Asia report: Markets tumble, Japan manufacturer confidence improves

Most Asia-Pacific markets experienced a mixed and volatile trading day on Wednesday, as Seoul’s benchmark index reversed half of the gains made earlier this week.

Market participants were also poring over a positive business sentiment survey from Japan.

Patrick Munnelly, market analyst at TickMill Group, said Asia markets had a mixed performance following a similar trend on Wall Street, with market activity being very limited in the region’s early hours.

“[The] Nikkei 225 initially gained from the strong earnings of Nintendo, which boosted the electronics sector by over 6%, but the oil sector dragged it down and the index eventually turned negative after Bank of Japan governor Kazuo Ueda said the Bank could exit yield curve and negative rates without waiting for real wages to turn positive, if it expects them to do so in the future,” he explained.

“The Hang Seng and Shanghai Composite fluctuated between small gains and losses with little reaction to the comments from the People’s Bank of China governor, while markets awaited the meeting between Biden and Xi in San Francisco next week, although no major breakthrough was anticipated.”

Munnelly also noted that China’s inflation data for October was set to be released overnight.

“CPI inflation is expected to turn negative to -0.1% from 0.0% in September, showing weak domestic demand conditions.

“Producer price inflation is also expected to drop to -2.7% from -2.5%, indicating lower input costs for manufacturers.”

Stocks slide in Seoul, most other markets close weaker

South Korea’s benchmark index, the Kospi, saw a decline of 0.91%, erasing more than half of the gains made earlier in the week.

Meanwhile, Japan’s Nikkei 225 ended the day with a 0.33% drop, and the broader Topix index fell by 1.16%.

Notable stock performances on Tokyo’s benchmark included Tokai Carbon tumbling by 10.91%, Meiji Holdings dropping by 8.67%, and Tokyo Gas slipping by 7.95%.

On the other hand, Australia’s S&P/ASX 200 managed to buck the trend with a 0.26% gain, supported by notable increases in James Hardie Industries, up by 13.76%, and Contact Energy, rising by 4.37%.

China’s markets showed mixed results, with the Shanghai Composite edging down by 0.16% and the Shenzhen Component nearly flat with a 0.04% decline.

Key performers in China included ADD Industry Zhejiang, which fell by 10.01%, and Founder Securities, which dipped by 4.52%.

In Hong Kong, the Hang Seng Index declined by 0.58%, with notable losses of 5.41% in Ping An Insurance, 3.87% for Lenovo Group, and 2.65% in China Hongqiao Group.

New Zealand’s S&P/NZX 50 experienced a 0.65% drop, with Sky Network Television falling by 5.28% and Vista Group International declining by 3.08%.

In the currency market, the dollar was last 0.26% stronger on the yen, trading at JPY 150.76, while it rose 0.19% against the Aussie to AUD 1.5566, and advanced 0.28% against the Kiwi to change hands at NZD 1.6894.

On oil prices, Brent crude futures were last up 0.1% on ICE at $81.53 per barrel, while the NYMEX quote for West Texas Intermediate dropped 0.27% to $77.16 per barrel.

Japan manufacturer confidence improves, NZ inflation expectations dip

In economic news, confidence among major Japanese manufacturers improved in the latest Reuters Tankan survey, which gauges business sentiment among prominent firms in the country.

It marked the first uptick in the index since August, with the sentiment index for manufacturers climbing to +6, up from +4 in October.

The service sector mood also saw positive growth for the second consecutive month, reaching a reading of +27, compared to +24 the previous month.

Elsewhere, New Zealand’s inflation expectations for the fourth quarter dipped to a two-year low, according to a survey from the Reserve Bank of New Zealand (RBNZ).

The central bank’s two-year inflation expectations - an indicator of when its monetary policy actions would influence prices - declined to 2.76% from 2.83% in the September quarter.

Projections for annual price increases one year ahead also showed a cooling trend, dropping to 3.60% from the previous 4.17%.

Additionally, expectations for annual wage inflation one year ahead slipped to 4.43%, down from 5.04% in the third quarter, while the two-year-ahead expectation for yearly wage inflation was at 3.53%, slightly lower than the previous quarter’s 3.66%.

The survey suggested that the central bank’s interest rate hikes were having an impact in mitigating inflationary pressures, with the RBNZ’s next policy meeting set for 29 November.

Reporting by Josh White for Sharecast.com.