Aussie Shares Stumble Ahead of Crucial Earnings Week; Nikkei’s Losses Limited by Chip Sector Surge

Shares in Australia and Japan closed lower on Friday on relatively low volume as many markets in the Asia-Pacific region were closed for the start of the Lunar New Year holiday.

In Australia, the benchmark S&P/ASX 200 Index dipped 0.63% to 6,806.70 with financials, energy and materials sub-indexes pressured throughout the session.

Japanese markets resumed trading after being closed Thursday for a public holiday. The benchmark Nikkei 225 Index declined 0.14% to 29,520.07 while the Topix Index climbed 0.16% to 1,933.88.

Friday’s session followed overnight moves on Wall Street where the Dow Jones Industrial Average ended near the flatline while the S&P 500 and NASDAQ Composite eked out gains.

Australia Shares Close Lower Weighed by Gold, Energy Stocks

Australian shares ended lower on Friday, hurt by losses in gold and energy stocks as prices of the underlying commodities declined, ahead of crucial earnings due next week.

“Participants are taking some exposure off the board ahead of the risk event that the earnings season will be,” said Nick Twidale, chief executive officer of APAC at FP Markets.

Earnings from Australian heavyweights, including BHP Group, Rio Tinto and National Australia Bank, are scheduled for next week.

Risk sentiment was also weighed by news that the country’s second-most populous city Melbourne will enter a five-day snap coronavirus lockdown after the discovery of a fresh cluster.

“Investors are closely watching Melbourne…there could be an acceleration in correction next week if the cases keep rising,” Twidale added.

Among sectors, energy stocks fell 1.3% as oil prices fell after OPEC cut its demand forecast and the International Energy Agency said the market was still over-supplied.

Oil & gas explorers Woodside Petroleum and Santos Ltd lost 1% and 1.6%, respectively.  Gold stocks fell 1.8%, snapping four-straight sessions of gains, as prices of the precious metal was weighed by a stronger dollar. Top independent gold producer Newcrest Mining was down 1%. Gold miners BHP Group and Rio Tinto fell 1.7% and 1.2%, weighing on the broader sector.

Nikkei Slips from Over 30-year High on Profit-Taking after Rally; Toyota, Chip Shares Jump

Japan’s stock benchmark snapped a four-session rally on Friday, slipping from a more than 30-year high hit in the previous session, as investors booked profits but gains in Toyota Motor and chip shares capped the losses.

Toyota Motor jumped 3.48%, after the automaker said on Wednesday after the markets closed that it has up to a four-month stockpile of chips and was not immediately expecting a global chip shortage to hit production. It raised its full-year earnings forecast by a bigger-than-expected 54%.

Chip-related shares gained after the Philadelphia Semiconductor Index hit record highs overnight, as Bloomberg News reported that U.S. President Joe Biden’s administration had pledged aggressive steps to address chip shortage.

For a look at all of today’s economic events, check out our economic calendar.