Asia report: Markets mixed as Japan manufacturing confidence rises

Asia-Pacific markets displayed a mixed performance on Wednesday, with Australia's benchmark surging to an all-time high, buoyed by strong performances in several key sectors.

Japanese stocks also saw solid gains, amid reports of increased business optimism among large manufacturers.

“Asian stocks rose, joining a global surge, as the anticipation of the Fed starting to reduce interest rates led to a rush into riskier sectors of the market,” said TickMill market analyst Patrick Munnelly.

“The MSCI Asia Pacific Index, which measures regional benchmarks, rebounded after a three-day decline following the record highs in US equities, propelling global stocks to a new peak.

“However, the index's earlier gains were tempered by a drop in Japanese stocks after the US cautioned its allies about stricter trade regulations in the China crackdown.”

Munnelly added that traders in Hong Kong and mainland China awaited further details from the Third Plenum.

“Risk appetite seems to have returned in Asia as concerns about geopolitical and trade threats sparked by the increasing prospects of a Donald Trump administration have eased.

“The optimism surrounding the Fed's potential rate cut, coupled with signs of a retail recovery in the US, has bolstered sentiment.”

Markets finish midweek session in a mixed state

The Nikkei 225 in Japan fell by 0.43% to 41,097.69, despite the broader Topix rising 0.3% to 2,915.21.

Notable declines were seen in Tokyo Electron, Dainippon Screen Manufacturing, and Ebara Corporation, which fell by 7.46%, 6.48%, and 5.45%, respectively.

China's markets also closed lower, with the Shanghai Composite and the Shenzhen Component dropping by 0.45% to 2,962.86 and 0.47% to 8,835.14, respectively.

Major decliners in Shanghai included China Grand Automotive Services and Olympic Circuit Technology, both plummeting around 10%

In Hong Kong, the Hang Seng Index managed a slight gain of 0.06%, closing at 17,739.41.

Top performers included Alibaba Health Information Technology, which rose by 8.57%, followed by Li Ning Co and China Mengniu Dairy, which increased by 6.03% and 5.42%, respectively.

South Korea's Kospi declined by 0.8%, ending at 2,843.29.

Significant losses were recorded by SK Square, SK Hynix, and Hanmi Semicon, dropping 7.96%, 5.36%, and 5.18%, respectively

Australia’s S&P/ASX 200 climbed 0.73% to reach 8,057.90, setting a new record high.

Polynovo led the gains with a 9.28% rise, followed by James Hardie Industries and Abacus Storage King, which increased by 6.31% and 5.88%, respectively.

New Zealand's S&P/NZX 50 also saw an uptick, rising 0.88% to 12,292.03, driven by Arvida Group, Ryman Healthcare, and Genesis Energy, which posted gains of 5.1%, 4.63%, and 4.15%, respectively.

In currency markets, the dollar was last down 1.19% on the yen, trading at JPY 156.47.

The greenback was also weaker against its antipodean counterparts, falling 0.24% on the Aussie to AUD 1.4815, and retreating 0.68% against the Kiwi to change hands at NZD 1.6417.

Oil prices remained relatively stable, with Brent crude futures last down 0.06% on ICE at $83.68 per barrel, while the NYMEX quote for West Texas Intermediate edged up 0.05% to $80.80.

Japanese manufacturers’ confidence increases, Singapore exports fall

In economic news, Japanese authorities were suspected of intervening in the currency market last Thursday and Friday, with CNBC reporting that it spent around JPY 6trn to stabilise the yen.

The currency had weakened to JPY 161.82 against the dollar last Wednesday before strengthening to JPY 157.41 the next day.

Meanwhile, the latest Reuters Tankan survey revealed increased business confidence among Japanese manufacturers in July, while the service sector showed a decline.

The sentiment index for manufacturers rose to +11, up five points from June, marking its first increase in four months.

However, manufacturers predicted a slight dip to +10 in the coming three months.

Conversely, the service sector index fell to +26 from +31, with non-manufacturers expecting it to rise slightly to +27 by October.

The survey came two weeks before the Bank of Japan reviews its policy on 30-31 July.

In Singapore, exports fell more than anticipated in June, highlighting ongoing challenges for the trade-dependent economy.

Official data showed non-oil domestic exports decreased by 8.7% year-on-year, significantly more than the 1.3% contraction forecasted in a Bloomberg survey.

That followed a revised 0.7% decline in May.

On a month-on-month seasonally adjusted basis, exports dipped by 0.4% in June.

So far, exports had contracted in five out of six months this year.

Reporting by Josh White for Sharecast.com.