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

By Kenan MachadoFeaturesDow Jones Newswires

Mixed trading ahead of expected strong earnings

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

Continue Reading Below

The Shanghai Composite Index pared early losses to trade 0.2% lower at the midday break, with large caps succumbing to selling pressure after recent gains. Stocks were higher in Hong Kong though, with the Hang Seng Index up 0.6%.

Elsewhere in the region, stock moves were mixed, with New Zealand's NZX 50 . rising 0.5%, on track for another fresh closing high, while Singapore's Straits Times Index was off 0.8%.

"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.

Stock benchmarks in China, Australia, South Korea and Hong Kong are up 1% so far this week, as investors found value in high-growth stocks following last week's pullback, which many analysts believed was overdue.

"We have had an uncharacteristic bull market in the past few months," said Michael Parker, Asia-Pacific equity strategist at Bernstein. "During a bull market, the sharper the one-day selloff, the better the buying opportunity."

Markets rebounded this week as short positions over tensions in the Korean Peninsula unwound. However, caution remains ahead of joint U.S.-South Korean military exercises next week, analysts say.

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.

Still, the Kospi was off to a strong start as traders returned from a public holiday. The benchmark index was up 0.5% after opening 1% higher.

Index heavyweight Samsung Electronics (005930.SE) led gains, surging as much as 3.1%; retail and travel stocks outperformed as well. Lotte Tour Development (032350.SE) was up 2.7% and Korean Air Lines (003490.SE) added 0.8%.

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 2.2% and Industrial & Commercial Bank of China (601398.SH) added 1.8%.

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, rose as much as 1.8% before ending the morning session up 0.9%.

In Japan, the Nikkei Stock Average was flat , 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.

Australia's S&P/ASX 200 was also flat, tracking the performance of metals prices during Asian trade, with copper largely unchanged, while iron ore was slightly higher.

Shares of Woodside Petroleum (WPL.AU) stood out, gaining 3.3% even as first-half earnings didn't provide any positive surprises. The company's strong operating cash flow beat RBC Capital Market's expectations, said the bank's oil and gas analyst Ben Wilson.

Crude-oil prices were higher ( ahead of weekly supply data from the U.S. Department of Energy. The American Petroleum Institute, an industry group, said late Tuesday that its own data for the week showed a 9.2-million-barrel decrease in crude supplies. Nymex crude-oil prices were recently up 0.5%, while Brent prices added 0.6%.

-- John Wu contributed to this article.

(END) Dow Jones Newswires

August 16, 2017 01:22 ET (05:22 GMT)