Asian shares were mostly lower Tuesday as investors took a breather after sharp gains the prior session, with demand ebbing after Wall Street pulled back on Monday.
Tokyo’s Nikkei 225 faded 125.12 points, or 1.2%, to 10,112.89
Hong Kong’s Hang Seng Index was lower by 93.10 points, or 0.5%, to 20,819.08
Asian currencies and the euro rose briefly against the U.S. dollar after Beijing lowered the dollar/yuan reference rate, but the gains evaporated as the yuan fell on apparent dollar-buying from Chinese banks.
The positive impact on markets from China's weekend decision to allow greater flexibility in the yuan's exchange rate had worn off as it was clear that Beijing would not allow the currency to move quickly.
Materials, energy and consumer discretionary plays were mixed in Australia as the initial positive reaction to the lowering of the dollar/yuan central parity subsided.
BHP Billiton was down 0.3%, Rio Tinto gained 0.5% and Santos fell 2.3%. Elders plunged 42.1% after the company downgraded its earnings outlook to a fiscal year underlying loss of A$8 million-A$14 million, from its previous forecast of a A$55.7-million profit.
The Tokyo market was down on broad-based losses, with 32 of the Topix's 33 subsectors trading lower.
Commodity plays such as trading houses fell on profit-taking after Monday's rise which was spurred by hopes of increased demand from China following the weekend's yuan news.
Marubeni lost 0.8% and Sumitomo Corp. was down 1.9%. Exporters were also taking a breather with Honda Motor off 0.7%, Sony down 1.8% and Canon down 2.1%.
Shares in Seoul pared some earlier losses with China-related plays such as steelmakers and shipbuilders continuing to rise on the weekend yuan news. Posco gained 0.2% and Hyundai Heavy Industries rose 2.8%.
Taiwan companies with exposure to China were bucking the broader market's falls with Uni-President up 0.3%, Cheng Shin Rubber 1.0% higher and Clevo gaining 1.5%.
In foreign exchange markets, the euro was down against the U.S. dollar, reversing a brief rise earlier which was driven by the Chinese central bank setting the dollar/yuan central parity at 6.7980 Tuesday, from 6.8275 on Monday.
Traders in Asia said several Chinese banks were behind the dollar buying against the yuan, amid speculation that the Chinese central bank could be encouraging buying to reinforce the perception that its latest promise to increase the yuan's flexibility means two-way fluctuations.
The single currency was fetching $1.2308 against the dollar, from $1.2320 U.S. late Monday in New York, and was at Y111.94 against the yen, from Y112.15. The dollar was buying Y90.95 compared with Y91.04.
CHINA
China stocks reversed earlier losses as expectations for a stronger yuan continued to drive investor demand.
Shanghai’s CSI 300 Index added 3.06 points, or 0.1%, to 2,783.72
Among actively traded stocks, Ping An Insurance was up 0.5% and China Eastern Airlines gained 0.4%.
Elsewhere;
Singapore’s Straits Times Index moved 13.34 points, or 0.5%, lower to 2,872.30
Korea’s Kospi index sank 8.20 points, or 0.5%, to 1,731.48
Taiwan’s Taiex Index doffed 22.88 points, or 0.3%, to 7,612.68
New Zealand’s NZX index gave back 14.05 points, or 0.5%, to 3,054.19
Australia’s S&P/ASX 200 took off 54.26 points, or 1.2%, to 4,558.34
