was likely to trade with a downward bias before the release of nonfarm payrolls due next week, Lien added.
Within Asia, regional markets were likely to continue focusing their attention on corporate results, with reports due from Yahoo Japan, Nomura Holdings and TEPCO.
Hong Kong-listed insurer AIA Group (Hong Kong Stock Exchange: 1299-HK) reported operating profit after tax rose 16 percent on-year to $2.26 billion in the first half of the year, the company said in a statement issued to the Hong Kong Exchange Friday. AIA shares were down 1.32 percent.
Shares of Nissan (Tokyo Stock Exchange: 7201.T-JP) were down 4.68 percent after the automaker announced a 12.8 percent on-year fall in operating profit for its fiscal first quarter Thursday. The company recorded operating profit of 153.3 billion yen ($1.38 billion) for its April-to-June quarter, below forecasts for 171.45 billion yen, Reuters said.
Reporting season was also underway for Singapore's banks. United Overseas Bank (Singapore Exchange: UOBH-SG) announced an on-year 5.5 percent rise in net profit for the second quarter. The bank's net profit after tax stood at 845 million Singapore dollars ($621 million).
That followed Oversea-Chinese Banking Corp (Singapore Exchange: OCBC-SG)'s Thursday announcement that its second-quarter net profit rose 22 percent on-year. UOB shares were down 1.87 percent and OCBC shares lower by 0.87 percent at 9:36 a.m. HK/SIN.
In corporate news, Toshiba (Tokyo Stock Exchange: 6502.T-JP) reached a deal to pay SCANA $2.168 billion to exit from incomplete U.S. nuclear projects undertaken by Toshiba subsidiary Westinghouse, Reuters reported. Toshiba was expected to make the payout in installments starting in October, Reuters said. Toshiba shares were down 8.23 percent.
Meanwhile, oil prices were mostly flat after rising to touch a two-month high in the overnight session. Brent crude slipped 0.12 percent to trade at $51.43 a barrel and U.S. West Texas Intermediate crude was off 0.1 percent percent to trade at $48.99 a barrel.
"On a quiet news day for energy markets, trader will look to the Baker Hughes rig count tonight for further signs of slowing shale drilling. The market will also be sensitive to headlines from Venezuela with the U.S. Congress' D-day for sanctions approaching on (July 30)," OANDA senior market analyst Jeffrey Halley said in a note.
The economic calendar for Friday was fairly crowded. South Korea kicked off data releases, announcing that industrial output had slipped 0.2 percent in June, compared with the month before, missing the 1 percent gain forecast in a Reuters survey.
Over in Japan, retail sales for June increased 2.1 percent on year, compared with the 2.3 percent expected by economists, Reuters reported.
Meanwhile, Japan core consumer prices gained 0.4 percent on-year in June, in line with the annual rise in prices forecast. Without taking changes in fresh food and energy prices into consideration, consumer prices were unchanged in June on year, Reuters said.
The yen (Exchange: JPY=) firmed slightly following the headlines, with the dollar fetching as little as as 110.90 yen, compared with around 111.13 yen seen before the CPI data release. The dollar/yen stood at 111.08 at 9:38 a.m. HK/SIN. The dollar had gained against the Japanese currency overnight on solid U.S. economic data released Thursday.
Ahead, Singapore was slated to announce second-quarter unemployment figures at 10:30 a.m. HK/SIN.
In Europe, investors were expected to keep an eye on consumer confidence data released at 5:00 p.m. HK/SIN. In addition, U.S. GDP due during the stateside trading day will be closely watched by markets.
Major indexes on Wall Street closed lower Thursday following a decline in technology stocks on a bout of profit taking. The sector had notched an intraday high earlier in the day.
