Asia report: Markets start new quarter higher

Markets in Asia finished higher on Friday - the first day of the new quarter - following global trends on Thursday as markets continued to recover from the post-Brexit sell off.

Japan’s Nikkei 225 added 0.68% to 15,682.48 as the yen was generally weaker during the session - it was last at JPY 102.53 per dollar.

The Bank of Japan’s Tankan survey showed business sentiment among domestic manufacturers now stood at +6, ahead of the market forecast for +4.

Sentiment among large non-manufacturers fell, however, to +19 from +22.

Government-released data showed core consumer prices - excluding fresh food - fell 0.4% year-on-year in May, with core consumer prices in Tokyo falling 0.5%.

Both readings were in line with expectations.

“The very weak May Japanese industrial production suggests Japanese second-quarter gross domestic product ground to a halt or may have contracted,” said Commonwealth Bank analysts in a note.

In Japanese corporates, Sumitomo Metal Holding shares managed a 0.1% gain after a Reuters report that the company has entered into an agreement to sell its entire 3.5% share in mine operator PT Newmont Nusa Tenggara for around $350m.

On the mainland, the Shanghai Composite added 0.11% to 2,932.82 while the Shenzhen Composite was down 0.18% to 1,970.72.

Markets in China appeared to mostly ignore a further slowdown in China’s manufacturing sector, with the official PMI easing to a flat 50.0, from 50.1 in May, in line with market expectations.

The services sector hastened its expansion, with the official PMI coming in at 53.7 for June over 53.1 in May.

“Today's data suggest that China is unlikely to achieve a GDP growth of 6.7 percent in the second quarter,” said Raymond Yeung and David Qu at ANZ.

“We do not think that there is a significant rise in service sector activity that can offset the downturn of the 'old economy’.”

In Korea, the Kospi ended 0.86% higher at 1,987.32, while markets in Hong Kong were closed as traders celebrated Special Administrative Region Establishment Day.

Oil prices were ahead during Asian trading, though they turned around at the start of the European trading day.

Brent crude was last down 0.83% to $49.30 per barrel and West Texas Intermediate lost 0.75% to $47.97.

Sterling was a big topic yet again, as it plunged to around $1.3225 after Bank of England governor Mark Carney said in a speech that the UK’s economic outlook has deteriorated after the Brexit vote.

“Sterling dropped like a hard rock after Bank of England (BOE) Governor Carney said another rate cut is coming this summer,” said BK Asset Management managing director of foreign exchange strategy Kathy Lien.

“Carney also warned that the BOE can react more rapidly than other institutions and the central bank will have its first full projections in August - which means we'll be looking for a move around that time.”

The pound was last 0.05% weaker at $1.3304.

Australia’s S&P/ASX 200 closed up 0.25% to 5,246.60, with almost all sectors gaining.

Over in New Zealand, the S&P/NZX 50 added 0.4% to 6,926.23.

The down under dollars both strengthened, with the Aussie last 0.36% ahead at AUD 1.3374 per USD and the Kiwi up 0.41% at NZD 1.3955.