Asia report: Markets mixed, PBoC maintains liquidity levels

Markets in Asia closed in a mixed state on Thursday, as fresh jobs data out of Australia beat expectations.

In Japan, the Nikkei 225 eked out gains of 0.07% to 29,642.69, as the yen strengthened 0.17% against the dollar to last trade at JPY 108.74.

Robotics specialist Fanuc was down 0.89%, while among the benchmark’s other major components, Uniqlo owner Fast Retailing managed gains of 0.06%, and technology giant SoftBank Group was 1.91% firmer.

The broader Topix index added 0.36% to settle at 1,959.13 by the end of trading in Tokyo.

On the mainland, the Shanghai Composite was down 0.52% at 3,398.99, and the smaller, technology-centric Shenzhen Composite was off 0.54% at 2,206.55.

Traders were left disappointed after the People’s Bank of China injected just enough cash into the economy to maintain liquidity, suggesting it was keen to keep a lid on leverage.

The central bank put CNY 150bn into the country’s financial markets, which was about enough to cover the CNY 100bn that had fallen due, and the CNY 56.1bn in targeted loans set to mature on 25 April.

Pantheon Macroeconomics chief Asia economist Freya Beamish said the move maintained the bank’s “near neutrality” around pressure on interbank rates, implying that officials were happy with market rates for the moment.

“It also suggests that the authorities will use shorter-term funds to address any liquidity squeeze generated by corporations paying taxes, or larger sales of government bonds,” Beamish said.

“At the same time, the lack of a net injection could easily be taken as a sign that the authorities aren’t going to pre-empt any fallout from the Huarong turmoil.”

That chimed with the State Council statement earlier in the week urging local government financing vehicles to restructure or enter liquidation if they were struggling to pay debts, Beamish explained.

“We think the People’s Bank will offer liquidity promptly if there are signs of systemic risk, but overall, the authorities seem ready to accept rising defaults, as monetary policy normalisation continues.”

South Korea’s Kospi was up 0.38% at 3,194.33, while the Hang Seng Index in Hong Kong was off 0.37% at 28,793.14.

The blue-chip technology stocks were in the green in Seoul, with Samsung Electronics up 0.12% and SK Hynix rising 0.36%.

Oil prices were lower as the region went to bed, with Brent crude last down 0.47% at $66.27 per barrel, and West Texas Intermediate falling 0.55% to $62.80.

In Australia, the S&P/ASX 200 was 0.51% higher at 7,058.60, as investors digested the latest employment data out of Canberra.

According to the Australian Bureau of Statistics, the country’s seasonally-adjusted unemployment rate was 5.6% in March, slightly better than the 5.7% expected by economists polled by Reuters.

The data also showed that 70,700 net new jobs were created in the months, which was well ahead of Reuters-polled forecasts for a figure of 35,000.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 lost 0.9% to close at 12,636.55, led lower by electricity generator-retailer Genesis Energy, which fell 3.2%.

Both of the down under dollars were stronger on the greenback, with the Aussie last ahead 0.39% at AUD 1.2897, and the Kiwi advancing 0.49% to NZD 1.3935.