Asian Stocks Mixed Again, Financials Weigh On Nikkei

Talking Points

• Most Asian stocks gained, with the Nikkei again a standout faller
• It didn’t slip by much though, although its financials weighed it down
• Other markets managed to ignore simmering geopolitics

Asians stock indexes managed gains on Tuesday, except for the Nikkei 225. It was weighed down by its big financial names as Deutsche Bank’s worries continue to reverberate.

The German giant said on Monday that it was after EUR8 billion ($8.5 billion) in cash from shareholders, sending its stock down 8% in Frankfurt. The Japanese benchmark did pare its losses into the close and ended down just 0.2%.

Australian stocks clawed their way up after a weak start. The Reserve Bank of Australia left its key Official Cash Rate on hold at its record low of 1.5%. This had been widely expected, and the RBA didn’t sound like a central bank keen to alter its policy settings any time soon. The Australian Dollar rose a little after the announcement but has traded a tight range since.

Markets managed to rise in general despite still-simmering geopolitics. The US said on Monday that it would deploy a missile defense system to South Korea to counter the missile threat from the North, while Malaysia and North Korea’s diplomatic row accelerated. Malaysia’s investigation into the murder of Kim Jong Nam on its soil goes on; he was the brother of North Korea’s leader Kim Jong Un. Pyongyang has reportedly barred all Malaysians in North Korea from leaving the country.

Investors are also looking to this month’s US Federal Reserve monetary policy meeting with ever-more certainty that interest rates will rise. The US Dollar seemed to steady on this prospect in Asia, with this Friday’s official US labor market data widely seen as the final hurdle to a rate hike on March 15. The Dollar Index ticked up to 101.63, from the one-month lows around 101.22 seen in the previous session.

Crude oil prices endured a quite session, with both US and Brent benchmarks close to flat.

The rest of the global day won’t offer investors much in terms of scheduled economic news. There’s a final look at the Eurozone’s Gross Domestic Product for the final quarter of 2016, and the US January trade balance, but that is about it.

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--- Written by David Cottle, DailyFX Research

Contact and follow David on Twitter: @DavidCottleFX