Asia report: Markets mixed after lacklustre start to year

Asia-Pacific markets displayed a mixed performance on Friday, capping off a week of fluctuations following a shaky start to the new year.

Despite early declines, some markets managed to close with modest gains, while others continued to experience losses.

“Stocks in the Asian region ended up trading mixed as the initial optimism slowly faded, even though there were no significant developments,” said TickMill market analyst Patrick Munnelly.

“This occurred as investors prepared for the release of the US non-farm payrolls report and ISM services purchasing managers' index (PMI).

“The Nikkei 225 performed well, briefly reaching above 33,500 handle with support from the weak JPY, but ultimately closed below that level.”

Munnelly noted that the Hang Seng and Shanghai Composite indices experienced fluctuations between gains and losses, ultimately leaning towards a downward trend by the end of the session.

“This was accompanied by the People's Bank of China (PBoC) conducting open market operations, resulting in a net withdrawal of CNY 2.423trn throughout the week.

“According to Reuters' calculations, this marked the largest weekly cash withdrawal on record.

“This significant monetary action may have implications for the financial markets and economic conditions.”

Japan rises while most other bourses decline

In Japan, the Nikkei 225 index rose by 0.27% to reach 33,377.42, while the Topix index recorded a 0.62% increase, closing at 2,393.54.

Leading the gainers on Tokyo’s benchmark was Konami, up 4.26%, followed by Resonac Holdings with a rise of 4.22%, and Nomura, which added 4.16%.

Markets in mainland China faced a less favourable day, with the Shanghai Composite index falling by 0.85% to 2,929.18, and the Shenzhen Component declining by 1.07%, closing at 9,116.44.

Danhua Chemical Technology and Fujian Longxi Bearing Group were among the biggest decliners in Shanghai, losing 9.65% and 9.52%, respectively.

Hong Kong's Hang Seng Index dropped by 0.66% to settle at 16,535.33, with Hansoh Pharmaceutical Group down 6.7%, China Resources Beer off 4.54%, and Lenovo Group settling 3.93% lower.

South Korea's Kospi index also saw a dip of 0.35%, closing at 2,578.08, with EcoPro Materials and Hankook Tire recording notable declines of 5.87% and 2.89%, respectively..

Australia's S&P/ASX 200 index slipped by 0.07% to 7,489.10, with Sims down 6.03% and Sandfire Resources falling 5.23% by the end of trading in Sydney.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 index closed down 0.09% at 11,748.48, with the losses led by KMD Brands and Infratil, which were down 2.6% and 2.52%, respectively.

Turning to currencies, the dollar was last 0.43% stronger on the yen, trading at JPY 145.25.

The greenback was also stronger on its downunder counterparts, rising 0.4% against the Aussie to AUD 1.4969, while it advanced 0.39% against the Kiwi, changing hands at NZD 1.6100.

In oil markets, Brent crude was last up 0.7% on ICE at $78.13 per barrel, while the NYMEX quote for West Texas Intermediate was ahead 0.91% to $72.85.

Positive signs in PMI readings from Japan, India

In economic news, the contraction in Japan’s private sector appeared to have halted, as the au Jibun Bank Japan composite purchasing managers' index (PMI) for December reached 50, up from November's 49.6.

The reading signified stability in Japan's private sector output, with any number above 50 indicating expansion.

Notably, the services sector demonstrated growth, with the services PMI rising to 51.5 in December, compared to 50.8 in November.

Although that expansion marked the second-weakest in 2023, it was driven by a faster rise in new business, attributed to increased customer numbers.

In India, the services sector showed some serious growth, achieving its fastest pace in three months.

The HSBC India services PMI for December recorded 59.0, a notable increase from November's 56.9 and the highest reading since September.

Reporting by Josh White for Sharecast.com.