Asia report: Markets mixed with retail sales, oil prices in focus

Asia-Pacific markets were mixed on Monday at the beginning of the week, with Chinese markets resuming trade after the Golden Week holiday.

Some bourses were closed for their holidays, and others faced weather disruptions, with much attention on energy markets after the Hamas attack on Israel over the weekend.

“Asian equity markets mostly traded lower in quiet markets, with concerns about geopolitical tensions and a surprise multi-front attack by Hamas on Israel weighing on sentiment,” said TickMill market analyst Patrick Munnelly.

“The conflict led to a flight to safety, boosting T-note futures and gold prices.

“Oil prices also surged amid heightened geopolitical risks, with reports suggesting Iranian security officials were involved in planning Hamas’s attack on Israel.

“However, trading activity was subdued due to holiday closures in Japan, South Korea, Taiwan, and disruptions caused by a typhoon in Hong Kong.”

Markets mixed on relatively quiet day for region’s trading

In China, both leading indices experienced declines upon resuming from the holiday, with the Shanghai Composite and the Shenzhen Component dropping 0.44% to 3,096.92 and 0.03% to 10,106.96, respectively.

Noteworthy downward movements in Shanghai included China Film Co, plunging 10.01%, Anhui Jiuhuashan Tourism Development, declining 9.98%, and Hengdian Entertainment, falling 9.86%.

Hong Kong’s Hang Seng Index managed to secure a slight uptick of 0.18%, closing at 17,517.40, despite a typhoon warning disrupting the morning session.

Once trading resumed in the afternoon, Zijin Mining Group, WuXi Biologics, and PetroChina saw appreciable rises, with their values increasing by 3.69%, 3.09%, and 2.55%, respectively.

The decision to open for the afternoon followed the Hong Kong Observatory’s withdrawal of its typhoon warning at 1140 local time.

The city had previously issued a Typhoon Signal 8 alert on Sunday in response to Typhoon Koinu.

Australia’s S&P/ASX 200 saw a modest rise, enhancing its value by 0.23% to end at 6,970.20.

De Grey Mining, Evolution Mining, and Contact Energy spearheaded the gains, climbing 8.07%, 6.29%, and 6.16%, respectively.

In New Zealand, the S&P/NZX 50 fell by 0.73%, landing at 11,205.06.

Companies like Serko, Skellerup Holdings, and Synlait Milk endured drawbacks in their values, experiencing decreases of 4.61%, 3.13%, and 2.88%, respectively.

Notably, Japan and South Korea’s markets remained closed due to the observance of the Sports Day and Hangul Day holidays, respectively.

In the currency realm, the dollar was last down 0.14% against the yen, trading at JPY 149.11, while it gained 0.36% on the Aussie to AUD 1.5716 and 0.19% against the Kiwi to change hands at NZD 1.6726.

On energy markets, Brent crude and West Texas Intermediate experienced substantial gains, with the former up 3.18% to $87.27 per barrel and the latter ahead 3.43% at $85.63.

Middle East tensions and Golden Week retail sales in focus

Oil prices were indeed firmly in focus as the Israel-Hamas conflict entered its third day after Hamas, a Palestinian militant faction, staged an unexpected assault on Israel.

The move, which unfolded on Saturday during a significant Jewish holiday, saw a comprehensive incursion into Israel via land routes, maritime approaches and aerial paragliders.

It was preceded by an extensive rocket barrage from Gaza into Israel.

Turning to China’s economic landscape, retail sales were boosted during last week’s Golden Week holiday.

The Ministry of Commerce announced a 9% annual growth in sales for major retail and catering firms.

Meanwhile, according to fresh data, the country’s foreign reserves fell to $3.12bn in September from $3.16bn in August.

Market consensus had been for a less pronounced decline to $3.13bn.

“Foreign reserves are likely to gain support from slowing capital outflows improve in the fourth quarter,” said Pantheon Macroeconomics chief China economist Duncan Wrigley.

“Targeted stimulus is gaining traction, especially through infrastructure and manufacturing investment.

“Consumption is on a gentle recovery path, as people are keen to go out and enjoy themselves, but less willing to open their purses.”

Wrigley noted that domestic tourism spending during the just-passed National Day holiday was just 1.5% higher than the 2019 level - a “trivial improvement” from the last Golden Week holiday in May, when it was up by 0.7%.

“People are worried about their income outlook and the fragile labour market.

“Housing sales have shown signs of life in September, thanks to down payment and mortgage rate cuts, but the rebound probably will be drawn-out and bumpy, given the lingering developer debt problems.”

Reporting by Josh White for Sharecast.com.