Asia Mixed; Yen Hits High. Asian stock markets were mixed Tuesday with investors in Tokyo turning cautious as Japan's ruling party held a ballot to decide its leader and thus the prime minister.
Japan's Nikkei Share Average was down 0.4% while Australia's S&P/ASX 200 was up 0.4%, South Korea's Kospi Composite down 0.l% and New Zealand's NZX-50 up 0.4%. Dow Jones Industrial Average futures were flat in screen trade.
Asian markets made solid gains on Monday which may be limiting the follow-through from another positive session on Wall Street. The Kospi, for one, hit a 52-week high on Monday and closed at its best level for 2010 so far.
"It will be interesting to see at what point we see some profit-taking in global equities," said IG Markets strategist Ben Potter in Sydney. "It can't be too far away."
Wall Street faces a string of data this week, starting with August retail sales later Tuesday. "I suspect people expect the recent theme of above-consensus U.S. economic data to continue this week. That's probably already in the price. So unless you get an absolute blow out retail sales number, I can't see equities putting in much more upside just yet," said Mr. Potter.
Tokyo investors were awaiting the outcome of the vote by Democratic Party of Japan members for their party president. Prime Minister Naoto Kan is facing off with political heavyweight Ichiro Ozawa for Japan's top post, with media reports suggesting the race is too close to call, though some reports give Mr. Kan a slight edge.
The results are expected after the Tokyo stock market shuts Tuesday. Investors generally consider Mr. Ozawa to be more market friendly as he is viewed as being more likely to take steps to boost the economy via stimulus spending and weakening the yen.
"Investors don't want to take large positions either way until the election result is out," said Yutaka Miura, senior technical analyst at Mizuho Securities.
Exporters were lower due to the yen's gains, with Toyota Motor down 1.0% and Toshiba down 1.0%.
Dai-ichi Life Insurance rose 1.1% after initial weakness which came on a Nikkei report that it plans to strengthen its capital base by procuring about 300 billion yen ($3.6 billion) in perpetual subordinated loans as early as next month.
"The stock has been sold (recently) because market players had anticipated a large-scale capital-raising, including the option of equity financing," said Cosmo Securities analyst Tomoaki Kawasaki. He said the report was positive for shares as the use of subordinated loans would not create share dilution risk.
Resource stocks were leading in Australia with BHP Billiton up 1.2% and Macarthur Coal adding 4.8%.
The Kospi was supported by technology and financial stocks amid continued foreign interest in local blue-chip shares. Samsung Electronics was 0.7% and Hynix Semiconductor was up 2.2% while KB Financial rose 1.6%.
"Overall, global sentiment improves and we catch the ride," said Macquarie Equities broker Brad Gordon in Auckland. Fletcher Building was up 1.1% with the stock "continuing its upward march, mainly on the back of the upward revisions to Christchurch's clean-up" costs after the earthquake there earlier this month, said Gordon.
In foreign exchange markets, the yen was in demand as investors moved to the safe-haven currency ahead of the DPJ election outcome. The U.S. dollar was at 83.38 yen, from 83.67 yen late in New York, after earlier touching 83.33 yen, its lowest level since May 31, 1995. The euro was at $1.2852, from $1.2873 and 107.16 yen, from 107.66 yen.
Akira Hoshino, a senior dealer at Bank of Tokyo-Mitsubishi UFJ, said short-term speculators such as hedge funds who had sold the yen in anticipation of intervention from Japanese authorities to weaken the currency, were now buying the yen back.
The British pound was lower against the U.S. dollar after the Royal Institution of Chartered Surveyors said house prices in the United Kingdom fell sharply in August, to their lowest levels in over a year. The pound was at $1.5379, from about $1.5420 before the data came out.
Lead December Japanese government bond futures were down 0.05 at 141.23 points, ahead of a 20-year JGB tender Tuesday. The 10-year cash JGB was still untraded after ending Monday with a 1.145% yield.
Spot gold was at $1,248.50 per troy ounce, up $3.50 from New York. October crude oil futures were up 12 cents at $77.31 per barrel.
