Asia report: Markets fall on back of US tech sell-off

Markets across the Asia-Pacific region largely declined on Tuesday, as investors examined pivotal economic data from Japan and South Korea.

In South Korea, the unemployment rate for August reached its lowest point since 1999, while in Japan, corporate confidence plummeted in September among both manufacturers and non-manufacturers.

“Asian equity markets faced downward pressure, influenced by the recent tech-related declines on Wall Street, driven by post-Apple event disappointment,” said TickMill market analyst Patrick Munnelly.

“Additionally, market participants exhibited caution as they awaited the release of upcoming US consumer price index data, which is of significant interest to global financial markets.

“The Nikkei 225 index in Japan experienced fluctuations, initially swinging between gains and losses.”

Munnelly said early gains were seen following mixed producer price data, and an improvement in large industry surveys.

“However, the index eventually slipped, with money markets now pricing in the Bank of Japan to exit negative interest rates in January, as opposed to the previous expectation of an exit in September of the following year.

“The Hang Seng index in Hong Kong and the Shanghai Composite index in mainland China initially held their ground, buoyed by strength in energy sector stocks and positive developments as some cities eased restrictions on the real estate sector.

“However, both indices later succumbed to the prevailing negative sentiment.”

Most equities dip across Asia-Pacific region

In Japan, the Nikkei 225 fell slightly by 0.21%, settling at 32,706.52, while the Topix recorded a minor dip of 0.05%, closing at 2,378.64.

Significant laggards on Tokyo’s benchmark included Mitsui Engineering & Shipbuilding which slumped by 3.42%, IHI Corporation dropping 3.05%, and Taisei declining 2.8%.

Markets in China also experienced a downswing, as the Shanghai Composite decreased by 0.45%, ending at 3,123.07, while the Shenzhen Component had a steeper fall of 1.14%, concluding at 10,255.87.

Leading the decliners in Shanghai were China Satellite Communications, which plunged by 6.89%, followed by ArcSoft with a 5.85% dip.

In South Korea, the Kospi index marginally dropped by 0.07%, finishing at 2,534.70.

Netmarble Games saw a significant tumble, down by 12%, and Yuhan registered a 5.62% decline.

Australia's S&P/ASX 200 encountered a more pronounced drop of 0.74%, settling at 7,153.9.

IGO and Macquarie Technology Group were among Sydney’s notable decliners, falling 7.58% and 5.19% respectively.

Contrary to the general trend in the region, New Zealand's market experienced a positive day, as the S&P/NZX 50 rose 0.52% to 11,357.12.

Pacific Edge and EBOS Group led the gains with increases of 4.72% and 4.12% respectively.

On the currency front, the dollar was last 0.18% stronger on the yen, trading at JPY 147.34, while it gained 0.23% on the Aussie to AUD 1.5597.

Meanwhile, the greenback held steady against its Kiwi counterpart, with the rate unchanged at NZD 1.6940.

The oil market saw an uptick, with Brent crude futures last up 0.52% on ICE at $92.54 per barrel, while the NYMEX quote for West Texas Intermediate climbed 0.6% to $89.37.

Japanese corporate sentiment declines amid economic challenges

In economic news, corporate confidence in Japan saw a substantial decline in September, with concerns rising among both major manufacturing and non-manufacturing sectors.

According to the latest Reuters Tankan survey, the sentiment index for manufacturers slipped to +4, making for a considerable drop from August's +12.

The descent marked the most significant decrease since January, where the index fell by 14 points.

Positive values in the index did, however, suggest that optimistic viewpoints outnumber the pessimistic ones.

At the same time, the non-manufacturers' sentiment saw a slide of nine points, positioning it at +23 in September.

According to the survey, the dip was the sharpest since May 2020.

Several Japanese firms reportedly voiced concerns over escalating raw material costs and subdued global and domestic demand.

External factors contributing to the decline in sentiment included the ongoing conflict in Ukraine, and mounting tensions between China and the United States.

In other news from Japan, the country's Corporate Goods Price Index (CGPI) registered a year-on-year rise of 3.2% in August.

Although noteworthy, the increase was slightly muted compared to July's revised 3.4%.

The CGPI, which measures the prices Japanese corporations charge one another, matched the expectations set by a Reuters poll of economists.

August also marked the eighth consecutive month where the pace of wholesale inflation decelerated.

From a monthly perspective, the CGPI saw a 0.3% increase, surpassing the Reuters projection for 0.1%.

Across the sea, South Korea reported a favourable employment scenario, with its unemployment rate for August dipping to a commendable 2% from July's 2.7%.

This new figure set a record, being the lowest unemployment rate since the inception of the measure in June 1999, according to Statistics Korea.

When adjusted for seasonal variations, unemployment for August was recorded at 2.4%, an improvement from 2.8% in July.

Reporting by Josh White for Sharecast.com.