Nikkei 225 Loses Ground as Asian Equities Finish the Week Down

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Asian indices finished the week down on Friday as the oil price-fueled rally that has swept equities along since Wednesday’s OPEC summit resulted in a commitment to reduce output by 1.2 million barrels a day ran out of gas. Growing expectation that inflation rates will increase in 2017 is also pushing up U.S. Treasury yields, a negative pull on emerging market equities, with a final drag the potentially disruptive outcome of this weekend’s referendum in Italy on constitutional reform. Markets are also waiting for U.S. jobs data, the last major economic data report due before the Federal Reserve makes a final decision on interest rate hikes in mid-December.

In Japan, the Nikkei 225 dropped 0.47%, which can be considered a modest correction in the context of Thursday’s session seeing an 11-month high for the index. There was also a slight drop in the U.S. dollar against the yen yesterday though positive sentiment was also given a fillip by the news that the country’s GDP increased for the second successive month in October.

Yesterday’s biggest faller was mobile portal and e-commerce company DeNA, which lost 6.7%. The company was forced to suspend most of its information websites on criticism that medical information on them was provided in an inappropriate and potentially dangerous manner. Electronics companies also didn’t have a good day with SCREEN Holdings (-5.43%), Tokyo Electron (-4.39%) and Alps Electric (-3.72%) all numbering among the day’s biggest fallers.

Banks and financial sector stocks had a largely positive session, however, and Mitsubishi UFJ Financial Group added 5.68% as the day’s biggest gainer, Nomura gained 4.84%, Resona 5.14%, Matsui Securities 3.51% and Shinsei Bank 3.24%.

In Hong Kong, the Hang Seng fell by 1.3%, with casino, insurance and technology-focused companies leading the slide. Galaxy Entertainment and China Sands, who have both risen significantly over the past couple of weeks in anticipation of new casino licenses being issued by Japan, fell 4.67% and 3.95% respectively. The fall was seemingly a reaction to news that Macau may introduce new rules obliging tourists arriving in the territory to declare cash sums of over $15,000. AAC Technologies was down by 1.93%. The insurers which saw the biggest losses were AIA Group, down 3.31% and China Life Insurance, down 2.69%.

In Australia, the ASX 200 fell by a touch over 1% despite data released by the Australian Bureau of Statistics indicating a third month of growth for retail sales. Oil prices dropping back slightly and investors fleeing bonds proved to be enough to overturn any optimism the retail sales data may have provided. Mining giants BHP Billiton and Rio Tinto dropped by 2.3% and 1.12% respectively and Fortescue Metals lost 3.15%. Woodside Petroleum was also a heavy loser, down 1.9%.

Bellamy’s Australia, who make baby formula, saw the company’s share price savaged as it plunged by 43.5%. The company released a profit warning, citing a loss of market share in China.

A drop in the dollar helped gold prices recover from this week’s 10-month lows and gold miners Evolution Mining and Regis Resources saw the benefit, gaining 4.7% and 2.5% respectively, while GrainCorp added 1.8%. U.S. soft commodities trading company Archer Daniels Midland recently sold its 19.9% stake.

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