Write to Colin Ng at colin.ng@dowjones.com
Japan's Nikkei Share Average was down 0.4% while Australia's S&P/ASX 200 was up 0.4%, South Korea's Kospi Composite down 0.l% and New Zealand's NZX-50 up 0.4%. Dow Jones Industrial Average futures were flat in screen trade.
Asian markets made solid gains on Monday which may be limiting the follow-through from another positive session on Wall Street. The Kospi, for one, hit a 52-week high on Monday and closed at its best level for 2010 so far.
"It will be interesting to see at what point we see some profit-taking in global equities," said IG Markets strategist Ben Potter in Sydney. "It can't be too far away."
Wall Street faces a string of data this week, starting with August retail sales later Tuesday. "I suspect people expect the recent theme of above-consensus U.S. economic data to continue this week. That's probably already in the price. So unless you get an absolute blow out retail sales number, I can't see equities putting in much more upside just yet," said Mr. Potter.
Tokyo investors were awaiting the outcome of the vote by Democratic Party of Japan members for their party president. Prime Minister Naoto Kan is facing off with political heavyweight Ichiro Ozawa for Japan's top post, with media reports suggesting the race is too close to call, though some reports give Mr. Kan a slight edge.
The results are expected after the Tokyo stock market shuts Tuesday. Investors generally consider Mr. Ozawa to be more market friendly as he is viewed as being more likely to take steps to boost the economy via stimulus spending and weakening the yen.
"Investors don't want to take large positions either way until the election result is out," said Yutaka Miura, senior technical analyst at Mizuho Securities.
Exporters were lower due to the yen's gains, with Toyota Motor down 1.0% and Toshiba down 1.0%.
Dai-ichi Life Insurance rose 1.1% after initial weakness which came on a Nikkei report that it plans to strengthen its capital base by procuring about 300 billion yen ($3.6 billion) in perpetual subordinated loans as early as next month.
"The stock has been sold (recently) because market players had anticipated a large-scale capital-raising, including the option of equity financing," said Cosmo Securities analyst Tomoaki Kawasaki. He said the report was positive for shares as the use of subordinated loans would not create share dilution risk.
Resource stocks were leading in Australia with BHP Billiton up 1.2% and Macarthur Coal adding 4.8%.
The Kospi was supported by technology and financial stocks amid continued foreign interest in local blue-chip shares. Samsung Electronics was 0.7% and Hynix Semiconductor was up 2.2% while KB Financial rose 1.6%.
"Overall, global sentiment improves and we catch the ride," said Macquarie Equities broker Brad Gordon in Auckland. Fletcher Building was up 1.1% with the stock "continuing its upward march, mainly on the back of the upward revisions to Christchurch's clean-up" costs after the earthquake there earlier this month, said Gordon.
In foreign exchange markets, the yen was in demand as investors moved to the safe-haven currency ahead of the DPJ election outcome. The U.S. dollar was at 83.38 yen, from 83.67 yen late in New York, after earlier touching 83.33 yen, its lowest level since May 31, 1995. The euro was at $1.2852, from $1.2873 and 107.16 yen, from 107.66 yen.
Akira Hoshino, a senior dealer at Bank of Tokyo-Mitsubishi UFJ, said short-term speculators such as hedge funds who had sold the yen in anticipation of intervention from Japanese authorities to weaken the currency, were now buying the yen back.
The British pound was lower against the U.S. dollar after the Royal Institution of Chartered Surveyors said house prices in the United Kingdom fell sharply in August, to their lowest levels in over a year. The pound was at $1.5379, from about $1.5420 before the data came out.
Lead December Japanese government bond futures were down 0.05 at 141.23 points, ahead of a 20-year JGB tender Tuesday. The 10-year cash JGB was still untraded after ending Monday with a 1.145% yield.
Spot gold was at $1,248.50 per troy ounce, up $3.50 from New York. October crude oil futures were up 12 cents at $77.31 per barrel.
Write to Colin Ng at colin.ng@dowjones.com
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