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Asia-Pacific Markets Update

Asia-Pacific-markets-dip-lower_FXPIG

Global equity markets were lower in Asia on Tuesday, as a pullback in commodity shares dragged Australia’s benchmark index lower, while tighter liquidity weighed on Chinese stocks.

Commodity stocks have been key to the recent rebound for Australia’s underperforming equities market, helping the S&P/ASX 200 XJO, -0.93% hit 10-year highs earlier this month, but profit-taking pressure has been building.

The stock index was down by as much as 1.1%, with the energy sector retreating around 2.5%, even though oil prices barely budged overnight. The sector had jumped nearly 15% in barely a month. The stock benchmark was last trading down 0.9%.

Utilities stocks in Australia were also weaker, down 1.6% after recently hitting their best levels since midyear, while heavyweight miners BHP Billiton BHP, -1.31% and Rio Tinto RIO, -0.88%   were also lower after recently hitting multiyear highs.

“The Australian market has had an uncommon run now. In these circumstances it is reasonable to expect some profit-taking,” said Ric Spooner, chief market analyst at CMC Markets.

Tuesday’s pullback came after another member of Australia’s parliament resigned over dual-citizenship status. The crisis tipped the conservative government toward the minority in the lower house of parliament last week, after two lawmakers were disqualified and forced to re-contest their seats.

Meanwhile, Chinese shares were also under pressure, with the Shanghai stock benchmark SHCOMP, -0.45% down 0.3%, after logging a six-session winning streak and closing at a fresh 22-month high on Monday.

Data late Monday showed that growth in M2, the broadest measure of money supply in China, was lower-than-expected at 8.8% in October, the weakest increase on record. In Shenzhen 399106, -0.62% , the stock benchmark was off 0.4%, while Hong Kong’s Hang Seng Index HSI, +0.05%  was roughly flat.

“Stocks there have a direct correlation with liquidity,” said Alexander Lee, chief investment officer at Nimbus Capital Group. He expects declines in stocks to be temporary, though, as the squeeze on liquidity could help reduce overcapacity, ultimately helping boost earnings.

Data released Tuesday also showed slower industrial output and fixed-asset investment growth in China in October.

“At the end of the day, China still intends to strike a balance between growth, debt and leveraging,” said Commerzbank economist Zhou Hao.

In South Korea, the Kospi SEU, -0.27%   was down 0.3%, led by declines in tourism-related shares such as Korean Air Lines 003490, -1.14% and Asiana Airlines 020560, -1.82%  . The stocks are sensitive to rising tensions with North Korea. On Monday, a North Korean soldier defected to the South by crossing the Demilitarized Zone. He was injured after being shot by fellow North Korean soldiers.

Bucking the region’s declines, Japan’s Nikkei Stock Average NIK, +0.31%   was up 0.3% in the morning session, lifted by gains in the U.S. dollar against the yen, which supported export-related stocks.

The dollar JPYUSD, -0.014959% was last at ¥113.62, up from ¥113.47 before the local stock market closed Monday. The rebound came after the benchmark index fell 1.3% to end lower for the fourth consecutive session on Monday, its largest four-day point decline since Nov. 9 last year.

Source: marketwatch.com

Global equity markets were lower in Asia on Tuesday, as a pullback in commodity shares dragged Australia’s benchmark index lower, while tighter liquidity weighed on Chinese stocks.

Commodity stocks have been key to the recent rebound for Australia’s underperforming equities market, helping the S&P/ASX 200 XJO, -0.93% hit 10-year highs earlier this month, but profit-taking pressure has been building.

The stock index was down by as much as 1.1%, with the energy sector retreating around 2.5%, even though oil prices barely budged overnight. The sector had jumped nearly 15% in barely a month. The stock benchmark was last trading down 0.9%.

Utilities stocks in Australia were also weaker, down 1.6% after recently hitting their best levels since midyear, while heavyweight miners BHP Billiton BHP, -1.31% and Rio Tinto RIO, -0.88%   were also lower after recently hitting multiyear highs.

“The Australian market has had an uncommon run now. In these circumstances it is reasonable to expect some profit-taking,” said Ric Spooner, chief market analyst at CMC Markets.

Tuesday’s pullback came after another member of Australia’s parliament resigned over dual-citizenship status. The crisis tipped the conservative government toward the minority in the lower house of parliament last week, after two lawmakers were disqualified and forced to re-contest their seats.

Meanwhile, Chinese shares were also under pressure, with the Shanghai stock benchmark SHCOMP, -0.45% down 0.3%, after logging a six-session winning streak and closing at a fresh 22-month high on Monday.

Data late Monday showed that growth in M2, the broadest measure of money supply in China, was lower-than-expected at 8.8% in October, the weakest increase on record. In Shenzhen 399106, -0.62% , the stock benchmark was off 0.4%, while Hong Kong’s Hang Seng Index HSI, +0.05%  was roughly flat.

“Stocks there have a direct correlation with liquidity,” said Alexander Lee, chief investment officer at Nimbus Capital Group. He expects declines in stocks to be temporary, though, as the squeeze on liquidity could help reduce overcapacity, ultimately helping boost earnings.

Data released Tuesday also showed slower industrial output and fixed-asset investment growth in China in October.

“At the end of the day, China still intends to strike a balance between growth, debt and leveraging,” said Commerzbank economist Zhou Hao.

In South Korea, the Kospi SEU, -0.27%   was down 0.3%, led by declines in tourism-related shares such as Korean Air Lines 003490, -1.14% and Asiana Airlines 020560, -1.82%  . The stocks are sensitive to rising tensions with North Korea. On Monday, a North Korean soldier defected to the South by crossing the Demilitarized Zone. He was injured after being shot by fellow North Korean soldiers.

Bucking the region’s declines, Japan’s Nikkei Stock Average NIK, +0.31%   was up 0.3% in the morning session, lifted by gains in the U.S. dollar against the yen, which supported export-related stocks.

The dollar JPYUSD, -0.014959% was last at ¥113.62, up from ¥113.47 before the local stock market closed Monday. The rebound came after the benchmark index fell 1.3% to end lower for the fourth consecutive session on Monday, its largest four-day point decline since Nov. 9 last year.

Source: marketwatch.com

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