TOKYO: Asia markets gave up much of their early gains on Wednesday to trade lower as the yen nudged higher against the dollar and oil prices retreated.
In Australia, the benchmark ASX 200 pared some of the early gains of more than 1.2 percent to trade up 0.5 percent, with advances in the financials sub-index, as well as the energy and materials sub-indexes.
The Nikkei 225 gave up early morning gains of over 1.3 percent to trade flat, with many Japanese shares coming under pressure from fresh strength in the yen against the dollar. Across the Korean Strait, the Kospi extended early losses to trade down 0.56 percent. In Hong Kong, the Hang Seng index was down 0.93 percent.
Mainland Chinese markets were lower in early trade, with the Shanghai composite down 0.23 percent, and the Shenzhen composite off 0.52 percent.
The Japanese yen gained fresh strength against the dollar, after weakening in the U.S. session. The dollar/yen pair traded at 108.78 as of 9:50 a.m. HK/SIN, compared to the 109 level in early trade and closing at 109.25 overnight.
The overnight move in the dollar/yen pair came after Japanese finance minister Taro Aso hinted at the possibility of an intervention in the currency market to tame the rise in yen.
Reuters reported that Aso told Japanese parliament on Tuesday that though Japan had no plans to manipulate currency moves on a long-term basis to give exporters a boost, the country was ready to intervene if one-sided moves in the yen persisted.
Since the Bank of Japan elected to keep its monetary policy unchanged late last month, shocking markets in the process, the dollar/yen pair had fallen from the 111 handle to the 106 handle before returning to the 108 level earlier this week.
Tuesday’s move in the dollar/yen was due to short covering, said Kathy Lien, managing director of foreign exchange strategy at BK Asset Management.
“While we are surprised that more Japanese officials are trying to talk up the currency at 108-109 than 106-107, this could be a strategic move to give speculators reason to cover their shorts at a time when the dollar/yen was struggling to extend its losses below 106,” she said.
Major Japanese exporters gave up most of their gains Wednesday morning, with shares of Toyota and Nissan giving up gains of more than 1 percent each to trade up 0.19 and 0.15 percent, respectively. Sony shares retraced some of the near 2.6 percent gains to trade up 2.1 percent.
Oil prices advanced in the U.S. on Tuesday amid expectations that the build up in U.S. crude inventories will be lower than expected, according to Reuters.
During Asian hours Wednesday, global benchmark Brent was down 0.26 percent at $45.40 a barrel, after settling up 4.3 percent overnight. U.S. crude futures were down 0.36 percent at $44.50 a barrel, after finishing up 2.8 percent in U.S. hours.
Energy plays in Asia were mostly higher, with Santos adding 1.12 percent, Woodside Petroleum up 0.79 percent and Inpex higher by 1.09 percent. Chinese mainland shares of China Petroleum were up 0.22 percent.
The overnight uptick in oil gave commodity currencies an initial boost, with both the Australian dollar and the New Zealand dollar advancing against the greenback in early morning Asia time.
But the Aussie pared some of the gains since, trading at $0.7354 as of 9:55 a.m. HK/SIN, compared to an earlier high of $0.7390. The Kiwi was at $0.6805, coming off a previous high of $0.6825.
The dollar index, which measures the greenback against a basket of currencies, was at 94.146, up from the 92 handle it touched last week.
In company news, one of Australia’s large grain storage companies, GrainCorp, announced its half-year profit numbers on Wednesday, with net profit at 20 million Australian dollars ($14.7 million) for the period, with the company saying global trading conditions will continue to weigh on the Australian grains sector in the near term.
Shares of GrainCorp were down 1.13 percent.
Other companies that are expected to announce their earnings on Wednesday include Japanese automakers Toyota, Nissan, as well as troubled airbag manufacturer Takata.
Stateside, major indexes closed higher, with the Dow Jones industrial average up 1.26 percent, the S&P 500 adding 1.25 percent and the Nasdaq composite higher by 1.26 percent.
