Asia report: Markets mixed ahead of US payrolls, Fonterra plunges

Stock markets in Asia finished in a mixed state on Friday, as investors closed their wallets ahead of a key set of employment data out of the United States.

In Japan, the Nikkei 225 eked out gains of 0.09% to 29,357.82, as the yen weakened 0.02% against the dollar to last trade at JPY 109.11.

Automation specialist Fanuc rose 1.15%, while among the benchmark’s other major components, fashion firm Fast Retailing was down 0.73% and technology conglomerate SoftBank Group was off 0.4%.

The broader Topix index was ahead 0.29% by the end of the session in Tokyo, closing at 1,933.05.

On the mainland, the Shanghai Composite fell 0.65% to 3,418.87, and the smaller, technology-heavy Shenzhen Composite slid 1.62% to 2,239.68.

Fresh data out of Beijing during the day showed China’s foreign exchange reserves rebounding to $3.2trn in April, from $3.17trn in March, broadly meeting consensus expectations.

Pantheon Macroeconomics chief Asia economist Freya Beamish said valuation effects fully accounted for the rise, with the bounce in the euro alone contributing a likely $20.5bn.

“These data suggest that the People’s Bank of China (PBoC) has done nothing to prevent the renewed appreciation of renminbi, at least not through official intervention,” Beamish said.

“Going forward, the Bank likely would lean against any further appreciation, which is possible since we continue to think that the PBoC will be ahead of the curve in the global normalisation efforts.

“But the recovery elsewhere is catching up, and we reckon that eventually will arrest the yuan’s rise.”

South Korea’s Kospi was 0.58% firmer at 3,197.20, while the Hang Seng Index in Hong Kong slipped 0.09% to 28,610.65.

The blue-chip technology stocks were mixed in Seoul, with Samsung Electronics down 0.49%, while SK Hynix gained 0.39%.

Market participants in the region were looking ahead to the nonfarm payrolls data out of the US later in the global day, with economists waiting to see if the figure of new payrolls tops one million for April.

The figures are seen as one of the key indicators as to the trajectory of the US Federal Reserve’s policy, as the central bank has said it would maintain its near-zero interest rates and other easy policy until inflation ticked higher and the labour market strengthened.

Oil prices were on the back foot as the region entered the weekend, with Brent crude last down 0.13% at $68.00 per barrel, and West Texas Intermediate losing 0.16% to $64.81.

In Australia, the S&P/ASX 200 was ahead 0.27% at 7,080.80, as the hefty financials subindex added 0.46% and the materials sector rose 1.13%.

The big four banks were in the green on the southern continent, with Australia and New Zealand Banking Group up 0.36%, Commonwealth Bank of Australia ahead 1.05%, National Australia Bank rising 0.83%, and Westpac Banking Corporation closing up 0.27%.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 was 0.17% weaker at 12,729.92, with shares in the Fonterra Shareholders’ Fund plunging 6.52% after a two-day trading halt.

Dairy cooperative Fonterra - a key influencer of the global dairy market - laid out a number of options for a capital restructure on Thursday, saying its preferred option was to limit the number of shares a farmer was required to hold.

It also wanted to put a lid on the growth of the traded Fonterra Shareholders’ Fund, which is a mechanism that allows non-farmer investors to participate in the performance of the cooperative.

Both of the down under dollars were weaker on the greenback, with the Aussie last off 0.1% at AUD 1.2858, and the Kiwi retreating 0.2% to NZD 1.3852.