Asia report: Markets mixed ahead of US payrolls report

Equities in Asia closed in a mixed state on Friday, with bourses in China leading the losers, after a jump in oil prices overnight.

In Japan, the Nikkei 225 was up 0.27% at 28,783.28, as the yen strengthened 0.03% on the dollar to last trade at JPY 111.50.

Fashion firm Fast Retailing was down 0.89%, while among the benchmark’s other major components, automation specialist Fanuc was up 0.3% and technology conglomerate SoftBank Group advanced 1.11%.

The broader Topix index was 0.88% firmer by the end of trading in Tokyo, closing at 1,956.31.

On the mainland, the Shanghai Composite was down 1.95% at 3,518.76, and the smaller, technology-heavy Shenzhen Composite slipped 1.86% to 2,396.78.

South Korea’s Kospi was off 0.01% at 3,281.78, while the Hang Seng Index in Hong Kong dropped 1.8% to 28,310.42.

The blue-chip technology stocks in Seoul were in the red, with Samsung Electronics down 0.12% and SK Hynix off 1.61%.

Investors were closing their wallets towards the end of the Asian day, looking across the Pacific to the nonfarm payrolls report out of the United States, due later on.

Consensus expectations were for an addition of 706,000 jobs in June, with an unemployment rate of 5.6%, down from 5.8%.

“Today’s NFP is expected to print around 700,000, but as ever, the range of estimates is quite wide,” said Neil Wilson of Markets.com.

“Whilst we know the Fed has signalled it’s not ignorant to inflation risks, we also know that the labour market is a key factor in determining the likely timing and pace of tightening when it does happen.

“Since the Fed’s last meeting, which the market took as a sign of more hawkishness - from a very dovish base - the equation for markets has changed slightly.”

Oil prices were lower as the region entered the weekend, having jumped during the US session overnight, with Brent crude last down 0.21% at $75.68, and West Texas Intermediate off 0.17% at $75.10.

“OPEC failed to agree on an increase in production yesterday, as the United Arab Emirates emerged as a dissenter against plans to gradually raise production by an additional 400,000 barrels per day each month through to December, until the baseline for its own output is raised,” Neil Wilson explained.

“The agreement in principle would also have led to the production deal being extended through to the end of 2022.”

The failure of OPEC members to agree to the deal meant the planned OPEC+ meeting was pushed back to Friday, and could run into the weekend.

“If OPEC cannot agree a deal, it could mean there is no agreement to gradually raise output, leaving production at current levels and forcing prices higher in what’s already seen as a very tight market.

“The market seems to still expect a deal to be struck – failure could see another leg up.”

In Australia, the S&P/ASX 200 managed gains of 0.59% to 7,308.60, while across the Tasman Sea, New Zealand’s S&P/NZX 50 was ahead 0.22% at 12,711.84.

The down under dollars were both weaker against the greenback, with the Aussie last off 0.28% at AUD 1.3422, and the Kiwi retreating 0.21% to NZD 1.4378.