Asia report: Markets mixed as Japan's household spending drops

Markets in the Asia-Pacific region faced a mixed trading session on Friday, with significant fluctuations across the region.

Japan’s benchmark index closed just below the waterline, having surged to a fresh all-time high earlier in the day.

“Markets across the world are reaching all-time highs as traders await the important US jobs report on Friday,” said TickMill market analyst Patrick Munnelly.

“In Japan, the Topix index surpassed the previous high from 1989 during Thursday's session, setting a new record early on Friday.”

Munnelly added that Korean markets surged after Samsung reported earnings above estimates.

“China's central bank announced it had ‘hundreds of billions’ of yuan in securities through agreements with lenders, taking steps to sell government bonds to curb a record-breaking rise.”

Markets end the week in a mixed state

Japan's Nikkei 225 index experienced a volatile session, briefly crossing the 41,000 mark to hit a fresh all-time high before retracting slightly to close at 40,912.37, marking a marginal decline of 0.003%.

Similarly, the broader Topix index dipped by 0.49% to finish at 2,884.18.

The downturn coincided with news of a 1.8% year-over-year drop in Japan's household spending for May, contributing to investor caution.

Notable decliners on Tokyo’s benchmark included Mitsui OSK Lines, down 3.57%; Nippon Yusen, off 3.36%; and Honda Motor, which lost 3.24%.

In China, the Shanghai Composite edged down by 0.26% to 2,949.93, while the Shenzhen Component managed a slight gain of 0.25% to close at 8,695.55.

The market saw significant losses in specific sectors, with Kangxin New Materials plummeting by 10.23%, Grace Fabric Technology by 10%, and Duolun Technology by 8.01%.

Hong Kong's Hang Seng Index dropped 1.27% to 17,799.61, with major losses from Geely Automobile of 3.33%, while Galaxy Entertainment Group fell 3.29%, and China Construction Bank was 3.25% lower/

South Korea's Kospi index declined by 1.32% to 2,862.23, with major losers including Hyundai Heavy Industries, down 3%; Hyundai Heavy Industries Holdings, off 2.82%; and HD Korea Shipbuilding & Offshore Engineering, which was 2.5% weaker.

However, Samsung Electronics provided a positive note, estimating a nearly 15-fold surge in second-quarter operating profit.

Australia's S&P/ASX 200 fell by 0.12% to 7,822.30, driven down by significant drops in companies such as Boss Energy, Zimplats Holdings, and Clarity Pharmaceuticals, which were down 6.14%, 4.29% and 4.23%, respectively.

Conversely, New Zealand's S&P/NZX 50 bucked the regional trend, gaining 0.41% to close at 11,794.81.

Leading the charge was Port of Tauranga, up 3.96%, as well as Skellerup Holdings which added 3.73%, and Tourism Holdings which was 2.78%.

In currency markets, the dollar was last 0.35% weaker on the yen to change hands at JPY 160.72, while it was down 0.13% against the Aussie to AUD 1.4848, and retreated 0.12% from the Kiwi to trade at NZD 1.6329.

Oil prices remained relatively stable, with Brent crude futures last down 0.13% on ICE at $87.32 per barrel, while the NYMEX quote for West Texas Intermediate inched up 0.02% to $83.90.

Household spending unexpectedly declines in Japan

In economic news, Japan's household spending in May saw an unexpected decline of 1.8% compared to the same month last year, defying economist expectations of a slight 0.1% increase, according to a Reuters poll.

The decline raised concerns for the Bank of Japan, which closely monitors household spending as a crucial indicator for achieving its goal of a “virtuous cycle” of rising wages and prices.

In May, the average household spending was JPY 290,328, reflecting the dip in consumer expenditure.

Despite that, average monthly income rose to JPY 500,231, marking a 6.4% increase in nominal terms and a 3% increase in real terms compared to the prior year.

Reporting by Josh White for Sharecast.com.