Asia report: Markets mixed as RBNZ cuts rates, China industrial profits fall

Asia-Pacific markets presented a mixed performance on Wednesday, reflecting investor caution after New Zealand’s central bank cut interest rates, China reported a decline in October industrial profits, and Australia released lower-than-expected inflation figures for the month.

The regional developments followed record-setting gains on Wall Street, where the S&P 500 and Dow Jones Industrial Average hit new intraday and closing highs.

“Asian stock markets displayed a mixed performance on Wednesday, mirroring the generally optimistic signals from Wall Street overnight,” said TickMill’s Patrick Munnelly.

“Investors are exercising caution in anticipation of a key US inflation report, the upcoming Thanksgiving holiday in the US, and the ongoing uncertainty regarding Trump's tariff proposals.

“The announcement of a US-brokered ceasefire agreement between Israel and Lebanon's Hezbollah has elicited a favourable response from the markets.”

Munnelly noted that investors in China appeared relieved that the threat of additional 10% tariffs on Chinese products was not the 60% levy that US president-elect Donald Trump campaigned on.

“They are confident that Beijing will increase stimulus to address any impact on trade.

“While the yuan, Mexican peso and Canadian dollar are still at or near multi-month or multi-year lows, the market consensus is that the tariff threats are likely a bargaining tactic and may not be implemented in January.”

Markets mixed after another strong showing from Wall Street

In Japan, the Nikkei 225 fell 0.8% to 38,134.97, and the broader Topix dropped 0.9% to 2,665.34.

Weakness on Tokyo’s benchmark was led by losses in Mitsubishi Chemical Holdings, down 5.75%; Mazda Motor Corporation, off 5.51%; and Fanuc, which lost 4.91%.

China’s mainland markets rallied, with the Shanghai Composite gaining 1.53% to close at 3,309.78 and the Shenzhen Component advancing 2.25% to 10,566.10.

Investor optimism focused on technology stocks, with Beijing Piesat Information Technology surging 11.36%, followed by double-digit gains in Inmyshow Digital Technology Group of 10.08%, while Suzhou Keda Technology added 10.06%.

In Hong Kong, the Hang Seng Index jumped 2.32% to 19,603.13, buoyed by strong performances in heavyweight stocks.

Meituan climbed 7.24%, while Chow Tai Fook Jewellery Group and Sunny Optical Technology Group rose 6.85% and 5.4%, respectively.

South Korea’s Kospi 100 fell 0.93% to 2,511.59, pressured by declines in major names like LF, down 6.06%; Hanmi Semiconductor, off 5.08%; and SK Square, which lost 5.08%.

Australia’s S&P/ASX 200 edged up 0.57% to 8,406.70, with travel and energy stocks leading gains.

Web Travel Group soared 13.48%, while Life360 added 6.24%, and Ampol gained 4.37%.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 climbed 0.76% to 13,212.92, with Pacific Edge leading the charge with gains of 7.69%, followed by A2 Milk Company and Spark New Zealand, which rose 3.58% and 2.45%, respectively.

Currency markets showed notable movements, with the dollar last down 1.1% on the yen to trade at JPY 151.40, while it slipped 0.16% against the Aussie to AUD 1.5419, and dropped 0.98% on the Kiwi, changing hands at NZD 1.6972.

Oil prices inched higher, with Brent crude futures last up 0.25% on ICE at $72.99 per barrel, and the NYMEX quote for West Texas Intermediate gaining 0.22% to $68.92.

RBNZ take another 50 basis points off cash rate

At the top of the economic agenda on Wednesday was the Reserve Bank of New Zealand, which cut its official cash rate (OCR) by 50 basis points to 4.25% for a second consecutive half-point cut.

The widely-anticipated decision reflected the central bank's effort to counter ongoing economic weakness.

RBNZ governor Adrian Orr signalled the possibility of another 50-basis-point cut in February, depending on economic conditions.

The central bank had aggressively lowered rates by a total of 125 basis points since August, making it one of the most proactive central banks globally.

While policymakers considered cuts of only 25 or 50 basis points, they refrained from more drastic measures despite New Zealand entering a recession in the third quarter.

The RBNZ predicted economic recovery by 2025, driven by lower borrowing costs, with growth expected to rise from 0.5% in the year to March 2025 to 2.3% by March 2026.

Inflation, currently at 2.2%, was forecast to briefly reach the 2% target early next year before climbing above target through 2027.

Elsewhere, China’s industrial profits fell 10% in October compared to the same period last year, extending a 27.1% decline in September, the steepest drop since early 2020.

The data underscored the limited impact of Beijing’s recent stimulus measures on corporate earnings.

Over the first 10 months of 2024, industrial profits decreased by 4.3% year-on-year, widening from a 3.5% decline reported in the first nine months, according to the National Bureau of Statistics.

Australia’s inflation rate meanwhile rose 2.1% in October on an annual basis, below the 2.3% expected by economists and matching September's increase.

The figure marked a substantial decrease from the 5.6% annual inflation recorded in September last year, however, providing further evidence of easing price pressures.

Reporting by Josh White for Sharecast.com.