Asia report: Most markets fall as Korean industrial output contracts

Asia-Pacific markets mostly edged lower on Friday, with South Korea leading the declines as its industrial production contracted for a second consecutive month in October.

There was also a lack of any overnight catalysts coming out of the US, as markets on Wall Street remained closed on Thursday for the Thanksgiving Day holiday.

“Although a quiet post-Thanksgiving day was anticipated in Asia, investors were prompted to chase the yen, which is poised for its strongest week in four months, by Tokyo's surprisingly high CPI data,” said Patrick Munnelly at TickMill.

“As traders strengthened their bets on a rate hike by the Bank of Japan next month, the yen surged as much as 1.1%, hitting its highest level in six weeks and dropping below the 150-per-dollar line.

“According to current swaps, there is a 60% chance that the rate will rise by one quarter point to 0.5%, the highest level since 2008.”

Munnelly noted that the Bank of Japan had a chance to “get closer to normalising rates” now that concerns about deflation had mostly been replaced by concerns about a weakening yen.

“Investors are better ready this time around, despite the fact that the central bank's previous rate hike created a slight market disturbance.

“Chinese stocks excelled in Asia, with blue-chip shares rising by 2% before the upcoming release of official surveys regarding the manufacturing and services sectors on Saturday.

“There is an anticipation that the large factory sector probably continued to grow in November, though at a slow rate.”

Most markets fall with Greater China a bright spot

In South Korea, the Kospi 100 fell 1.84% to close at 2,456.50, weighed down by significant losses in Hanmi Science, Kumyang, and Doosan Robotics, which dropped 7.84%, 7.38%, and 7.16%, respectively.

Japan’s Nikkei 225 shed 0.37% to end at 38,208.03, while the broader Topix slid 0.24% to 2,680.71.

Declines were broad-based, with Nissan Motor plummeting 4.01%, Sumco Corporation down 3.3%, and DeNA Co losing 3.27%.

China provided a bright spot as its markets posted robust gains - the Shanghai Composite rose 0.93% to 3,326.46, and the Shenzhen Component surged 1.72% to 10,611.72.

Top performers in Shanghai included Guangdong Mingzhu Group, Xinjiang Sayram Modern Agriculture, and Wuxi Commercial Mansion Grand Orient, all hitting the 10% daily limit.

Hong Kong’s Hang Seng Index also advanced, rising 0.29% to 19,423.61, driven by strong performances from Xinyi Solar, Sands China, and Haidilao International, which gained 4.56%, 4.42%, and 4.3%, respectively.

Australia’s S&P/ASX 200 edged down 0.1% to 8,436.20.

Financial and New Zealand dual-listed stocks underperformed, with BSP Financial Group losing 5.03%, Kiwi airport operator AIAL declining 3.31%, and NZ energy generator Genesis Energy slipping 2.39% in Sydney.

Meanwhile, New Zealand’s S&P/NZX 50 managed a slight uptick of 0.1% to 13,066.92, supported by gains of 8% for Pacific Edge, 5% in Restaurant Brands New Zealand, and 4.61% for Vista Group International.

In currency markets, the dollar was last down 0.93% on the yen to trade at JPY 150.14, as it lost 0.1% against the Aussie to AUD 1.5372, and dropped 0.38% on the Kiwi, changing hands at NZD 1.6917.

Oil prices retreated slightly, with Brent crude futures last down 0.79% on ICE to $72.70 per barrel, and the NYMEX quote for West Texas Intermediate declining 0.48% to $68.39.

Industrial production contracts again in Korea, Tokyo inflation accelerates

In economic news, South Korea's industrial production contracted by 0.3% in October compared to the prior month, matching September’s decline.

However, year-on-year growth rebounded with a 2.3% rise, reversing the 1.3% annual decline recorded in September.

In Japan, inflation in Tokyo accelerated in November, exceeding expectations and intensifying speculation about a potential December rate hike by the Bank of Japan.

Core consumer prices, excluding fresh food, rose 2.2% year-on-year, up from October’s 1.8%, driven by reduced energy subsidies.

Overall inflation climbed to 2.6%, buoyed by rising food costs.

Reporting by Josh White for Sharecast.com.