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Asia markets mixed as investors focus on US tax reform

Saheli Roy Choudhury
Futures pointed to a higher open in Australia and Japan, and the dollar fell against a basket of currencies.

Asia markets traded mixed on Monday, following a decline in U.S. equities last Friday on lingering concerns about American tax reform.


Markets on the move

In Australia, the ASX 200 closed down 11.58 points, or 0.19 percent, at 5,945.67. The heavily-weighted financial subindex was down 0.41 percent, while the energy sector trimmed morning gains to rise 0.11 percent.

Japan's Nikkei 225 fell 135.04 points, or 0.6 percent, to 22,261.76, while the Topix index was down 4.11 points, or 0.23 percent, at 1,759.65. In South Korea, the Kospi gave up early morning gains to close down 6.32 points, or 0.25 percent, at 2,527.67.

Chinese markets retraced losses to climb in afternoon trade. The Shanghai composite closed up 10.11 points, or 0.3 percent, at 3,393.02 while the Shenzhen composite added 17.63 points, or 0.9 percent, to 1,971.93.

In Hong Kong, the Hang Seng index traded up 0.17 percent at 2:57 p.m. HK/SIN.

One focus for investors: Analysts were cautiously optimistic about the U.S. tax reform getting done this year. Treasury Secretary Steven Mnuchin told CNBC's " Squawk Box " on Friday that he expects a Republican tax reform bill to be sent to President Donald Trump by Christmas .

Mnuchin made his comments a day after the House passed a bill aimed at overhauling the tax code. The Senate now has to vote on its version of a tax plan.

One commentator told CNBC on Monday that he was advising investors to not make any investment decisions until there was more clarity on the tax reform.

Jim Lowell, CIO at Adviser Investments, told CNBC's " The Rundown " that the tax reform plan at the moment is more theoretical than practical. He pointed out that tax reforms also tend to have intended and unintended consequences that are both positive and negative.

"There'll be plenty of time to digest the plan, if it actually does turn into some mode of enactment," Lowell said. "There'll also be plenty of time to figure out how to maneuver as the revisions go forward. But I would definitely advise investors to not make any investment move today based on the fact that they don't know how this tax reform plan is going to play out."

Meanwhile, the U.S. dollar traded at 93.954 against a basket of currencies at 3:00 p.m. HK/SIN, hovering near the 94.00 level it saw in the previous week.

Among other currency majors, the Japanese yen traded at 112.03 to the dollar, while the Australian dollar fetched $0.7563.

The euro traded at $1.1738, slipping from levels above $1.1760 reached in the previous week. The move in the common currency came after reports emerged that German Chancellor Angela Merkel's efforts to form a coalition government had failed, thus making the political outlook for Europe's largest economy uncertain.


Oil in focus amid rising Middle East tensions

Energy prices were in focus amid reports of heightened tension in the Middle East between Saudi Arabia and Iran, following the resignation of the Lebanese Prime Minister Saad al-Hariri and the escalation of the Yemeni conflict.

Reuters reported that Saudi Arabia and other Arab foreign ministers criticized Iran and its Lebanese Shi'ite ally Hezbollah at an emergency meeting in Cairo on Sunday. They called for a united front to counter Iranian interference.

Meanwhile, Iran exported about 4.26 million barrels of oil from South Pars to international destinations since late March, according to the Iranian Students' News Agency. South Pars is the world's largest gas field that also has significant oil reserves, reported Reuters.

The Organization of the Petroleum Exporting Countries (OPEC) is also set to meet in Vienna on Nov. 30, where member states will decide if they would support an output cut deal beyond March next year.

Analysts at Singapore's OCBC Bank said in a Monday note that they expect OPEC to "deliver at least a three to six months extension to supply cuts" that would further support oil prices.

U.S. crude traded up 0.04 percent at $56.57 a barrel at 3:04 p.m. HK/SIN, while global benchmark Brent fell 0.27 percent to $62.55.

Energy plays in Asia Pacific were mixed. In Australia, shares of Santos rose 0.6 percent, after shaving morning gains of near 2 percent. Woodside Petroleum was up 0.55 percent, while Beach Energy gave up early gains to close down 0.47 percent. Oil Search shares fell 0.97 percent.

In Japan, Inpex trimmed morning gains to close down 0.08 percent and Japan Petroleum was up 1.17 percent.

Company news

In corporate news, Toshiba said it would raise 600 billion yen ($5.3 billion) from a sale of new shares, according to Reuters.

The company needs to raise 750 billion yen by the end of March to plug the hole in its balance sheet following the bankruptcy of its U.S. nuclear power business or it will be delisted from the Tokyo Stock Exchange, Reuters reported.

Toshiba shares closed down 5.82 percent.

Hong Kong-listed shares of Chinese offline food retail, Sun Art Retail Group , fell 3.6 percent in afternoon trade, after tech giant Alibaba announced it will invest a total of $2.88 billion to acquire a 36.16 percent stake in the company.

Sun Art operates about 446 hypermarkets in 29 provinces, autonomous regions and municipalities across China, according to Alibaba.

— CNBC's Fred Imbert and Reuters contributed to this report.