ASIA MARKETS: Australian Stocks Upended Over Political Turmoil, While Nikkei Notches Record

By Lucy CraymerFeaturesDow Jones Newswires

Australian stocks finish off session lows

Australian equities reversed into declines Friday after a court ruling left the country's government without a majority, as stocks there underperformed broad gains elsewhere in the Asia-Pacific region.

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The nation faces weeks of political turmoil after judges ousted five lawmakers ( the country's deputy leader--because they contravene an obscure constitutional rule barring dual citizenship. The move threatens the conservative government's delicate grip on power given its one-seat majority.

Following news of the ruling, Australia's S&P/ASX 200 fell as much as 1% but finished the session lower by 0.2%. The declines came as local stocks have performed rather strongly this month, and were nearing 2017 highs.

Financial markets "had seen a knee-jerk reaction on the uncertainty that came with the decision," said Paul Dales, Australia and New Zealand chief economist for Capital Economics, though he noted that investors had been aware that such a ruling was a possible.

"This makes it harder for the [Australian government] to pass any measures that it wants," he said.

Australia's late-session declines also weighed on stocks in neighboring New Zealand, with the benchmark NZX-50 turning lower to end down nearly two points at 8,084.99.

Elsewhere in the region, equities were broadly higher, buoyed by strength in U.S. corporate earnings and the prospect of continuing stimulus in Europe.

Ahead of the start of Asian trading, three of the world's biggest companies -- Google parent Alphabet Inc. (GOOGL) , Inc. (AMZN) and Microsoft Corp. (MSFT) -- reported booming quarterly growth, sending shares of the three tech giants surging in after-hours trade.

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U.S. equity futures "are shooting up during Asian trading hours and that is leading a rally in Asian equities," says Margaret Yang, a markets analyst at CMC Markets.

Japanese stocks led the region's strength, helped by a 0.4% decline in the yen against the U.S. dollar when compared with Thursday's Japan closing, as global risk-taking appetite improved. The weaker yen boosted export-related stocks, sending the Nikkei Stock Average up 1.2% to a two-decade closing high of 22,008.45.

In Hong Kong, the Hang Seng Index rose 0.8% following the market's recent underperformance. Korea's Kospi gained 0.6%, Singapore's Straits Times Index added 0.9% and Malaysia's benchmark index finished up 0.5%.

The rally in the three U.S. tech giants lifted technology stocks across the region. Nintendo (7974.TO) shares rose 1.3%, while Samsung Electronics (005930.SE) added 1.3%. Taiwanese chip maker TSMC (2330.TW) (2330.TW) rose 1.3%.

The region's gains also come after European Central Bank President Mario Draghi said late Thursday that the bank's bond-buying program could be extended beyond September 2018, even though it would pare back its monthly bond purchases.

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In commodities, iron-ore prices continued to decline, as traders continued to fret about the impact of steel mill closures over the winter months.

ANZ said in a note that these concerns were also weighing on steel futures in China, while sentiment was helped by news that Rio Tinto could potentially increase output at its Australian operations to over 400 million metric tons.

(END) Dow Jones Newswires

October 27, 2017 06:21 ET (10:21 GMT)