Asia report: Markets mixed after Wall Street tech surge

Asia-Pacific markets finished with a mixed performance on Tuesday, diverging from Wall Street's tech-fuelled rally that saw the Nasdaq Composite reach a new record high.

Investors in the region weighed South Korea's inflation data, which revealed a June rate of 2.4%, falling short of the 2.7% forecasted by economists polled by Reuters.

“Japanese equities in Asia surged, particularly in the banking sector, as lending rates are expected to rise, bringing the Japan equity benchmark closer to a record high,” said TickMill market analyst Patrick Munnelly.

“Bank and insurance companies in Japan contributed significantly to the advance, while the MSCI Asia Pacific Index rose to its highest level since late May.”

Munnelly noted that Hong Kong-listed property and electric car maker companies also saw a surge.

“Traders are considering the likelihood of another Donald Trump administration following his debate with Joe Biden last week.

“US stock futures dipped during Asian hours, despite Wall Street pushing higher on Monday due to a surge in tech megacaps.”

Markets mixed after strong session for tech on Wall Street

In Japan, the Nikkei 225 surged past the 40,000 mark for the first time in three months, closing at 40,074.69, a 1.12% increase.

The broader Topix also saw a 1.15% rise, ending at 2,856.62, just below its all-time high.

Contributing to the gains on the benchmark index were companies like Kawasaki Kisen Kaisha, which soared 8.56%, Minebea Mitsumi, up 7.18%, and Mercari, which gained 5.94%.

Chinese markets presented a mixed picture, as the Shanghai Composite edged up by 0.08% to 2,997.01, while the Shenzhen Component fell by 0.97% to 8,812.67.

Leading the gains in China were China Grand Automotive Services, Grace Fabric Technology, and Cashway Technology, each advancing over 10%.

In Hong Kong, the Hang Seng Index recorded a modest increase of 0.29%, closing at 17,769.14.

Li Auto, CNOOC, and Orient Overseas International were among the top performers, rising by 4.98%, 4.91%, and 4.81% respectively.

South Korea's Kospi index dropped by 0.84% to 2,780.86, influenced by the lower-than-expected inflation rate.

Major decliners included Kogas, down 11.9%, Solus Advanced Materials, which fell 11.5%, and LIG Nex1, dropping 11.45%.

Australia's S&P/ASX 200 declined by 0.42%, ending the day at 7,718.20.

Igo, Lovisa Holdings, and Nine Entertainment Co led the losses, falling by 3.76%, 3.67%, and 3.65% respectively.

In New Zealand, the S&P/NZX 50 slightly decreased by 0.11%, closing at 11,776.73.

Synlait Milk, Oceania Healthcare, and Scales Corporation were the biggest losers, dropping by 4.35%, 3.7%, and 3.14% respectively.

In currency markets, the dollar was last 0.12% stronger on the yen to trade at JPY 161.66, while it increased 0.15% against the Aussie to AUD 1.5037, and climbed 0.36% on the Kiwi to change hands at NZD 1.6517.

Oil prices saw an uptick, with Brent crude futures last up 0.81% on ICE at $87.30 per barrel, and the NYMEX quote for West Texas Intermediate ahead 0.84% at $84.08.

Korean inflation drops to 11-month low

In economic news, South Korea's consumer inflation dropped to an 11-month low in June as supply-side pressures eased, according to official data.

The consumer price index (CPI) rose by 2.4% year-on-year in June, down from a 2.7% increase in May, marking the weakest rise since July 2023.

It fell short of the 2.7% median forecast in a Reuters survey of economists, providing some relief for policymakers.

Statistics Korea reported a 0.2% monthly decline in the CPI, the first such drop in seven months, following a 0.1% rise in the previous month.

South Korea's vice finance minister expressed optimism, anticipating consumer inflation to stabilise in the lower-to-mid 2% range in the latter half of the year.

The Bank of Korea (BOK) echoed the positive sentiment, viewing the decline to mid-2% inflation as beneficial and saying it would monitor inflation’s alignment with its 2% target.

In Australia, the Reserve Bank of Australia (RBA) released the minutes from its June monetary policy meeting, when it decided to hold interest rates steady.

The board cited a stronger case for maintaining the current rates rather than hiking them.

However, the RBA acknowledged the need to remain vigilant against upside risks to inflation, despite current data suggesting potential inflationary pressures.

The minutes highlighted economic uncertainty, making future policy changes difficult to predict.

While recent data did not alter the inflation outlook for reaching target levels by 2026, the RBA recognized the possibility of achieving this goal without sacrificing employment gains.

Nonetheless, the board noted potential downside risks to the labour market, with vacancy rates indicating weakness and the rapid rise in business insolvencies posing a threat to jobs.

Reporting by Josh White for Sharecast.com.