Asia report: Markets mostly fall amid tsunami of data

Asia-Pacific markets finished in a mixed state on Tuesday, as investors weighed new data on inflation and business activity across the region.

While Japan’s indices displayed modest gains, other major markets including China, Hong Kong, and Australia mostly stumbled.

“Asian equity markets remained relatively subdued following the recent lull in US markets and amid contemplation of disappointing data releases,” said TickMill market analyst Patrick Munnelly.

“Among these, the Chinese Caixin services PMI fell short of expectations, setting the tone for the day.

“The Nikkei 225 showed a modest gain, but struggled to breach the 33,000 handle.”

Munnelly said it contended with headwinds stemming from discouraging household spending data, which experienced its most significant decline since February 2021.

“In contrast, the Hang Seng and Shanghai Composite indices faced more substantial setbacks.

“The disappointing Caixin services PMI data cast a shadow, and concerns about the property sector loomed large due to fears of defaults.

“It was reported that approximately a third of the 50 major private builders were on the precipice of having to make payments totaling around $1.5bn this month.”

In a narrow escape, Country Garden averted default by making dollar-denominated coupon payments just hours before the grace period's expiration, Munnelly quipped.

Japanese stocks sustain uptick, other bourses fall

The Nikkei 225 in Japan rose 0.3% to close at 33,036.76 points, while the Topix edged up by 0.17% to 2,377.85 points.

Notable performers on Tokyo’s benchmark included Oki Electric Industry Co, which surged by 16.48%, followed by Mitsui Engineering & Shipbuilding and Taiyo Yuden, both up by 4.25% and 4.06%, respectively.

China’s Shanghai Composite dipped by 0.71% to end at 3,154.37, and the Shenzhen Component dropped by 0.67% to 10,540.71.

Shares of China Bester Group Telecom and Fujian Furi Electronics plunged by 7.82% and 7.05% in Shanghai, respectively, contributing to the day’s losses.

Hong Kong’s Hang Seng Index suffered a notable decline, closing 2.06% lower at 18,456.91.

Sinopharm Group led the slump with a drop of 8.04%, followed closely by Trip.com Group and Xiaomi Corporation, down by 7.82% and 6.6%, respectively.

South Korea’s Kospi edged lower by 0.09% to finish at 2,582.18.

Hanwha Solutions and GS Holdings were among the biggest decliners, shedding 3.76% and 2.63% respectively.

Australia’s S&P/ASX 200 slipped marginally by 0.06% to 7,314.30, with Chalice Mining and Yancoal Australia leading the pullback with losses of 13.43% and 8.89%, respectively.

New Zealand’s S&P/NZX 50 dropped by 0.66% to 11,437.25, as Vista Group International and Heartland Group Holdings declined by 6.17% and 5%.

In currency markets, the dollar was last up 0.42% on the yen at JPY 147.08, as it strengthened 1.28% against the Aussie to trade at AUD 1.5675, while it gained 1.02% on the Kiwi to change hands at NZD 1.7009.

On the oil front, Brent crude futures were last down 0.54% on ICE at $88.52 per barrel, while the NYMEX quote for West Texas Intermediate slipped 0.13% to $85.44.

Central banks and surveys paint mixed economic picture

Economic indicators across Asia-Pacific nations revealed a mixed bag of data on Tuesday, as Australia’s central bank maintained its benchmark rate amid a slowing inflationary environment.

Philip Lowe, in his final rate decision as the Reserve Bank of Australia's governor, announced that the central bank would keep its decade-high cash rate at 4.1% for the third month in a row.

The decision aligned with market expectations, and came as inflationary pressures showed signs of abating.

Although inflation remained above the bank’s target range of 2% to 3%, it had started to decline, reinforcing the growing belief that rates were likely to remain stable for the foreseeable future.

“In light of this and the uncertainty surrounding the economic outlook, the board again decided to hold interest rates steady this month. This will provide further time to assess the impact of the increase in interest rates to date and the economic outlook,” Lowe said in a statement.

The outgoing governor did, however, leave open the possibility of more increases in the coming months.

“Some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe, but that will continue to depend upon the data and the evolving assessment of risks,” he added.

In China meanwhile, a private survey indicated a decline in the rate of growth in China's services sector.

The Caixin/S&P services PMI dropped to 51.8 in August from 54.1 in July.

Despite the index still being above 50, indicating sectoral growth, it was still the lowest figure since December last year.

A drop in new orders contributed to the slower growth, even as input cost inflation reached a six-month low and job creation remained stable.

"Data suggested that this was partly due to weaker foreign demand for Chinese services. New export business fell for the first time since December 2022, albeit marginally, amid reports of sluggish overseas market conditions," S&P said in a statement.

In contrast to China, Japan's service sector recorded its quickest expansion since May, according to a survey from au Jibun Bank.

The service PMI was reported at 54.3 for August, indicating a faster rate of new business and pointing to increased consumer spending and customer numbers.

Hong Kong’s private sector saw a contraction in activity for the second consecutive month, albeit at a slower pace than in July.

The S&P Global survey pegged the city’s global PMI at 49.8, up slightly from July’s 49.4 but still below the 50-point threshold that signifies growth.

It was attributed to weakened underlying demand in the face of softening economic conditions, despite a fractional increase in exports.

Finally on data, South Korea saw its consumer price index leap to 3.4% year-on-year in August, marking its first inflation increase since January.

The figure significantly exceeded July's 2.3% and also outperformed the 2.7% forecast by economists.

On a month-on-month basis, the index rose by 1%, substantially higher than the anticipated 0.3%.

Reporting by Josh White for Sharecast.com.