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Japan equities buoyed by yen weakness

Monday 02.10 GMT. The post-US election rally appears to have subsided, with Asian equities benchmarks having a mixed morning with the exception of Japan, which has been propped up by a weaker yen.

Wall Street finished a strong week on a mixed note on Friday, as the S&P 500 slipped but the Dow Jones Industrial Average closed at a record high.

The action on Monday is in Japan. Data showed that the economy expanded 0.5 per cent quarter-on-quarter in the three months to the end of September — more than twice the pace of the previous period and of economists’ expectations.

That potentially relieves pressure from the Bank of Japan to ease monetary policy further. Some initial stability in the yen did not last, and the currency is among the worst performers in Asia on Monday, down 0.7 per cent at ¥‎107.39 to its weakest level since early June. Propelled by the weaker yen, Japan’s broad Topix benchmark was up 1.4 per cent and the price-focused Nikkei 225 gained 1.5 per cent.

Australia’s S&P/ASX 200 was down 0.9 per cent with gold stocks the worst performers, as the price of the yellow metal fell 0.7 per cent to $1,218.86 an ounce.

Hong Kong’s Hang Seng was down 1.6 per cent, while China’s Shanghai Composite was up 0.3 per cent and the technology-focused Shenzhen Composite added 0.5 per cent.

China’s renminbi was also in the spotlight. The People’s Bank of China fixed the midpoint around which the currency is allowed to trade softer on Monday to Rmb6.8291 — its weakest since September 2009.

Influencing that is the continued rise of the US dollar. The US dollar index, which tracks the greenback’s value against a basket of other major currencies, was up 0.5 per cent at 99.542 and on track for a sixth-straight day of gains.

The New Zealand dollar, down 0.5 per cent, was also among the worst performers in Asia and took a knock following a 7.8 magnitude earthquake that struck 90km north of Christchurch on the South Island just after midnight local time on Monday.

Investors were also watching Chinese economic data for October that have come in slightly weaker than economists had forecast. Industrial production held steady on the previous month, while retail sales moderated, but both data points were slightly less than the average of market expectations.

Chinese fixed asset investment was a slightly brighter spot, growing from September and also coming in above forecasts.

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