Japanese investors still wary after stimulus let-down

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Tokyo, Japan (BBN) – Asia markets were mixed in mid-morning trade on Tuesday, following a mixed overnight session in the US that nevertheless saw the Dow Jones industrial average notch a record closing high.

Australia’s ASX 200 traded fractionally lower by mid-morning at 5,983.7, after being down nearly 0.3 percent following the first hour of trade. The heavily-weighted financial subindex was lower by 0.31 percent, reports CNBC.com.

The country’s so-called Big Four banks were under pressure, with ANZ losing 0.56 percent, Commonwealth Bank down 0.27 percent, Westpac lower by 0.83 percent and the National Australia Bank fractionally lower.

In Japan, the Nikkei 225 was lower by 0.46 percent in morning trade. The Topix index lost 0.17 percent. Across the Korean Strait, the Kospi reversed losses of about 0.5 percent to trade up 0.35 percent.

Hong Kong’s Hang Seng index was down 0.19 percent after the first half hour of trade. In the Chinese mainland, both the Shanghai and the Shenzhen composites traded fractionally higher.
“Markets … look to be taking their lead from the likelihood of Congress agreeing on tax cuts and, last night, another positive US economy data print,” David de Garis, director of economics and markets at the National Australia Bank, wrote in an early morning note.
He pointed out the market will be paying “close attention to not only the headline print for ISM Non-manufacturing but what it might say about Friday’s payrolls from its employment component.”
Meanwhile, Wei Liang Chang, a foreign-exchange strategist at Mizuho Bank, wrote in a morning note that the “failure in the U.S. equity rally, and a retreat in [10-year Treasury] yields back below 2.4 percent suggest that tax reforms had already been partially expected, while new uncertainties related to investigations into [President Donald] Trump are also weighing” on the market.
The Australian central bank is expected to announce its monetary policy decision for December at 11:30 a.m. HK/SIN. The Reserve Bank of Australia has kept its cash rate at a historic low of 1.5 percent since August last year.
Analysts expect the central bank to keep rates on hold.
Andrew Ticehurst, executive director and rate strategist at Nomura Australia, told CNBC’s “The Rundown” on Tuesday that all of the key messages from the RBA should be in the policy statement: Those include the central bank’s confidence in the global growth story and the domestic situation in the country, seeing low inflation and wages and “a little bit of heat coming out of the housing market.”
In the currency market, the dollar traded at 93.069 against a basket of rivals. The greenback hovered near levels seen in the previous Asian trading session.
Among currency majors, the Japanese yen traded at 112.47 to the dollar. The Australian dollar rose to $0.7639 at 9:58 a.m. HK/SIN, from an earlier low of $0.7593.
The euro traded at $1.1871; the common currency declined from levels from $1.19 reached late last week.
Meanwhile, the British pound traded at $1.3469 at 9:58 a.m. HK/SIN, climbing from an earlier low of $1.3463.
Overnight, the meeting between British Prime Minister Theresa May and European Commission President Jean-Claude Juncker failed to yield an agreement on the terms for Brexit between the U.K. and the European Union.
Oil prices traded higher in the morning session on Tuesday, with U.S. crude gaining 0.21 percent to $57.59 a barrel. Global benchmark Brent rose 0.14 percent to $62.54.
Analysts at Singapore’s OCBC Bank said in a note that crude oil prices fell overnight “likely on profit-taking amid a stronger dollar.”
Last week, OPEC and oil giant Russia agreed to extend production cuts until the end of 2018 to tackle a supply glut in the energy market.
Australia’s seasonally adjusted retail sales for October saw a 0.5 percent jump according to the country’s Bureau of Statistics, beating forecasts. There were increases across all industries, led by a 1.7 percent increment in cafes, restaurants and takeaway food services.
That followed a 0.1 percent rise in September.
“Interestingly, housing related spending growth continues to moderate suggesting the softening housing cycle is having an impact,” Jo Masters, a senior economist at ANZ, wrote in a note.
Masters said she sees “headwinds for discretionary spending” due to the challenging combination of weak wage growth, record indebtedness, a rise in prices for non-discretionary goods and services and the slowing house price growth and rising petrol prices.
Meanwhile, e-commerce giant Amazon officially launched its Australian operations that are expected to tighten competition in the country’s retail space.
Australian retailers traded mostly higher on Tuesday. Shares of department store chain Myer was up 1.62 percent and wholesaler Metcash gained 4.5 percent. Supermarket giant Woolworths was flat and Harvey Norman added 3.25 percent.
Elsewhere, the country’s current account deficit decreased to 9.1 billion Australian dollars ($6.95 billion) in the September quarter.