Asia markets mixed despite Wall Street’s gains; Toshiba shares extend drop amid growing concerns on restructuring plans

Asia markets traded mixed on Thursday, despite U.S. stocks closing at fresh highs for a fifth-straight day overnight, with Toshiba shares extending their recent tumble.

In Japan, the Nikkei Stock Average ended down 0.47 percent, or 90.45 points, at 19,347.53.

Toshiba shares continued their decline on Thursday, falling 3.34percent, extending a more than 8 percent drop in Wednesday’s session amid mounting troubles.

Reuters, citing sources, reported Toshiba may delay the sale of its prized flash-memory chip unit as it scrambles for cash to stay in business, after booking a massive multi-billion dollar hit to its U.S. nuclear unit. The company has delayed releasing its earnings results.

“We believe Toshiba’s delay in reporting its financial results is due to poor internal controls at its U.S. nuclear-power subsidiary, Westinghouse Electric,” said Masako Kuwahara, a senior analyst at ratings agency Moody’s, in a note on Thursday.
“Toshiba is already in a deleterious financial position,” Kuwahara said. “The delay in reporting its results and the substantial impairment charge pose further credit negatives for the company.”

Across the Korean Strait, the Kospi gave up slight early gains to end down 0.10 percent, or 2.02 points, at 2081.84.

In Hong Kong, the Hang Seng index advanced 0.47 percent in afternoon trade, while Chinese mainland markets also saw gains.

The Shanghai composite ended up 0.51 percent, or 16.43 points, at 3229.41, while the Shenzhen composite rose 0.57 percent, or 11.07 points, to 1958.12.

Australia’s ASX 200 ended slightly higher, rising 0.12 percent, or 7.226 points, to 5816.30.

In regional company news, Singapore’s top lender DBS Group said Thursday that net profit in the fourth quarter of 2016 fell nearly 9 percent from the year-earlier quarter to S$913 million. DBS shares advanced 1.59 percent.

Views on U.S. interest rates were also in focus as New York Fed President William Dudley said Wednesday that a rate hike could come soon. “We expect to gradually remove further monetary policy accommodation and snug up interest rates a little bit further in the months ahead,” Dudley said.

The Fed has forecast as many as three rate hikes this year, with the policymaking committee’s next meeting set for March.

Overnight, Federal Reserve Chair Janet Yellen testified in front of Congress for the second straight day on Wednesday. She acknowledged the economy was weak, but said Fed policies have helped and the economy is close to achieving the Fed’s goals on employment and inflation.

On Tuesday, Yellen raised market expectations for a March rate hike after saying it would be “unwise” for the Fed to wait too long.

Symbol
Name
Price
Change
%Change
NIKKEI NIKKEI 19234.62
-112.91 -0.58%
HSI HSI 23987.35
-120.35 -0.50%
ASX 200 S&P/ASX 200 5805.80
-10.51 -0.18%
SHANGHAI Shanghai 3209.94
-19.68 -0.61%
KOSPI KOSPI Index 2080.40
-1.44 -0.07%
CNBC 100 CNBC 100 ASIA IDX 7275.12
-16.45 -0.23%

Analysts were sanguine on how a Fed hike might affect markets.

“What’s most important here is that the market is just so comfortable with a somewhat hawkish Fed and we can even go as far as saying hawkish commentary is now being taken as an equity positive,” said Chris Weston, chief market strategist at spreadbettor IG, in a note.

In the currency market, the dollar slipped against a basket of currencies to trade at 100.84 as of 4:50 p.m. HK/SIN, down from levels above 101.50 in the previous session.

The yen strengthened against the greenback to trade at 113.67 at 4:50 p.m. HK/SIN, climbing from the last close at 114.15.

The stronger yen sent Japanese exporters lower, with major automakers in the red. Toyota shares fell 0.52 percent, Nissan was down 0.31 percent and Honda fell 0.61 percent. Electronics maker Sonydropped 0.97 percent.

Elsewhere, the euro fetched $1.0607 and the Australian dollar was at $0.7698.

Kathy Lien, managing director of foreign exchange strategy at BK Asset Management, said in a note the dollar’s decline against major currencies was likely a surprise to many, “considering the strength of the latest U.S. economic reports, the new highs in U.S. stocks and rise in Treasury yields.”

Lien said the loss of momentum in the dollar likely came from an “unexpected decline in industrial production” and Yellen’s remarks on the economy.

“Investors latched onto these words even though she spent more of her Congressional testimony talking about solid consumer spending, and the pickup in business and consumer confidence,” she said.

On Wednesday, the Dow Jones industrial average closed up 107.45 points, or 0.52 percent, at 20,611.86. The S&P 500 index closed up 11.67 points, or 0.5 percent, at 2,349.25, while the Nasdaq gained 36.87 points, or 0.64 percent, at 5,819.44.