Published: June 21st, 2021
On Friday, June 18, shares in Asian-Pacific markets showed mixed results. Major Australian miners’ shares slipped following a recent drop in commodity prices. Meanwhile, the Bank of Japan kept its monetary policy steady, announcing a continuation of the pandemic-relief program duration.
Shares in Asia-Pacific recorded mixed results on Friday, June 18, after investors retreated to monitor trends in the commodities space following a sharp drop in the prices the previous day. Japan’s Nikkei 225 shed 0.19% to close the day’s trading at 28,964.08. Meanwhile, the Topix index bled 0.87% to record 1,946.56. Kospi of South Korea gained 0.1%, etching 3,267.93 at the day’s end.
Mainland Chinese companies’ stocks were just as mixed. The Shanghai Composite recorded a marginal drop to stand at 3,525.10 while the Shenzhen component picked up 0.769% to close the day at 14,583.67. Hong Kong’s Hang Seng index was also up about 0.6%.
Australia’s S&P/ASX 200 shot up by 0.13% to etch 7,368.90 at closing.
In Southeast Asia, Singapore’s Straits Times index gained a fraction of a percent after the government announced further easing of COVID-related restrictions during the week beginning on Monday, June 21. However, the reopening would adopt a much slower pace than earlier announced since local infections have not declined significantly.
MSCI’s broadest index of Asia-Pacific stocks outside Japan shrunk by 0.1%.
The mixed performances are attributed to the wait-and-see attitude adopted by investors as they train their eyes on the trajectory the market is taking after commodity prices tumbled on Thursday, June 17.
Share prices of major Australian mining entities slipped on Friday, June 18, with Rio Tinto shrinking by more than 0.6%, while BHP Group Ltd.’s shares closed 2.45% down. Fortescue Metals Group also winded down the week with a slip of 0.84%. Oil prices dropped on Friday, June 18, during the afternoon trading session in Asia, compounding the losses recorded the previous day. International benchmark Brent crude futures shed 0.41% to trade at $72.78 per barrel. U.S. crude futures were also down almost 0.25% with a barrel selling at $70.87.
Meanwhile, the price of spot gold went up by 0.84% to $1,788.16 for every ounce. Gold prices dropped sharply in the week that ended on Saturday, June 19, coming from a high of more than $1,840 an ounce to the prices mentioned above.
Overall, of the six major indexes in the Asia-Pacific region, half of them closed the week lower with the remaining either holding steady or gaining marginally. Nikkei 225’s 0.19% drop was the most significant followed by CNBC 100 Asia IDX, which slid by 0.07%. Shanghai Stock Exchange recorded a marginal 0.01% decline.
Among the risers, the Hang Seng index managed the biggest leap, shooting up by 0.85%. Australia’s S&P/ASX 200 managed to close 0.13% up, while South Korea’s Kospi index gained by almost 0.1%.
While stocks swung, the currencies were more defined. The U.S. dollar index, the indicator tracking the greenback’s trend against the basket of its peers, climbed to 92.009 after rising above 91 the previous week. Meanwhile, the Australian dollar closed at $0.7534, struggling to claw back the week’s losses. It had dipped significantly after rising above $0.768 the previous week.
On Friday, June 18, Japan announced that it would maintain its monetary policy. It would also extend the duration of its relief program on the effects of the pandemic. According to the Bank of Japan (BoJ), the administration would continue to monitor the ravaging effects of COVID-19 and act instantly if additional measures become necessary.
The statement contained in the bank’s monetary policy statement reiterated that it would keep both the short- and long-term policy interest rates at their current state or even lower. Following the bank’s announcement, the country’s currency was exchanged at 110.01 for every dollar. The yen’s performance improved, rising steadily above 110.5 for every dollar recorded on Thursday, June 17.
The stance of the Japanese central bank was informed by a monetary policy review that pointed to the risk of aggravated financial distortions. It is the first time the bank has published an elaborate, in-depth review of its monetary policy since 2016.
A senior bank representative said that the statement added a greater leeway for flexibility on the policy in case the need to adjust the purchase of exchange-traded funds (ETFs) arises. He also added that the additional leeway affects its policy on yield curve control. Besides the policy motivates bank lending and insulates banks from some effects of the pandemic.
Japan’s headline consumer price index for May 2021 fell by 0.1% year-on-year. The figure dropped below the 0.2% projection and follows a slip of 0.4% the previous month. The CPI data excluding food and energy slumped 0.2% year-on-year compared to a projected drop of 0.3%. the April figure was -0.2%.
Meanwhile, shares of Chinese firms fell after the U.S. proposed sanctions on products from Huawei Technologies and four other electronic companies from China. On Thursday, June 17, the U.S. Federal Communications Commission (FCC) took a unanimous vote to implement the plan to restrict approval for tools and equipment that the country’s telecommunication companies source from Chinese companies thought to be security risks.
The other four are ZTE Corporation, Hytera Communications Corp., the video surveillance equipment manufacturer Hangzhou Hikvision Digital Technology Co., and Zhejiang Dahua Technology Co.
Beijing protested the proposed ban, while a Huawei spokesperson termed the decision as unnecessarily punitive and misguided. Zhao Lijian, the spokesperson attached to China's foreign ministry, said the U.S. is abusing national security and state power to vanquish Chinese companies.
However, FCC said the proposal would eliminate untrustworthy equipment from the U.S. communications networks. The agency’s chairwoman Jessica Rosenworcel said the country’s open authorization process has left open opportunities for Huawei and other Chinese communication equipment manufacturers to access the U.S. market. However, the new proposal seeks to close that door, Jessica added.
The news pushed Chinese companies' shares down 0.49%.