Asia report: Most markets lower on Brexit stall, Covid relief talks

Most markets in Asia finished in negative territory on Thursday, once again with the exception of those in China, as investors watched for developments on both the Covid-19 front and in ongoing Brexit negotiations between the UK and the European Union.

In Japan, the Nikkei 225 was down 0.23% at 26,756.24, as the yen weakened 0.24% against the dollar to last trade at JPY 104.48.

Technology giant SoftBank Group surged 10.91%, while among the benchmark’s other major components, robotics specialist Fanuc slipped 0.06% and Uniqlo owner Fast Retailing was 1.01% weaker.

The broader Topix index ended the session in Tokyo 0.18% weaker at 1,776.21.

On the mainland, the Shanghai Composite eked out gains of 0.04% to 3,373.28, and the smaller, technology-centric Shenzhen Composite rose 0.12% to 2,253.43.

South Korea’s Kospi was 0.33% lower at 2,746.46, while the Hang Seng Index in Hong Kong lost 0.35% to 26,410.59.

The blue-chip technology stocks were weaker in Seoul, with Samsung Electronics down 1.35% and SK Hynix losing 3.32%.

Sentiment in Asia was negative from the start of the session, following losses on Wall Street overnight as investors held their breath for a breakthrough in talks between the UK and the EU.

UK prime minister Boris Johnson had dinner with European Commission president Ursula von der Leyen on Wednesday night, in a bid to find more common ground.

No such progress was made, but according to reports from Downing Street, both sides agreed that a “firm decision” should be made by Sunday about the trajectory of negotiations.

The UK’s current transition arrangement with the EU expires at 2300 GMT on 31 December, having come into force in January in a bid to give both sides time to negotiate a permanent trade agreement.

“UK-EU trade talks trudge on, with both sides setting Sunday as a deadline for a firm decision,” said Axi chief global market strategist Stephen Innes.

“A semblance of progress by Sunday should ensure that talks continue beyond then, perhaps explaining the unperturbed reaction in GBP-USD and EUR-GBP in Asia this morning.”

Innes quipped that, with more than four years having passed in the process of Brexit, the deadlines were meant to be broken.

“Sterling is still the best fear index for gauging investor confidence, and although it has been banging around quite a bit, even opening in Asia at 1.3350, the street is still holding on to a high level of optimism.”

“Deadlines have come and gone, and it appears the market will be tolerant of more slippage on the deal's timeline, and I suspect even into 2021.”

Stateside, meanwhile, negotiations for Covid-19 relief continued among lawmakers in Washington, although like the Brexit talks, no major advancements were made.

Oil prices were higher as the region went to bed, with Brent crude last up 1.43% at $49.56 per barrel, and West Texas Intermediate rising 1.32% to $46.12.

In Australia, the S&P/ASX 200 was off 0.67% at 6,683.10, with oil plays dragging the energy subindex down 0.37%.

Beach Energy and Santos were both flat, while Oil Search lost 0.53% and Woodside Petroleum was off 0.35%.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 was off 0.23% at 12,860.37, as medical technology company Fisher & Paykel Healthcare continued its decline, falling 0.93%.

Both of the down under dollars were stronger on the greenback, with the Aussie last ahead 0.6% at AUD 1.3355, and the Kiwi advancing 0.28% to NZD 1.4196.