ASIA MARKETS: Asian Markets Take A Breather After Early-week Rebound

By Kenan Machado Features Dow Jones Newswires

Mixed trading ahead of expected strong earnings

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Asian equity markets lacked direction Wednesday following a rebound earlier in the week, tracking a muted performance overnight on Wall Street.

The Shanghai Composite Index was down 0.5% as trading kicked off, with large caps succumbing to selling pressure following recent strength. Stocks were higher in Hong Kong though, with the Hang Seng Index up 0.5%.

"There is a bit of a pause for reflection really," said Chris Weston, chief market strategist at IG Markets. In the U.S., the Dow Jones Industrial Average ended flat, while the Nasdaq was 0.1% lower.

Nonetheless, analysts expect strong corporate earnings in the region to provide some support to stocks in coming sessions.

Gains earlier this week came from the unwinding of short positions as tensions surrounding the Korean Peninsula eased, said Weston, though he noted that caution looms ahead of joint U.S.-South Korean military exercises next week.

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Still, the Kospi was off to a strong start as traders returned from a public holiday. The benchmark index was recently up 0.6% after opening 1% higher.

Samsung Electronics (005930.SE) gained as much as 3.1%; retail and travel stocks outperformed as well. Lotte Tour Development (032350.SE) was up 1.8% and Korean Air Lines (003490.SE) added 0.4%.

On Tuesday, South Korean President Moon Jae-in called for renewed talks with the North. He said the U.S. would need Seoul's consent for any military action on the Korean Peninsula, which helped to ease tensions.

In Hong Kong, improved risk-taking appetite saw strong buying among Chinese banking and casino gambling stocks. Among the nation's biggest lenders, China Construction Bank (0939.HK) gained 2% and Industrial & Commercial Bank of China (601398.SH) added 1.4%. Driven by its bullishness on China-related stocks, especially banks, broker CIMB sharply raised its end-2018 target for the Hang Seng Index to 33,600, implying an upside of more than 23%.

Meanwhile, messaging giant Tencent Holdings (0700.HK) , which is scheduled to release its second-quarter results later Wednesday, added 1.1%.

In Japan, the Nikkei Stock Average was down 0.1%, even as the U.S. dollar recovered further against the yen to Yen110.64, versus Yen110.36 at Tuesday's Tokyo stock-market close.

Broad gains in the dollar came after data from the U.S. Commerce Department showed retail sales rising 0.6% from a month earlier, the biggest jump since December, with much of that coming from internet sales.

(END) Dow Jones Newswires

August 15, 2017 23:19 ET (03:19 GMT)