Asia report: Markets finish mixed as Covid situation worsens

Markets in Asia finished in a mixed state on Monday, as a worsening Covid-19 situation in parts of the region dragged on investor sentiment.

In Japan, the Nikkei 225 was down 0.18% at 26,714.42, as the yen weakened 0.53% against the dollar to last trade at JPY 103.85.

Technology conglomerate SoftBank Group was up 1.62%, while among the benchmark’s other major components, automation specialist Fanuc was down 1.43% and fashion firm Fast Retailing lost 0.75%.

The broader Topix index ended its session 0.23% weaker in Tokyo, at 1,789.05.

In coronavirus developments, Kyodo News reported that Tokyo topped 10,000 new cases on a monthly basis for the first time on Sunday.

On the mainland, the Shanghai Composite rose 0.76% to 3,420.57, and the smaller, technology-heavy Shenzhen Composite was 1.87% firmer at 2,304.98.

The People’s Bank of China stood pat on its loan prime rates on Monday, sating market expectations, with the one-year and five-year rates held at 3.85% and 4.65%, respectively.

“These rates are unlikely to change without moves in the rates banks can borrow from the PBoC,” said Pantheon Macroeconomics senior Asia economist Miguel Chanco.

“The Bank topped up MLF liquidity last week, as market rates had begun to creep back up.

“But this was merely about managing rates in their comfort zone.”

Chanco said it suggested that the central bank was not yet ready for tightening, nor did it see the need to reduce rates.

“Monetary conditions continue to loosen, for now, and the transition to the LPR benchmark has continued to bring down lending costs for the real economy, resulting in further loosening, without the Bank having to cut its rates.

“In short, the Bank seems comfortable with its main policy settings.

“The thought of rate hikes may seem absurd at this stage, but China’s recovery has been swift and we reckon the next move will be upward, even as soon as the second half next year.”

South Korea’s Kospi managed gains of 0.23% to 2,778.65, while the Hang Seng Index in Hong Kong lost 0.72% to 26,306.68.

Chinese semiconductor giant SMIC fell 3.6% in the special administrative region, after the US Commerce Department added it to its blacklist, putting the kibosh on dealings with American companies, and thus restricting its access to a number of technologies.

The blue-chip technology stocks were mixed in Seoul, with Samsung Electronics flat and chipmaker SK Hynix down 2.11%.

According to Yonhap, new cases of Covid-19 reached a new record high on Sunday in South Korea.

Oil prices were lower as the region went to bed, with Brent crude last down 5.45% at $49.41 per barrel, and West Texas Intermediate losing 5.69% to $46.44.

In Australia, the S&P/ASX 200 slipped 0.08% to 6,669.90, as many parts of the country placed travel restrictions on Sydney amid a growing number of fresh Covid-19 cases.

The country’s largest city has seen a rapidly-growing outbreak of the coronavirus in its Northern Beaches suburbs, with the metropolitan area now essentially cut off from the rest of Australia.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 was 0.59% lower at 12,607.74, as specialist dairy exporter A2 Milk fell 0.55% by the end of trading in Wellington.

The company had said on Friday that its earnings for the current financial year would be more than 20% lower than the prior year.

Both of the down under dollars were weaker against the greenback, with the Aussie last off 1.43% at AUD 1.3368, and the Kiwi retreating 1.4% to NZD 1.4255.