Asia report: Markets mixed after suprise Korea rate cut

Markets in the Asia-Pacific region saw a mixed performance on Thursday as investors weighed South Korea's unexpected interest rate cut and a subdued session on Wall Street.

The Bank of Korea reduced its benchmark interest rate by 25 basis points to 3.0%, a move that surprised analysts who had anticipated a pause following October's cut.

“Asian stocks were lacklustre on Thursday, and the dollar was under pressure after US data indicated that the progress in curbing inflation had stagnated, despite the economy showing resilience,” said Patrick Munnelly at TickMill.

“This has created uncertainty regarding the Federal Reserve's potential actions in the coming year.

“With the US Thanksgiving holiday expected to result in thin trading for the remainder of the week, traders were cautious about making significant moves.”

Munnelly noted that China's stock market lagged behind the rest of the region as traders anticipated potential additional stimulus from Beijing ahead of an economic summit next month.

“Japanese semiconductor stocks gained after reports indicated that the United States might consider easing restrictions on chip equipment and AI memory semiconductor sales to China

“The Central Economic Work Conference in China, typically held in December, outlines the monetary, fiscal, and industrial policies for the upcoming year.

“The possibility of sanctions has underscored the already fragile trade relations between the United States and China.”

Asian markets mixed as Wall Street rally stalls

In Japan, equity markets extended their rally, with the Nikkei 225 rising 0.56% to 38,349.06 and the Topix gaining 0.82% to 2,687.28.

Key performers on Tokyo’s benchmark included T&D Holdings, which surged 12.8%, and Tokyo Electron, up 6.74%.

China’s markets faced downward pressure, with the Shanghai Composite slipping 0.43% to 3,295.70 and the Shenzhen Component dropping 1.26% to 10,432.54.

Losses in Shanghai were led by Yueyang Forest & Paper and Ningbo Techmation, both declining nearly 10%.

The Hang Seng Index in Hong Kong fell 1.2% to 19,366.96, driven by steep losses in consumer staples.

Tingyi and China Resources Beer dropped 4.4% and 4.28%, respectively.

In South Korea, the Kospi 100 edged down 0.34% to 2,502.52, with tech-heavyweights SK Square and SK Hynix among the top decliners.

Australia’s S&P/ASX 200 gained 0.45% to close at 8,444.30, buoyed by strong performances in healthcare stocks.

Contact Energy and Pro Medicus surged 9.04% and 8.66%, respectively, leading the gains.

Conversely, New Zealand’s S&P/NZX 50 dropped 1.21% to 13,053.56, weighed down by significant declines in Pacific Edge and Ryman Healthcare.

In currency markets, the dollar was last up 0.54% on the yen to trade at JPY 151.91, as it gained 0.04% against the Aussie to AUD 1.5398, and advanced 0.11% on the Kiwi, changing hands at NZD 1.6983.

Oil prices remained soft, with Brent crude futures slipping 0.22% on ICE to $72.67 per barrel, and the NYMEX quote for West Texas Intermediate down 0.32% to $68.50.

Bank of Korea surprises markets with another rate cut

In economic news, the Bank of Korea delivered a surprise 25-basis-point interest rate cut during the day, lowering its benchmark rate to 3.0% in a bid to stimulate a faltering economy.

It marked the central bank's second consecutive cut, a rare occurrence not seen since 2009.

The decision came after a disappointing third-quarter GDP growth rate of 1.5% year-on-year, falling short of the 2% forecast by economists surveyed by Reuters.

The back-to-back rate reductions highlighted growing concerns over South Korea’s economic trajectory, with tepid domestic growth compounded by weakening external demand.

A Reuters poll projected that November exports grew by just 2.8% compared to a year earlier, a slowdown from October’s 4.6% increase and the smallest gain in 14 months.

Despite 14 consecutive months of export growth, the pace had moderated, driven by waning US demand for semiconductors and lingering tariff uncertainties.

Reporting by Josh White for Sharecast.com.