Asia report: Most markets fall after US inflation data

Asia-Pacific markets exhibited a mixed performance on Friday in response to US inflation data which came in lower than anticipated overnight.

The unexpected outcome raised hopes that the markets could potentially witness a ‘soft landing’ in the ongoing battle against inflation.

“Asian equity markets made little positive progress overnight, influenced by a dovish reaction to post-CPI developments in the United States and concerns surrounding Chinese property developers,” said TickMill market analyst Patrick Munnelly.

“Trading activity was also hindered by reduced participation as Japanese market participants were absent due to Mountain Day.

“The Hang Seng index and the Shanghai Composite index experienced declines, primarily driven by the struggles of property developers.”

Munnelly noted that Country Garden Holdings faced pressure after announcing a potential loss of up to CNY 55bn for the first half, and enlisting CICC for assistance with debt restructuring.

“Additionally, Fantasia Holdings saw a significant drop of over 50% upon resuming trading, having been halted since March of the previous year.

“Market participants were also anticipating details emerging from an emergency meeting between the securities regulator, developers, and financial institutions.

“Conversely, certain Hong Kong-listed companies performed well. Alibaba, China Mobile, and Li Ning stood out as some of the best-performing stocks, buoyed by favourable results.”

Equity markets react to US inflation data

China bore the brunt of the declines, with its major indexes witnessing a downturn.

The Shanghai Composite saw a decrease of 2.01%, closing at 3,189.25, while the Shenzhen Component went down by 2.18% to 10,808.86.

Leading the descent in Shanghai were shares of Hongta Securities which plummeted 10.03%, followed by Cashway Tech and Chongqing Fuling Electric dropping 9.95% and 7.88% respectively.

Over in Hong Kong, the Hang Seng Index fell by 0.9% to 19,075.19.

Among the most notable decliners were Country Garden Holdings which slipped by 5.77%, Alibaba Health Information Tech down by 5.52%, and Xinyi Solar which decreased by 4.52%.

South Korea's Kospi also witnessed a dip, albeit a moderate one, declining by 0.4% to finish at 2,591.26.

Some of the major stocks that impacted the decrease were Posco International with a 6.37% drop, Sk Biopharma losing 5.02%, and Amore Group which went down by 4.31%.

Australia presented a similar story, with the S&P/ASX 200 index declining slightly by 0.24% to close at 7,340.10.

Leading the list of underperformers were BSP Financial Group which shed 4.58%, New Hope Corporation with a 3.74% decline, and Genesis Energy which saw a decrease of 3.66%.

On the brighter side, New Zealand stood as a beacon of positive momentum with the S&P/NZX 50 gaining 0.21% to 11,836.71.

Stocks leading the upward drive were Scales with a jump of 3.9%, Fonterra Shareholders which rose by 3.21%, and Mercury NZ which climbed 2.15%.

Japan remained dormant for the day as markets were closed in observance of the Mountain Day holiday.

On the currency front, the dollar weakened 0.08% against the yen to last trade at JPY 144.63.

The greenback did, however, experience a minor gain against the Aussie, by 0.03%, and increased by 0.26% against the Kiwi.

In oil markets, both Brent crude and West Texas Intermediate futures saw slight increments, increasing by 0.13% to $86.51 and 0.12% to $82.92, respectively.

New Zealand factory activity dips, Singapore adjusts growth forecast

In economic news, New Zealand's manufacturing sector experienced an accelerated rate of contraction in July.

The country’s manufacturing purchasing managers index (PMI) landed at 46.3 for the month, signifying a more significant dip compared to June's 47.5.

It marked the fifth consecutive month the sector had been in contraction, and made for the most sluggish pace since August 2021, when New Zealand was under Covid-19 lockdown.

A PMI score above 50 represents expansion in a sector, while anything below indicates a contraction.

Meanwhile, officials in Singapore adjusted their 2023 growth forecast during the day.

Previously projected to be between 0.5% and 2.5%, the city-state’s trade ministry had now revised its GDP prediction to a narrower band of 0.5% to 1.5%.

Looking at the second quarter, Singapore reported year-on-year growth of 0.5%, slightly up from the 0.4% growth in the prior period.

The initial estimate was, however, more optimistic at 0.7%.

On a seasonally-adjusted quarter-on-quarter basis, there was a small expansion of 0.1%, contrasting the 0.4% decline observed in the first quarter of 2023.

Reporting by Josh White for Sharecast.com.