Asia report: Markets mixed after oil producers extend cuts

Markets across the Asia-Pacific region showed a mixed bag of performance on Wednesday, influenced by the decision of Saudi Arabia and Russia to extend their voluntary oil production cuts until the end of the year.

Patrick Munnelly at TickMill Group said Asian equity markets started the day with a bearish tone, influenced by a lacklustre performance on Wall Street overnight.

“Investors there were grappling with concerns over rising yields, a strengthening dollar, and surging oil prices.

“However, the Nikkei 225 defied the broader trend, managing to breach the 33,000 handle, thanks to a weaker yen, which touched a new low for the year.”

On the other hand, Munnelly noted that the Hang Seng and Shanghai Composite faced losses, primarily driven by weakness in the tech sector.

“Notably, some property developers saw significant gains, fueled by hopes of additional policy support measures, with Sunac's stock surging by over 60% following its recent return to the Stock Connect program.”

Japan sees gains, China turns in mixed performance

In Japan, both major indices - the Nikkei 225 and the Topix - closed up 0.62% at 33,241.02 and 2,392.53 points, respectively.

Companies in various sectors gained on Tokyo’s benchmark, most notably Mitsui Engineering & Shipbuilding which jumped 8.89%.

Oki Electric Industry Co followed with a 5.38% increase, and Mazda Motor Corporation rounded out the top performers with a 4.67% rise.

Chinese markets exhibited mixed trends, as the Shanghai Composite edged up 0.21% to finish at 3,160.84, while the Shenzhen Component slightly retreated, down 0.13% to 10,527.33.

HMT Xiamen New Technical Materials was a standout in Shanghai, rallying 7.75%, followed by China Bester Group Telecom which gained 6.9%.

The Hang Seng Index in Hong Kong eked out a minor gain, closing 0.06% higher at 18,467.86.

Country Garden Services led the gains with a 5.85% surge, as Longfor Properties increased by 4.67%, and Semiconductor Manufacturing International Corporation advanced 2.39%.

On the downside, South Korea's Kospi index fell 0.73% to 2,563.34.

Leading the declines were Posco International, which plummeted 5.58%, and Hanwha Solutions, which dropped 5.02%.

Australia's S&P/ASX 200 also ended the day in the red, slipping 0.78% to 7,257.10.

Orora took a heavy hit, plunging 18.18%, while Lovisa Holdings decreased 4.43%.

New Zealand’s S&P/NZX 50 showed little change, dipping just 0.08% to close at 11,427.66.

Meridian Energy and Fletcher Building were the biggest losers, down 1.97% and 1.87% respectively.

In currency markets, the dollar was last 0.21% stronger on the yen, trading at JPY 147.41.

The Aussie and Kiwi dollars also saw minor declines against the greenback, dropping 0.09% and 0.04% to AUD 1.5663 and NZD 1.6990, respectively.

Oil prices experienced a dip following the extended production cuts, with Brent crude futures falling 0.94% on ICE to $89.28 per barrel, and the NYMEX quote for West Texas Intermediate declining 0.82% to $85.98.

Australia's GDP outperforms expectations while Singapore lowers economic forecasts

In economic news, Australia's economy exhibited stronger growth than analysts had anticipated for the second quarter of 2023, although the pace of expansion did moderate compared to the prior quarter.

The nation's gross domestic product (GDP) increased by 2.1% year-on-year, surpassing the 1.8% forecast by economists in a Reuters poll.

Despite beating expectations, the figure was still a deceleration from the 2.3% year-on-year growth observed in the first quarter.

On a sequential basis, the economy continued to show resilience, with GDP expanding by 0.4%, marking the seventh straight quarter of growth for Australia.

In a contrasting development, Singapore trimmed its economic outlook for 2023.

The country's central bank, the Monetary Authority of Singapore, released a survey on Wednesday that indicated economists had downgraded both growth forecasts and inflation expectations for the nation.

The revisions came amid concerns over the spillover effects from a global economic slowdown, identified as the most significant risk.

According to the median estimate from the survey of 22 economists, Singapore's economy was now projected to grow by 1.0% this year, a cut from the 1.4% growth expected in the June survey.

In terms of inflation, the headline consumer price index was now expected to rise 4.7%, down from the 5.0% previously predicted in June.

Core inflation, which excludes the cost of private road transport and housing, was slated to climb 4.1%, unchanged from the prior survey.

Reporting by Josh White for Sharecast.com.