Asia report: Markets mixed on back of fresh services, trade data

Stock markets in the Asia-Pacific region closed with mixed results on Monday, as investors digested a range of key economic releases across the region.

Patrick Munnelly, market analyst at TickMill, said Asian markets started the week on a broadly positive note, although gains were limited amid uncertainty ahead of key risk events.

“US equity futures also showed a non-committal tone as investors await the outcomes of upcoming monetary policy meetings by the Federal Reserve, European Central Bank, and the Bank of Japan,” he noted.

“Additionally, big tech earnings results are also anticipated from Microsoft and Alphabet.

“The Nikkei 225 in Japan rose, buoyed by reports suggesting that the BoJ is likely to keep its yield curve control policy unchanged at the upcoming meeting and sees little immediate need to act.”

Munnelly added that Hong Kong’s Hang Seng Index declined, while the Shanghai Composite on the mainland posted a marginal gain.

“Hong Kong's market was pressured by weakness in the property sector and tech stocks, while the mainland market was indecisive as the National Development and Reform Commission's (NDRC) notice to promote high-quality development of private investment countered reduced hopes for aggressive stimulus measures following China's politburo meeting, where top officials reviewed the economic performance for the first half of the year.”

Mixed performance across region amid key economic releases

Japan's Nikkei 225 and Topix saw a positive day, climbing 1.17% to 32,692.50 and 0.84% to 2,281.18 respectively.

Mitsubishi Motors led the gains on Tokyo’s benchmark, rising by 4.99%, followed by Hitachi Construction Machinery and Kobe Steel with gains of 4.24% and 3.77% respectively.

China's stock market performance was slightly subdued with the Shanghai Composite dropping marginally by 0.11% to 3,164.16 and the Shenzhen Component dipping 0.58% to 10,747.79.

Dahu Aquaculture and Dr Peng Telecom & Media experienced notable declines in Shanghai, falling 10.06% and 4.91% respectively.

Hong Kong's Hang Seng Index faced a more considerable drop, falling 2.25% to 18,646.00.

The biggest falls were seen in Country Garden Services, plummeting 17.85%, while Country Garden Holdings and Longfor Properties both saw significant drops of 8.7% and 8.54% respectively.

South Korea's Kospi 100 managed to buck the trend, posting a 0.63% gain to 2,598.73.

Shares in Posco International soared by an impressive 29.92%, while POSCO Holdings also saw a robust gain of 16.52%.

In Australia, the S&P/ASX 200 declined slightly by 0.1% to 7,306.40, with Core Lithium and Sayona Mining leading the declines in Sydney, falling 17.24% and 11.77% respectively.

New Zealand's S&P/NZX 50 rose by 0.65% to 12,018.23, as Stride Property and Meridian Energy led the gains in Wellington, with stocks increasing by 4.17% and 3.86% respectively.

On the currency markets, the dollar weakened against the Japanese yen by 0.28% to last trade at JPY 141.33.

The greenback also fell against the Aussie by 0.09% to AUD 1.4846, and slid against the Kiwi by 0.52% to change hands at NZD 1.6125.

Oil prices saw minor fluctuations, with Brent crude futures last up 0.05% on ICE at $81.11 per barrel, while the NYMEX quote for West Texas Intermediate rose just 0.01% to $77.08.

Region experiences mixed business activity and trade shifts

On the economic front, Japan’s streak of expansion in business activity continued unabated for the seventh month in a row, according to preliminary data from au Jibun.

However, the composite purchasing managers index (PMI) stood static at 52.1 for July, showing no movement from June's reading.

Although the services PMI reported a slight downward adjustment to 53.9 from June's 54, it still remained above the 50-point level that separates expansion from contraction.

The manufacturing sector, on the other hand, remained in a contraction phase, with the PMI dipping to 49.4 from 49.8 the previous month.

“The Bank of Japan is likely to see the continued divergence between faltering manufacturing and expanding services as an indication that Japan has not yet reached a self-sustaining growth cycle,” said Duncan Wrigley at Pantheon Macroeconomics.

“The slowing input price index is consistent with its outlook for consumer inflation to cool gradually, as high import costs work their way through the system.

“We think the BoJ will leave easy policy settings on hold on Friday, and likely for the rest of the year too.”

Elsewhere, reports from Australia painted a contrasting economic landscape, with the private sector seeing a dip in business activity for the first time since March, driven largely by a contraction in services activity.

Preliminary estimates from Juno Bank indicated that the composite PMI slid to 48.3 in July from 50.1 in the prior month.

The services PMI slipped below the neutral 50-point mark to 48, a slight downturn from June's 50.1.

However, the manufacturing sector posted a milder contraction, registering a PMI of 49.6, a slight improvement from June's 48.2.

Finally on data, New Zealand reported a shrinking trade surplus in June, reducing to NZD 9m from May's revised figure of NZD 52m.

In terms of annual comparisons, goods exports rose modestly by 1.3% to $6.31bn in June, while imports saw a considerable drop of 14% to $6.3bn.

According to Statistics NZ, the export surge was driven primarily by a boost in dairy products, while the decline in imports was put down to a drop in petroleum products.

Reporting by Josh White for Sharecast.com.