Asian stocks falter as political developments unfold

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By 2018-01-23

Most Asian markets traded lower on Monday as investors kept an eye on political developments in the US after a government shutdown began last week.

Japan's Nikkei 225 edged down 0.18 per cent in afternoon trade. Automakers were mixed: Toyota declined 0.68 per cent while Mitsubishi Motors tacked on 1.97 per cent. Technology stocks were also a mixed picture, with Sony edging lower by 0.04 per cent and SoftBank Group advancing 0.73 per cent.

Shares of Toshiba popped 4.04 per cent. The move higher followed news that the company was contemplating listing its memory unit. An IPO was one suggestion under consideration should the $18 billion sale of its chip unit to a Bain-led consortium fail to secure approval from regulators by end-March, the Financial Times reported Monday, citing sources.

Meanwhile, South Korea's Kospi declined 1.14 per cent as index heavyweight Samsung Electronics fell 2.68 per cent. Other technology stocks were mixed, with chipmaker SK Hynix declining 3.55 per cent and LG Display gaining 0.99 per cent.
The manufacturing, finance and retail sectors traded lower for the most part, with steelmaker Posco losing 2.72 per cent and Lotte Shopping off by 0.21 per cent.

Down Under, the S&P/ASX 200 gave up gains seen earlier in the session to trade lower by 0.16 per cent. The heavily-weighted financials sector declined 0.65 per cent, weighing on the broader index. Shares of Commonwealth Bank sank 1.2 per cent, underperforming most other banking names.

National Australia Bank, another of the country's 'Big Four' banks, is reportedly considering spinning out its wealth arm for a potential listing, the Australian Financial Review reported, citing sources. NAB shares were lower by 0.5 per cent.
Greater China markets were mixed. Hong Kong's Hang Seng Index was off by 0.04 per cent , but casino stocks traded in positive territory - with Wynn Macau higher by 2.62 per cent . The technology and financials sectors were mixed in the early going, meanwhile, with Tencent higher by 0.53 per cent and HSBC softer by 0.47 per cent.
On the mainland, the Shanghai composite added 0.22 per cent and the Shenzhen composite gained 0.93 per cent . The blue chip CSI 300 index was higher by 0.75 per cent.

US Government shutdown extends
Stateside, the US Government shutdown will continue for a third day after the Senate failed to secure a deal on Sunday night.
Prior to the Sunday development, there had been some signs of progress, with Republicans appearing unified over plans to end the impasse with a temporary solution. Democrats, however, want an immigration agreement in place before they support a spending plan.

"The shutdown in the US looks set to dominate market attention this week. It is likely to result in plenty of noise, but no dramatic shifts in trends," ANZ Research said in a morning note.

US futures tracked lower on Monday, but pared some losses late in the morning. The Dow Jones industrial average futures was last lower by 39 points. On Friday, stocks had closed in positive territory as earnings season rolled on.

Currency watch
Against the yen, the dollar traded at 110.77 — near Friday's close of 110.76. The dollar index, which tracks the dollar against a basket of six currencies, traded at 90.660.
The euro traded at $1.2223 at 12:21 p.m. HK/SIN after rising as high as $1.2274 earlier. The move higher came after Germany's Social Democrats agreed to embark on formal coalition negotiations with Chancellor Angela Merkel's government following a weekend party vote.

French President Emmanuel Macron›s weekend comments were also in focus for currency markets. Macron said the UK could have a bespoke arrangement with the European Union following Brexit, although London would not have the same degree of access to the bloc if the UK left the single market, Reuters reported. The pound last traded at $1.3862.

What's on tap
Central banks, meanwhile, will be in focus this week as the Bank of Japan convenes a two-day monetary policy meeting beginning Monday. No major changes are expected.

Investors sent the dollar tumbling against the yen earlier this month after the central bank moved to slightly reduce its purchases of long-dated Japanese government bonds. Still, a move away from ultra-easy policy is seen by many as some ways away.
In Europe, the European Central Bank is set to make its interest rates decision on Thursday.

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