Asia report: Most markets fall as RBNZ keeps rates on hold

Stock markets in the Asia-Pacific region saw a mixed performance on Wednesday, as New Zealand’s central bank held interest rates.

At the same time, Hong Kong authorities announced the scraping of rules designed to tighten the region’s property market.

“Markets in the region are cautious ahead of key US data releases,” said TickMill market analyst Patrick Munnelly.

“The number of Fed rate cuts discounted by markets has fallen to three, equaling the signal provided in policymakers’ 'dot plot' of interest rate expectations.

“In December, Japan's leading index rose to 110.2 from 108.1 in November, which was higher than the initial estimate of 110.0.”

Munnelly said that was the highest reading since October 2022.

“The coincident index also improved to 115.9 in December from 114.6, while the lagging index moderately rose to 105.9 from 105.6.”

Most markets finish Wednesday’s session in the red

In Japan, both the Nikkei 225 and Topix indices experienced marginal declines, with the Nikkei 225 slipping by 0.08% to reach 39,208.03, and the Topix index declining by 0.13% to settle at 2,674.95.

Leading the losses on Tokyo’s benchmark was Omron, down 4.41%; Dainippon Screen Manufacturing, off 3.1%; and J.Front Retailing, which lost 2.57%.

Chinese markets exhibited significant losses, with the Shanghai Composite falling by 1.91% to close at 2,957.85, and the Shenzhen Component declining by 2.4% to reach 9,047.10.

Among the leading losers in Shanghai was Harbin Xinguang Optic Electronics and Beijing Piesat Information Technology, which lost 13.32% and 10.91%, respectively.

In Hong Kong, the Hang Seng Index dipped by 1.51%, settling at 16,536.85.

Notable decliners included Longfor Properties, down 7.01%; Country Garden Services, off 6.52%; and Li Ning Co, which was 5.63% lower.

The declines in the special administrative region coincided with the announcement of the scrapping of rules intended to tighten Hong Kong’s property market.

Conversely, South Korea's Kospi index bucked the trend, rising by 1.04% to reach 2,652.29, with companies such as Samsung Life and Hanwha Aerospace posting respective gains of 11.73% and 8.6%.

Australian markets remained relatively stable, with the S&P/ASX 200 index edging down by just 0.03% to settle at 7,660.40.

Kelsian Group was down 11.99% and Zimplats Holdings lost 10.89% to lead Sydney’s main board lower.

In New Zealand, the S&P/NZX 50 index experienced a modest increase of 0.59%, closing at 11,763.32, led higher by Vista Group International and Synlait Milk, which were ahead 8.55% and 7.25%, respectively.

In currency markets, the dollar was last 0.11% stronger on the yen, trading at JPY 150.67.

At the same time, the greenback strengthened 0.69% against the Aussie to AUD 1.5388, and gained 1.14% on the Kiwi, last changing hands at NZD 1.6391.

On the energy front, oil prices saw declines, with Brent crude futures last down 0.94% on ICE at $82.86 per barrel, and the NYMEX quote for West Texas Intermediate falling 1.07% to $78.03.

RBNZ keeps rates on hold, Hong Kong relaxes property rules

In economic news, the Reserve Bank of New Zealand (RBNZ) opted to keep its main lending rate unchanged in its latest policy decision.

The central bank affirmed its decision to maintain the official cash rate at 5.50%, standing as a 15-year high.

RBNZ Governor Adrian Orr emphasised that headline inflation continues to exceed the target band of 1% to 3%, reaching 4.7% in the fourth quarter of last year.

The persistent high inflation level constrained the committee's flexibility in accommodating further upside inflation surprises, Orr said in his statement.

“The RBNZ left rates on hold and said the current policy is restrictive enough,” said Markets.com chief market analyst Neil Wilson.

“As detailed previously, there had been some sense that the New Zealand central bank may opt for a hawkish surprise.

“However, whilst there was no hike, the central bank did indicate that rates would need to be higher for longer.”

Elsewhere, Hong Kong unveiled its budget, revealing a notable shift in its approach towards property market regulation.

The government announced the immediate cancellation of plans aimed at tightening the property market.

Measures included the revocation of all buy-side property tightening initiatives for residential properties and the waiver of stamp duties on the transfer of real estate investment trust (REIT) units.

The decision marked a departure from previous efforts to curb property speculation.

Reporting by Josh White for Sharecast.com.