Asia report: Markets mixed as Bank of Korea holds rates

Asia-Pacific markets experienced modest gains on Thursday as investors analysed regional business activity reports and the latest Federal Reserve minutes.

South Korea’s central bank was also in focus, keeping interest rates on hold as had been widely expected by market watchers.

“Following the generally positive signals from global markets overnight, Asian stock markets are mostly up on Thursday,” said TickMill market analyst Patrick Munnelly.

“The Japanese market reversed the losses from the previous session and is now much higher on Thursday.

“The Nikkei 225 is trading back above the 38,000 handle supported by financial, technology, and exporter firms.”

Munnelly noted that the market leader SoftBank Group was flat, while Fast Retailing, the company that runs Uniqlo, was up about 3%.

“However, traders are cautious after revised data revealed that US job growth was lower than previously reported in the year ending in March 2024, raising some growth concerns.

“Nonetheless, it is anticipated that the US Federal Reserve will lower interest rates next month.

“The minutes of the US Federal Reserve's most recent meeting on monetary policy appeared to lend further credence to predictions of a September interest rate reduction.”

Markets in mixed state after release of US Fed minutes

In Japan, the Nikkei 225 advanced by 0.68% to 38,211.01, while the Topix rose by 0.25% to 2,671.40.

Notable gains were seen in stocks such as Mercari, which surged 7.56%, Sumitomo Dainippon Pharma with a 6.71% increase, and IHI Corporation up 5.9%.

In contrast, Chinese indices fell slightly.

The Shanghai Composite decreased by 0.27% to 2,848.77, and the Shenzhen Component dropped by 0.82% to 8,162.18.

Shanghai’s declines were led by significant losses in Yijiahe Technology, down 10.02%; Shanghai Moons Electric, off 9.99%; and Shanghai Jahwa United, which was 9.96% weaker.

Hong Kong's Hang Seng Index gained 1.44% to 17,641.00, driven by strong performances from Xiaomi, which rose 9.02%, AIA Group at 5.93%, and Orient Overseas International, up 5.61%.

South Korea's Kospi inched up by 0.24% to 2,707.67, with Posco ICT climbing 7.79%, Korea Kolmar up 6.82%, and LG Chemicals rising by 6.04%.

Australia's S&P/ASX 200 added 0.21% to 8,027.00, bolstered by significant increases in Codan, up 11.37%; Clarity Pharmaceuticals, ahead 8.85%; and Wisetech Global, which closed 7.77% firmer.

Conversely, New Zealand's S&P/NZX 50 declined by 0.27% to 12,469.35, with Synlait Milk falling 8.7%, Vista Group International down 3.03%, and SkyCity Entertainment Group slipping 2.52%.

In currency markets, the dollar was last up 0.25% on the yen to trade at JPY 145.57, while it was nearly flat against the Aussie at AUD 1.4829.

The greenback meanwhile decreased 0.03% on the Kiwi, changing hands at NZD 1.6233.

Oil prices showed minimal change, with Brent crude futures last up 0.09% on ICE at $76.12 per barrel, and the NYMEX quote for West Texas Intermediate down 0.07% at $71.88.

Bank of Korea stands pat on rates, business activity accelerates in Japan

In economic news, the Bank of Korea maintained its benchmark interest rate at 3.5%, meeting market expectations.

The central bank highlighted a continued decline in inflation in South Korea, but emphasised the need for ongoing vigilance regarding real estate prices and household debt levels.

That decision followed the release of minutes from the US Federal Reserve's July meeting, which indicated that some Fed members had advocated for a rate cut in July rather than postponing until September.

In Japan, business activity accelerated in August, with the composite purchasing managers' index (PMI) rising to 53.0 from 52.5 in July.

The increase was driven by a rebound in the manufacturing sector and a faster expansion in services.

Australia also reported an improvement in economic activity.

The country’s flash composite PMI for August climbed to 51.4, up from 49.9 the previous month.

That three-month high was supported by increased activity in the services sector, according to Judo Bank.

Reporting by Josh White for Sharecast.com.