Asia report: Japan markets trip up on poor GDP data

Most markets in Asia finished the first day of the week in the green on Monday, though shares in Japan fell after fresh data revealed the economy did not grow in the quarter through June.

The Nikkei 225 bounced above and below the line for much of the session, closing 0.3% in the red to 16,869.56, while the Topix lost 0.5% to finish at 1,316.63.

Before markets opened, data from the cabinet office showed the country’s gross domestic product was unchanged in the three months to 30 June, compared to the three months to 31 March, with exports dragging the chain.

On an annualised basis, however, the economy grew a muted 0.2%.

The readings were against consensus expectations for annualised growth of 0.7% and quarter-on-quarter growth of 0.2%.

Market watchers said the disappointing readings will fan the flames of doubts over Prime Minister Shinzo Abe’s stimulus packages.

He had announced a fiscal stimulus package worth JPY 28trn last month, though since then its ability to boost future growth has been highly criticised.

“The actual effects could be very limited, given that fresh spending in the package is of similar size as in the previous years,” noted DBS Bank on Friday.

On the currency front, the yen was relatively stronger for much of the session, and was last 0.38% closer to the greenback at JPY 100.91.

In corporates, shares in electronics maker Sharp were up 10.38%, after rising almost 20% on Friday on the news that the Chinese competition regulator had given the go-ahead for a takeover from Taiwanese technology manufacturer Hon Hai Precision Industry, better known as Foxconn.

On the mainland, the Shanghai Composite added 2.45% to 3,125.40, while the Shenzhen Composite gained 2.51% to 2,023.23.

A number of market watchers were looking for additional stimulus from Beijing, after last week’s raft of Chinese data fell short of expectations.

Investors were also anticipating the launch of a Shenzhen-Hong Kong stock connect in the coming months, after reports on Friday that the China Securities Regulatory Commission was preparing for an imminent launch.

The programme will reportedly be similar to the existing Shanghai-Hong Kong stock connect, which allows investors on the mainland to trade in shares listed in the special administrative region.

“We expect the southbound fund flows of Shenzhen-Hong Kong Stock Connect, which could be announced in the coming weeks, to share similar preference on small-caps as domestic A-share investors,” HSBC head of Hong Kong and China research Steven Sun was quoted as saying.

Hong Kong’s Hang Seng Index added 0.73% to finish at 22,932.51, while South Korean markets were closed and their traders enjoying a day off the floor, commemorating liberation from imperialist Japanese rulers in WWII on National Liberation Day.

Oil prices were stronger during Asian trading, with Brent crude last up 0.8% at $47.35 per barrel and West Texas Intermediate adding 0.8% to $44.85.

Australia’s S&P/ASX 200 grew 0.16% to 5,539.96, with the weighty financials subindex rising 0.59%, although materials lost 1.52% as resource producers came under renewed pressure.

The major miners in the sunburnt country were all down more than 2%, with Fortescue Metals chalking the biggest loss at 3.27%.

Health and safety solutions company Ansell posted its full-year earning during the session, with sales revenue down 4%.

Its board did admit that it was at the lower end of its guidance, but it also revealed it was actively considering a continuation of its share buyback programme.

There were also reports during the day that it was considering the sale of its condom-manufacturing division, before its shares closed up 17.74%.

In New Zealand, the S&P/NZX 50 rose 0.3% to 7,388.35 as traders dealt with the first reports of the local earning season.

Steel products manufacturer Steel & Tube was up 10.5%, after posting better-than-expected annual earnings and lifting its dividend on Friday.

The down under dollars were both stronger against the greenback, with the Aussie last 0.24% closer at AUD 1.3040 per $1 and the Kiwi ahead by 0.19% at NZD 1.3869.