Asia report: Markets mixed as Bank of Korea holds rates

Asia-Pacific markets closed mixed on Thursday following the release of the US Federal Reserve's minutes overnight, which highlighted officials' concerns over persistent inflation and potential hesitations on cutting interest rates.

In South Korea, the central bank maintained interest rates as anticipated amid a series of economic updates from the region.

“Europe was mixed early on after a broadly softer session in Asia that took its cue from a downbeat day for Wall Street,” said Finalto chief market analyst Neil Wilson.

“The Dow Jones Industrial Average shed 200 points, or about half a percent, whilst the S&P 500 was off by a quarter of one percent to sit just above 5,300.”

Wilson noted that Target shares declined 8%, signalling weakness in the consumer, while the Vix volatility index was down to lowest since 2019 at 11.53.

“Futures though indicate SPX to open up about 30 points though, as Nvidia shares delivered the kind of shot in the arm this slightly flagging bull market needs.”

Japan, NZ stocks rise on mixed day for region

In Japan, the Nikkei 225 climbed by 1.26% to finish at 39,103.22, while the Topix increased by 0.64% to 2,754.75.

Notable gainers on Tokyo’s benchmark included Teijin, which surged by 10.32%, Lasertec up by 6.31%, and Renesas Electronics advancing by 5.48%.

Chinese markets saw declines, with the Shanghai Composite falling by 1.33% to 3,116.39 and the Shenzhen Component dropping by 1.56% to 9,541.64.

Significant losses in Shanghai were seen in Guizhou Redstar Developing, which plummeted by 9.68%, and Guangdong Sitong Group, down by 7.53%.

Hong Kong's Hang Seng Index also faced a downturn, slipping by 1.7% to 18,868.71.

Major decliners included NetEase, which fell by 7.88%, Li Ning Co down by 5.61%, and Alibaba Group Holding decreasing by 5.24%.

In South Korea, the Kospi edged down by 0.06% to 2,721.81, as Hanjinkal saw a significant drop of 5.93%, and Kumho Petro Chemical declined by 4.56%.

Australia's S&P/ASX 200 decreased by 0.46% to 7,811.80, with Nufarm dropping by 7.07% and Bellevue Gold falling by 6.68%.

Conversely, New Zealand's S&P/NZX 50 rose by 0.66% to 11,809.48, led by strong performances from Fletcher Building, up by 9.25%, and Eroad, which gained 9.2%.

In currency markets, the dollar was last down 0.08% on the yen to trade at JPY 156.68, while it fell 0.29% against the Aussie to AUD 1.5062 and dropped 0.52% on the Kiwi, changing hands at NZD 1.6317.

Oil prices saw modest gains, with Brent crude futures last up 0.6% on ICE at $82.39 per barrel, and the NYMEX quote for West Texas Intermediate increasing 0.58% to $78.02.

Bank of Korea holds rates, Japan’s manufacturing activity expands

In economic news, South Korea's central bank maintained its benchmark policy rate at 3.5%, aligning with expectations from a Reuters poll.

It marked the 11th consecutive meeting where the Bank of Korea kept interest rates steady.

The Bank of Korea revised its economic growth forecast for the year to 2.5%, up from a previous estimate of 2.1%, attributing it to factors such as IT sector expansion, recovery in consumption, and global monetary policies.

It also reaffirmed its inflation forecasts, expecting consumer price inflation to remain at 2.6% and core inflation at 2.2%, the same levels projected in February.

Analysts were anticipating a rate cut of 50 basis points in the fourth quarter.

In Japan, manufacturing activity expanded for the first time in a year, while the services sector continued its growth in May, according to a private survey.

The headline au Jibun Bank flash Japan manufacturing purchasing managers’ index (PMI) rose to 50.5 in May from 49.6 in April, indicating growth.

The flash services PMI, although slightly lower, still grew to 53.6 from April's 54.3.

Overall business activity expanded at its fastest pace in nine months, with a PMI of 52.4 in May compared to 52 in April.

The survey noted that while growth was led by the services sector, the near-stabilisation of manufacturing output suggested potential broader growth later in the year.

Australia saw its business activity meanwhile grow at the slowest rate in three months in May.

The composite PMI slipped to 52.6 from 53.0, according to flash estimates from Judo Bank.

The manufacturing PMI remained steady at 49.6, a joint nine-month high, while the services PMI decreased to 53.1 from 53.6.

Despite the dip, the figures still indicated ongoing business activity and output growth across the Australian economy, contrasting with weak consumer sentiment and spending indicators.

Finally on data, Singapore's headline inflation rate for April remained steady at 2.7%, the same as in March, marking a 32-month low.

Significant year-on-year price increases were observed in healthcare, recreation, and culture segments.

The MAS core inflation measure, which excludes private transport and accommodation costs, also held steady at 3.1%.

Reporting by Josh White for Sharecast.com.