China shares eked out gains Tuesday even as most Asian markets retraced some of their recent rally, with traders digesting weaker-than-expected trade data from the mainland.
Angus Nicholson, a market analyst at IG, told CNBC a lot of the recent rally in stocks has been “driven by a major reversal (or short covering) in financials, materials and energy.” But, he said, momentum, which had been declining in other sectors already, is now falling in these sectors as well.
China’s trade data, released around 10:30 a.m. SIN/HK time, also wasn’t positive for sentiment, with February exports falling 25.4 percent in U.S. dollar terms, while imports fell 13.8 percent, with both declines wider than expectations. The drop in exports was the largest on-year drop since 2009, according to Reuters.
Nicholson noted that China’s foreign exchange reserves data released overnight is unlikely to have “totally reassured markets around the prospects for further yuan devaluation.”
On Monday, official data released after the market close showed foreign currency reserves on the mainland fell to $3.2 trillion at the end of February, dropping from $3.23 trillion the previous month, marking the fourth straight month of declines, although the pace of outflows slowed substantially. The February figure was in line with analysts’ expectations shown in a Reuters poll.
Among other markets, Japan’s benchmark Nikkei 225 closed down 128.17 points, or 0.76 percent, at 16,783.15, extending Monday’s 0.6 percent drop.
Before the market open, Reuters reported revised government data showed Japan’s economy shrank at an annualized 1.1 percent in the final quarter of 2015. This was revised up from a preliminary reading of a 1.4 percent contraction.
The S&P/ASX 200, Australia’s benchmark index, ended down 34.85 points, or 0.68 percent, at 5107.96, dragged by losses in the energy, materials and financials sectors. The sectors were down 1.11, 0.82 and 1.02 percent, respectively.
Major miners in Australia gave up early gains, with Rio Tinto closing down 2.60 percent, BHP Billiton lower by 1.83 percent and iron ore producer Fortescue slipping 9.42 percent, after surging nearly 24 percent Monday.
Fortescue announced prior to the market open that it was in talks with Vale to work together to blend iron ore to meet the demands of its customers. The announcement said there was also a possibility that could see the Brazilian miner take a 5-15 percent minority stake in the Australian miner.
“I think what the [Vale and Fortescue deal] reflects is a realization on the part of both companies that iron ore prices are going to hang around these levels for a long time to come,” Gavin Wendt, senior resource analyst from MineLife, told CNBC’s “Street Signs.”
“We are unlikely to see any sort of major recovery to the sort of [iron ore] prices we’ve seen in the past,” added Wendt.
The declines in mining shares come despite recent upward moves in commodities. Overnight, iron ore prices rose from $52.40 to $62.60 a tonne.
Gold miners, on the other hand, saw an uptick, with shares of Newcrestclosing up 1.30 percent and Alacer Gold adding 0.72 percent. As of 3:13 p.m. HK/SIN time, spot gold traded higher at $1,269.57 an ounce, but below Friday’s peak of $1,279.60, the highest since Feb. 3, 2015. Overnight, U.S. gold for April delivery gained 0.5 percent to $1,269.90 an ounce.
Japanese automaker Suzuki Motor closed down 3.76 percent, following a report in the Nikkei that the company will issue 200 billion yen in zero-coupon convertible bonds and use most of the proceeds toward widening its operations in India.
Shares of Japan’s Softbank closed up 1.69 percent, after the company announced reorganization plans to separate its domestic and overseas businesses with separate chief executives. This latest move to boost shareholder value comes after a $4.4 billion share buyback plan announced in February.
On the currency front, the dollar struggled to find traction against major Asian currencies.
The Japanese yen strengthened against the greenback as thedollar/yen pair traded down 0.5 percent to 112.92, as of 3:13 p.m. HK/SIN time.
Major Japanese exporters struggled on the back of the yen’s strength, as shares of Toyota finished down 1.80 percent, Nissan fell 2.63 percent and Honda was lower by 0.95 percent. A strong yen is a negative for exporters as it usually reduces their overseas profits when converted into local currency.
The Chinese yuan also strengthened marginally against the dollar, with the dollar/yuan pair trading lower by 0.13 percent at 6.5058. Prior to market open, the People’s Bank of China set the yuan mid-point fix at 6.5041 against the dollar.
Down Under, the Australian dollar slipped against the U.S. dollar, with the pair trading down 0.62 percent at 0.7422.
Oil prices slipped during Asian hours, with the global benchmark Brentdown 1.25 percent at $40.33, as of 3:13 p.m. HK/SIN time, after closing at its 2016 peak of $40.84 a barrel. U.S. crude futures were also down 1.13 percent at $37.46, after finishing up at $37.90 a barrel overnight.
Energy plays in the region were mixed, with Oil Search closing up by 0.27 percent and Woodside Petroleum finishing 0.33 percent lower. Japan’s Inpex shed 0.72 percent, while Japan Petroleum was up 0.29 percent. On the Chinese mainland, Sinopec shares were up 2.91 percent, while Petrochina slipped 0.51 percent.
Correction: The article has been updated to reflect that Brazil’s Vale may take a 5-15 percent stake in Australian miner Fortescue. The article has also been updated to reflect that Australia’s S&P/ASX index ended at 5107.96.
— Nyshka Chandran contributed to this report.