Asia report: Japan leads gains on mixed day for region

Asia-Pacific markets finished with a mixed performance on Thursday, with Japan leading the gains as investors looked ahead to a policy decision from the US Federal Reserve.

Expectations were for the US central bank to maintain its current interest rate targets.

Patrick Munnelly, market analyst at TickMill Group, said stocks in the region experienced primarily positive trading conditions, although gains were limited for most indices ahead of the Federal Open Market Committee (FOMC) announcement.

“The region also faced a series of data releases, including disappointing Chinese Caixin manufacturing PMI, which marked its first contraction in three months,” he said.

“The Nikkei 225 posted the most substantial gains, benefiting from reports of a new economic package in Japan totalling around JPY 17trn, as well as recent currency depreciation following the Bank of Japan's modest yield curve control adjustment.

“Conversely, the Hang Seng and Shanghai Composite saw choppy trading.”

Patrick Munnelly noted that the Caixin manufacturing PMI data from China mirrored the recent deterioration in the official figures.

“There was some disappointment after the People's Bank of China's open market operations resulted in a net daily drain, despite prior reports of the central bank's likely addition of further liquidity and expected declines in money market rates from the day.”

Japan markets jump, mixed performance for rest of region

Stocks in Japan put in a robust performance, with the Nikkei 225 closing up 2.41% to reach 31,601.65, while the Topix index saw significant gains of 2.53% to 2,310.68.

The impressive performance came a day after the Bank of Japan announced a fresh approach of flexibility to its yield curve control policy.

Leading the gains on Tokyo’s benchmark were Mitsubishi Electric, which surged 14.52%, followed by Mitsubishi Chemical Holdings, up 9.88%, and Daiwa Securities Group, which added 9.69%.

Markets in mainland China meanwhile showed mixed results, with the Shanghai Composite edging up 0.14% to 3,023.08, while the Shenzhen Component saw a slight decline of 0.38% to end at 9,826.73.

Among the notable gainers in Shanghai were Guangzhou Tongda Auto Electric and Fujian Furi Electronics, which were up 10.05% and 10.02%, respectively.

The Hang Seng Index in Hong Kong experienced a marginal decline of 0.06%, closing at 17,101.78.

Some of the prominent fallers in the city included Haidilao International, down 12.78%, China Resources Mixc Lifestyle, which lost 2.46%, and Trip.com Group, which was 2.46% weaker/

South Korea's Kospi index displayed positive momentum, rising by 1.03% to reach 2,301.56, with the gainers including Hanwha Aerospace, ascending 12.38%, and Hanwha Solutions, jumping 7.16%.

Australia's S&P/ASX 200 index posted steady gains of 0.85%, closing at 6,838.30, with Paladin Energy rising 7.94% and Pro Medicus adding 5.18%.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 index also showed positive movement, increasing by 0.87% to reach 10,850.92.

Freightways and Synlait Milk were among the leading gainers in Wellington, rising 5.37% and 4.51%, respectively.

In currency markets, the dollar was last down 0.32% on the yen, trading at JPY 151.20.

The greenback was, however, trading stronger on its downunder counterparts, rising 0.05% on the Aussie to AUD 1.5788, and advancing 0.08% against the Kiwi to change hands at NZD 1.7180.

In oil markets, Brent crude futures were last up 1.22% on ICE at $86.06 per barrel, while the NYMEX quote for West Texas Intermediate rose 1.32% to $82.09.

Mixed economic signals across Asia-Pacific economies

In economic news, China's manufacturing sector saw an unexpected contraction in October, according to fresh data from a private survey.

The Caixin/S&P Global manufacturing purchasing managers' index (PMI) declined to 49.5, marking the first contraction in four months.

Economists surveyed by Reuters had pencilled in a reading of 50.8, with a PMI reading below 50 indicating a contraction.

The result mirrored the official figure released earlier in the week by China's National Bureau of Statistics.

“The CNY 1trn post-disaster reconstruction targeted stimulus is likely to buoy construction activity in the fourth and first quarters, filtering down to industrial demand, and offsetting the drag from the struggling property sector and declining exports,” said Pantheon Macroeconomics chief China economist Duncan Wrigley.

“China’s industrial sector probably will continue to forge an uneven and patchy recovery, led by electric vehicles and green energy, but hampered by soft domestic demand and a slow rebound in consumer sentiment.”

Elsewhere, South Korea saw a positive turn in its export performance, recording a 5.1% year-on-year increase in exports in October, reversing the 4.4% decline observed in September.

That marked the first expansion in exports since September last year.

However, South Korea's factory activity contracted slightly deeper in October, with the PMI registering at 49.8, down from 49.9 in September.

“Cost pressures have continued to build,” Pantheon’s Duncan Wrigley said of the Korean data.

“The input price index rose to 59.4 in October, the highest level since December 2022, with manufacturers citing rising global energy and raw material prices, and higher import costs due to the weaker won.”

In India, factory activity slowed to its weakest pace since February, according to private surveys conducted by S&P Global.

The manufacturing PMI for the country fell to 55.5 in October, down from September's reading of 57.5.

Despite the deceleration, it still marked the 28th consecutive month of improvement in the sector's health, with the latest reading remaining above its long-run average of 53.9.

Reporting by Josh White for Sharecast.com.