Asian Shares Retreat On Liquidity Worries

Asian stocks fell on Thursday as investors booked profits after recent strong gains on earnings optimism and firm signs of an economic recovery.

A spike in short-term interest rates raised worries that Chinese policymakers may be starting to shift to a tighter stance to rein in share prices and property markets.

Chinese shares drifted lower as the country’s short-term interest rates rose again, raising worries over signs of liquidity tension ahead of the upcoming Lunar New Year holiday.

The benchmark Shanghai Composite Index slid 15.45 points, or 0.4 percent, to 3,501.86, while Hong Kong’s Hang Seng Index ended down 193.96 points, or 0.7 percent, at 29,113.50.

Japanese shares ended lower to snap a three-day winning streak, weighed down by losses in chip-related shares. The Nikkei 225 Index fell 304.55 points, or 1.1 percent, to 28,341.95, while the broader Topix closed 0.3 percent lower at 1,865.12.

Advantest shed 3.9 percent, Sumco gave up 3.8 percent and Tokyo Electron declined 2.6 percent. Sony shares jumped 9.5 percent after the electronics and media giant reported a 62 percent surge in its profit for the third quarter and also raised its full-year outlook.

Nomura Holdings climbed 4.1 percent after reporting strong earnings. Transport company Kawasaki Kisen Kaisha rose 4.4 percent after signing a deal with Ship Data Center to share operation data of the K Line fleet installed with Kawasaki Integrated Maritime Solutions.

Nippon Yusen gained 4.3 percent after reporting an increase in its profit for the third quarter and raising its financial outlook for the full year.

Australian markets fell, dragged down by gold miners and healthcare companies. The benchmark S&P/ASX 200 Index dropped 59.10 points, or 0.9 percent, to 6.765.50, snapping a three-day winning streak. The broader All Ordinaries Index ended down 53 points, or 0.8 percent, at 7,037.90.

Healthcare stocks such as Cochlear and CSL fell 1-2 percent, pressured by a stronger Aussie dollar. Miners ended mostly higher despite a fall in Chinese iron ore futures ahead of the Lunar New Year holidays.

Evolution Mining, Newcrest Mining, Northern Star and Regis Resources lost 2-3 percent after spot gold prices weakened overnight amid rising Treasury yields and gains in equity prices.

Power provider Origin Energy slumped 6.9 percent after downgrading its profits and earnings guidance for the 2021 financial year. AGL Energy shares tumbled 3.6 percent. Banks ended flat to slightly lower as investors awaited RBA’s updated economic forecasts.

In economic news, a government report showed Australia had a seasonally adjusted merchandise trade surplus of A$6.785 billion in December. That exceeded expectations for a A$6.0 billion surplus following the downwardly revised A$5.014 billion surplus in November. Exports were up 3.0 percent month-on-month, while imports slipped 2.0 percent.

Seoul stocks fell sharply on profit taking after three days of gains. The benchmark Kospi tumbled 42.13 points, or 1.4 percent, to 3,087.55 as foreign and institutional investors booked profits after the recent string of gains on optimism around vaccine rollouts.

The government’s extension of its pandemic-imposed ban on short selling also weighed on markets. Market heavyweight Samsung Electronics gave up 2.5 percent and No. 2 chipmaker SK Hynix lost 3.9 percent.

New Zealand shares fell notably, with the benchmark NZX-50 Index ending down 99.07 points, or 0.8 percent, at 12,992.14 as rising bond yields raised concerns the Reserve Bank of New Zealand could tighten monetary policy.

In economic news, the total number of building permits issued in New Zealand in December advanced a seasonally adjusted 4.9 percent month on month in December, Statistics New Zealand said in a report. That’s up from 2.1 percent in November.

U.S. stocks ended narrowly mixed overnight as investors reacted to the latest earnings news and upbeat private sector employment and service sector activity data, which raised concerns lawmakers will feel less pressure to provide additional stimulus.

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