Asian markets are seeing a muted reaction to another bullish session on Wall Street, after Japan’s trade deficit unexpectedly swelled, FastFT reports.
Japan’s Nikkei 225 average is flat, while Hong Kong’s Hang Seng index and Sydney’s S&P/ASX 200 each fell 0.2 per cent.
Market sentiment had been up earlier, after a strong overnight session pushed the S&P 500 up 0.5 per cent to 1,981, leaving the US equity benchmark less than 0.4 per cent shy of the record closing high it struck three weeks ago.
But the positive tone subsided after Japanese data indicated the trade deficit widened in July, driven by an unanticipated rebound in imports.
The monthly deficit was -Y964bn, much wider than forecasts of -Y714bn and also wider than June’s -Y823bn gap. This marks the 25th straight monthly deficit.
Imports climbed 2.3 per cent from a year ago, against forecasts that they would fall 1.5 per cent.
Any sign that spending habits are rebounding in the third quarter should be positive, after GDP slumped an annualised rate of 6.8 per cent in the second quarter, but the driving factor behind July’s uptick in imports was fuel costs.
“The trade deficit was still on a rough par with that of 3Q 2013 (prior to the surge in domestic demand ahead of the April 2014 consumption tax increase) despite the recent post-tax-hike demand downturn, suggesting that it continues to face widening pressure due to structural factors,” said analysts at Credit Suisse.
In Australia, BHP Billiton shares fell 4.1 per cent after it confirmed it would unwind much of the 2001 merger that brought BHP and Billiton together.
Wesfarmers shares rose 1.7 per cent after the retail giant said it would return A$1.1bn to shareholders. The news came as it said net profit in its fiscal year rose 19 per cent to A$2.69bn.
Shares of Woodside Petroleum rose 0.7 per cent after the oil explorer reported that first half net profits grew 27 per cent from a year ago to $1.1bn, matching estimates.
In currencies, the Australian dollar didn’t react much to the latest “jawboning” attempt from Reserve Bank of Australia Governor Glenn Stevens.
Mr Stevens said he “can’t see the logic” for the Aussie dollar’s high valuation and argued that a material fall in the currency is “underestimated” by markets.
