Nikkei 225 reversed initial gains to be down 0.44% at 39,308.55, the broader Topix remained up 0.88%, Kospi declined 0.14%, Australia’s equity benchmark slid 0.24%, Hang Seng gained 0.49% and mainland blue chips rose 0.14%
Asia-Pacific equity markets were mixed on Thursday as investors weighed the implications of a Donald Trump presidency, while also eyeing monetary policy decisions from central banks later in the day.
Though potential for a Republican sweep quickly ushering in big fiscal spending sent all three major U.S. share indexes to record highs, strong gains were not seen in Asia.
U.S. Treasury yields surged on the risk of higher deficits, helping lift the dollar to its biggest one-day gain in over two years versus major peers on Wednesday.
The euro was under additional pressure after German Chancellor Olaf Scholz sacked his Finance Minister Christian Lindner, causing the ruling three-party coalition to collapse.
The mixed reaction for Asian stocks was underscored in Japan as the tech-heavy Nikkei 225 reversed initial gains to be down 0.44% at 39,308.55 as of 0217 GMT, while the broader Topix remained up 0.88%.
Higher bond yields – with the 10-year U.S. Treasury yield at 4.4236%, hovering close to Wednesday’s four-month high of 4.4790%, and equivalent-maturity Japanese government bond yields advancing to 1% for the first time in three months – buoyed shares of Japanese banks and insurers, but weighed on tech companies and other growth stocks.
In this highly volatile period, you have to be very selective in Japan, according to Frank Benzimra, head of Asia equity strategy at Societe Generale, adding that the Nikkei looks overextended.
When we have the Nikkei at this level, I feel very uncomfortable, he added.
Elsewhere, Kospi declined 0.14%, while Australia’s equity benchmark slid 0.24%, hurt by weakness in gold stocks after bullion plunged against a firming dollar.
Chinese markets, which lost ground on Wednesday, rebounded in the latest session. Hong Kong’s Hang Seng gained 0.49% and mainland blue chips rose 0.14%.
China’s week-long National People’s Congress Standing Committee meeting concludes on Friday, and market participants are keen for any fresh details on stimulus measures.
Chinese trade data released Thursday showed outbound shipments rose at the fastest pace in more than two years in October as manufacturers rushed inventory to major export markets in anticipation of further tariffs from the U.S. and the EU.
Weakness in some equity markets, including China and Europe, may be a product of investors flocking into U.S. assets, according to Chris Weston, head of research at Pepperstone.
