Asia report: Markets mostly weaker as Covid concerns weigh

Markets in Asia closed mostly weaker on Tuesday, as investors digested fresh economic data out of China, with concerns over Covid-19 outbreaks weighing on sentiment.

In Japan, the Nikkei 225 was down 0.17% at 26,687.84, as the yen strengthened 0.05% against the dollar to last trade at JPY 104.00.

Robotics specialist Fanuc was up 1.14% and Uniqlo owner Fast Retailing added 0.1%, while technology giant SoftBank Group lost 1.1%.

The broader Topix index was 0.47% weaker by the end of trading in Tokyo, closing at 1,782.05.

On the mainland, the Shanghai Composite slipped 0.06% to 3,367.23, and the smaller, technology-centric Shenzhen Composite managed gains of 0.39% to 2,256.43.

In fresh economic data out of China, the country’s industrial production expanded 7% year-on-year in November, in line with what economists polled by Reuters were expecting.

Retail sales, meanwhile, were ahead 5% over the prior year in November, according to the National Bureau of Statistics, which was just short of the 5.2% growth picked by the Reuters poll.

South Korea’s Kospi was 0.19% lower at 2,756.92, while the Hang Seng Index in Hong Kong lost 0.69% to 26,207.29.

The blue-chip technology stocks were mixed in Seoul, with Samsung Electronics closing flat and SK Hynix rising 0.43%.

The short-term trajectory of the coronavirus pandemic remained a top concern during the Asian day, with the US Covid-19 death toll topping 300,000, according to Johns Hopkins University, as the mayor of New York City warned that there could be a “full shutdown” soon.

Overnight, it was confirmed that London would move into the top ‘tier 3’ level of coronavirus restrictions under the English rules from midnight on Wednesday, amid soaring infection numbers in the capital.

“Last year talk of a global pandemic would have been dismissed as alarmist nonsense, but now it is all anyone can discuss as they look ahead into 2021,” said IG chief market analyst Chris Beauchamp.

“The bull case for equities still rests on widespread vaccination efforts that will allow things to move back to normal, or something like it, as the new year goes on, but almost everyone seems to expect some kind of pullback into the new year once Christmas and the usual end of year chase are out of the way.”

Oil prices were higher as the region went to bed, with Brent crude last up 0.26% at $50.42 per barrel, and West Texas Intermediate rising 0.32% to $47.14.

In Australia, the S&P/ASX 200 was off 0.43% at 6,631.30, as investors there pored through the minutes from the Reserve Bank of Australia’s December policy meeting.

In them, the central bank warned of “an extended period of high unemployment” as the sunburnt country worked to reach pre-pandemic levels of output.

“The high unemployment rate and excess capacity across the economy more broadly were expected to result in subdued wages growth and inflation over coming years,” the bank said.

“Given this environment, the board viewed addressing the high rate of unemployment as an important national priority.”

Coal miners plunged in Sydney, meanwhile, amid reports from Chinese state-controlled media that power plants had been cleared to import coal without restrictions, except for from Australia.

BHP was down 2.25%, Coronado Global Resources fell 10.04%, Whitehaven Coal lost 5.88% and Yancoal was 8.43% weaker.

The two countries have been locking horns in a months-long trade dispute, which has seen Beijing put tariffs on a wide range of Australian products, including wine and barley.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 lost 0.53% to 12,767.17, as Contact Energy gave up some of its gains from the prior session, falling 3.26%.

Both of the down under dollars were weaker on the greenback, with the Aussie last off 0.13% to AUD 1.3292, and the Kiwi retreating 0.11% to NZD 1.4138.