Asia report: Hong Kong leads region-wide losses

Asia-Pacific markets saw broad declines on Tuesday, led by significant losses in Hong Kong amid sharp falls in basic materials and industrial stocks.

The losses for the region came despite a tech rally on Wall Street overnight that pushed the Nasdaq to fresh record highs.

“Asian stocks paused on Tuesday after a seven-day winning streak,” said TickMill market analyst Patrick Munnelly, adding that profit-taking by investors led to a decline in Chinese stocks.

“Hong Kong's equity market also experienced a downturn, with Li Auto leading the losses in the MSCI Asia Pacific index due to lower-than-expected first-quarter vehicle sales.

“Japanese stocks remained steady thanks to positive insurance company earnings.”

Munnelly said the economic challenges in China remained a “major concern” in Asia, with recent data showing no signs of recovery in the country's debt-ridden real estate market.

“Land sales last month generated the lowest revenue for local governments in eight years, highlighting the financial struggles faced by agencies heavily reliant on this type of income.”

Markets in the red across the region

In Japan, the Nikkei 225 slipped 0.31% to 38,946.93, and the Topix fell 0.3% to 2,759.72.

Notable decliners on Tokyo’s benchmark included Sumitomo Dainippon Pharma, which plunged 8.85%, Sompo Holdings, down 6.07%, and Daikin Industries, which decreased by 4.68%.

Chinese markets also faced losses, with the Shanghai Composite down 0.42% to 3,157.97 and the Shenzhen Component falling 0.71% to 9,681.66.

Major laggards in Shanghai were Anhui Andeli Department Store, which dropped 9.99%, and Beijing Airport High-Tech Park, down 6.18%.

Hong Kong’s Hang Seng Index dropped 2.12% to 19,220.62, impacted by Li Auto, whose shares plummeted 19.27% after reporting disappointing first-quarter results.

The electric vehicle maker's revenue fell 38.6% from the previous quarter to CNY 25.6bn (£2.81bn), missing analysts' expectations of CNY 26.73bn.

Vehicle deliveries also fell sharply to 80,400 from 131,805 in the last quarter of 2023.

South Korea's Kospi declined 0.65% to 2,724.18, with EcoPro Materials dropping 12.52% and Hanwha Solutions down 11.79%.

In Australia, the S&P/ASX 200 edged down 0.15% to 7,851.70, pressured by a 14.79% decline in James Hardie Industries and a 6.01% drop in Sonic Healthcare.

New Zealand's S&P/NZX 50 decreased by 0.51% to 11,675.99, with Pacific Edge falling 6.86% and Stride Property dropping 5.43%.

In currency markets, the dollar was last down 0.06% on the yen to trade at JPY 156.17, while it lost 0.03% against the Aussie to AUD 1.4993.

The greenback meanwhile strengthened 0.05% on the Kiwi to change hands at NZD 1.6388.

Oil prices also declined, with Brent crude futures last down 0.48% on ICE at $83.31 per barrel, and the NYMEX quote for West Texas Intermediate falling 0.86% to $79.11.

RBA considered rate hike in May, youth unemployment falls in Chinese cities

In economic news, the Reserve Bank of Australia (RBA) considered a rate hike in its May meeting but ultimately decided to keep the cash rate unchanged at 4.35%, according to the meeting minutes released earlier in the day.

The minutes revealed that board members were concerned about persistent inflation, which had not declined as much as anticipated.

It noted that both domestic and international economic growth and inflation had been stronger than expected.

The data since the April meeting suggested an increased risk of inflation remaining above target for an extended period.

In China, the urban unemployment rate for those aged 16 to 24 decreased to 14.7% in April, down from 15.3% in March, according to the country’s statistics bureau.

That figure, which excludes students, reflected a revised definition implemented since December.

The adjustment followed the government’s decision to stop reporting youth unemployment data in June when it surpassed a record high of 21%.

Reporting by Josh White for Sharecast.com.