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Asian stocks mixed on Wednesday

Asian stocks mixed on Wednesday

Asian stocks showed mixed results on Wednesday as Chinese equities lost steam late in the day and major stock indices across the region inched slightly higher and lower at the close of play.

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By Jay Banerjee 09.08.2018

Asian stocks showed mixed results on Wednesday as Chinese equities lost steam late in the day and major stock indices across the region inched slightly higher and lower at the close of play. 

On the mainland, China’s Shanghai Composite retreated again after a brief respite during the previous session. It tracked downward from the midafternoon onward and eventually finished at 2,745.11 for a 1.23% drop off. The blue-chip CSI 300 also saw a 1.59% decline.

Japan’s Nikkei 225 fared better, but a loss of 100 points in just a few minutes late in the day saw it close at 22,644.31 for a modest 0.08% downturn. Oil and coal products dragged the indices lower, but stocks in shipping and telecoms did manage to post gains to close 4.78% higher.

South Korea’s Kospi finished on a strong note as a late rally saw it inch 0.06% upward to close at 2,301.45. Hong Kong’s Seng Index also went into positive territory as sharp gains in energy-linked stocks pushed it 0.15% higher during the midafternoon. Further late gains helped the HIS end at 28,359.14 for a 0.39% uptick.

Finally, Australia’s S&P/ASX 200 managed to register a 0.23% increase as it ended Wednesday’s session at 6,268.50, with the financials subindex and materials boosting the benchmark. MSCI’s index of share in Asia Pacific increased by 0.38% just before the last bell rang.

Strong corporate earnings in the US, which pushed Wall Street into the green overnight, drove positive sentiment in global stocks Trade concerns are never far away these days, however, and US President Donald Trump confirmed late on Tuesday that its latest round of tariffs at a higher rate of 25% on Chinese products worth $16bn will come into effect on 23 August.

The tit-for-tat battle has rattled financial markets this summer, but the concerns did not have a major impact on Wednesday. While perhaps surprising, National Australia Bank’s Head of Foreign Exchange Strategy Ray Attrill noted that investors may still have their heads in the sand until new tariffs actually arrive. 

“Seeing is believing, it appears, with respect to the looming threat of a sharp escalation in trade tariff wars," Attrill said on Wednesday. "The US stock market is behaving as though it doesn't take seriously the threat of Trump going ahead with the next phase of tariffs on China... the implication being that if at some point [he] does, the market will surely correct significantly lower."

The yuan has been at the center of trade rhetoric from the Trump administration as it continues to decline in value, but it was mostly steady in midweek. The onshore yuan was trading at 6.8218 against the dollar in the afternoon, while the offshore yuan came in at 6.8300 at the same time.

The Chinese currency has taken a hit in a recent months, but some analysts believe that a trade-weighted basis may exaggerate its weakness. Patrick Bennett, CIBC World Markets Currency Strategist, said: "We would tell you it's probably weaker than it deserves to be because we've got uncertainty rather than the actuality of tariffs being imposed.”

Wall Street moved in the right direction on Tuesday as corporate reports continue to buoy sentiment despite fresh concerns over tariffs in the long-running trade dispute. This sentiment prevailed overnight as more Q2 earnings came in. Chinese stocks had also rebounded on Tuesday as a 2% jump in the Shanghai Composite ended a four-session losing streak. 

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