Asia report: Markets rise as Japan industrial output tops forecasts

Asia-Pacific markets saw significant gains on Friday, driven by strong economic data from Japan, including a better-than-expected rise in industrial production.

Investors were also looking ahead to a key US inflation reading, due later in the global day.

“Asian equities rose ahead of the release of the Fed's preferred inflation indicator on Friday, following gains on Wall Street,” said TickMill market analyst Patrick Munnelly.

“This came after a previous session when the region's stocks experienced their first decline in three days.

“In the US, President Joe Biden and Former President Donald Trump had their first debate of 2024 on Thursday.”

Markets in the green ahead of US PCE inflation reading

Japan's Topix index surged to its highest level since 1990, closing at 2,809.63, up 0.57%, while the benchmark Nikkei 225 rose 0.61%, reaching 39,583.08.

Sumitomo Dainippon Pharma led the gains on the Nikkei with an 8% increase, followed by Ebara and IHI, which rose by 7.32% and 5.91%, respectively.

China's Shanghai Composite rose by 0.73% to 2,967.40, although the Shenzhen Component saw a marginal dip of 0.01%, ending at 8,848.70.

Notable performers in Shanghai included Innovation New Material Technology, Dalian Thermal Power, and Nanjing Huamai Technology, each rising over 10%.

In Hong Kong, the Hang Seng Index edged up by 0.01% to 17,718.61.

Major contributors to the index's performance were PetroChina, China Unicom Hong Kong, and CNOOC, with gains of 4.23%, 3.9%, and 3.45%, respectively.

South Korea's Kospi climbed by 0.49% to 2,797.82, buoyed by strong performances from Kumyang, up 8.45%; SKC, ahead 6.1%; and LG Display, which closed 6.7% firmer.

Australia's S&P/ASX 200 inched up by 0.1% to close at 7,767.50.

Insurance Australia Group saw a substantial rise of 7.21%, followed by Clarity Pharmaceuticals, up 6.9%; and De Grey Mining, which was 4.59% firmer.

In New Zealand, markets were closed for the Matariki public holiday.

Currency markets showed minor fluctuations, with the dollar last down 0.02% on the yen at JPY 160.73.

The greenback fell 0.11% against the Aussie to AUD 1.5028, while it edged up 0.06% on the Kiwi, last changing hands at NZD 1.6452.

Oil prices saw an uptick, with Brent crude futures last up 0.97% on ICE at $85.26 per barrel, and the NYMEX quote for West Texas Intermediate increasing 1.05% to $82.60.

Tokyo inflation accelerates as Japan’s industrial production rebounds

In economic news, inflation in Tokyo accelerated in June, driven by rising energy prices, while Japan's industrial output for May surpassed expectations.

Consumer prices in Tokyo, excluding fresh food, increased by 2.1% year-on-year in June, up from 1.9% in May, according to the Ministry of Internal Affairs.

That figure exceeded the consensus estimate of 2%, suggesting stronger inflationary pressures.

Tokyo's inflation data often serves as a precursor to national figures, which are set to be released in July.

Japan's industrial production meanwhile rose 2.8% in May from the prior month, significantly higher than the anticipated 2% growth.

The increase was primarily driven by automakers like Daihatsu Motor, which resumed full production after resolving issues related to a safety certification scandal that had previously disrupted factory operations.

In South Korea, retail sales for May fell by 0.2% year-on-year, marking a less severe decline compared to April's revised 0.8% drop.

That marked the first instance since July 2023 of two consecutive months of retail sales declines.

Reporting by Josh White for Sharecast.com.