Asia report: Most markets fall on release of Fed minutes

Asia-Pacific stock markets finished in a mixed state on Thursday, after the release of the US Federal Reserve's July meeting minutes overnight.

The notes showed that concerns about inflation persisted at the central bank, hinting at potential further rate hikes in the future.

“Asian equity markets mostly experienced another day of selling, in line with losses on Wall Street,” said Patrick Munnelly at TickMill Group.

“Yields in the market continued to rise following the release of the FOMC minutes, which highlighted that most officials saw significant upside risks to inflation, possibly necessitating further tightening measures.

“The Nikkei 225 index in Japan declined, driven by soft data releases that included a miss on machinery orders.”

Munnelly noted that, although exports and imports saw declines that were not as severe as expected, exports registered a contraction for the first time in 29 months.

“The Hang Seng index and the Shanghai Composite index opened under pressure - the Hang Seng index's decline of more than 20% from its January high pushed it into bear market territory, attributed to disappointing earnings results from companies like Tencent and JD.com.

“However, Chinese markets managed to recover most of their earlier losses following another liquidity injection by the central bank and recent economic commitments by Premier Li.”

Equity markets mostly lower on US inflation concerns

In Japan, the Nikkei 225 index closed down 0.44% at 31,626.00, while the broader Topix index shed 0.34% to conclude at 2,253.06.

Notable decliners on Tokyo’s benchmark included Rakuten, which tumbled by 4.43%, Oki Electric Industry Co with a 3.96% decline, and CyberAgent which dropped by 3.92%.

China, on the other hand, ended in a more positive mood, as the Shanghai Composite advanced by 0.43% to 3,163.74, while the Shenzhen Component rose by 0.61% to 10,644.52.

Among the gainers in Shanghai were Hubei Mailyard Share Co, surging 10.07%, and Anhui Great Wall Military Industry Co following closely with a gain of 10.04%.

Over in Hong Kong, the Hang Seng Index closed barely lower, by 0.02% at 18,326.62.

Some major stocks took a hit in the special administrative region - Country Garden Holdings fell by 7.23%, Alibaba Health Information Technology saw a 7.09% dip, and JD Health International receded by 6.43%.

South Korea's Kospi edged down 0.23% to end the day at 2,519.85.

Among the big decliners in Seoul were Hanjinkal, plummeting 6.54%, and Amore Group which decreased by 5.95%.

The Australian market didn't fare any better, with the S&P/ASX 200 closing down by 0.68% at 7,146.00.

Leading the downtrend were Domain Holdings Australia, dropping by 7.84%, and APM Human Services International with a 7.2% decline.

In New Zealand, the S&P/NZX 50 took a more pronounced hit, declining by 0.95% to 11,651.58.

Synlait Milk and Serko saw drops of 5.13% and 4.06% respectively.

On the foreign exchange front, the dollar was in the red against some of the region’s major trading currencies, falling by 0.18%, 0.08%, and 0.17% on the yen, the Aussie and the Kiwi, respectively.

Oil prices edged higher, with Brent crude and West Texas Intermediate futures both ahead by 0.83%, to $84.14 and $80.04 per barrel, respectively.

Japan’s trade moves into deficit, jobless rate climbs in Australia

In economic news, Japan's trade position shifted into deficit in July, just a month after heralding its first surplus in around two years.

July saw the country grapple with a trade shortfall of JPY 78.7bn - a stark contrast to the JPY 43bn surplus in the prior month, and notably lower than the JPY 24.2bn surplus that economists polled by Reuters had predicted.

Compared to the substantial JPY 1.42trn deficit seen in July last year, however, the new deficit had narrowed by a significant 94.5%.

Contributing to the reversal, Japan's exports recorded a mild decline of 0.3% from the prior year, and imports saw a more substantial fall of 13.5%.

“The Bank of Japan is likely to view the July export figures as the continuation of a gentle downward decline this year,” said Duncan Wrigley at Pantheon Macroeconomics.

“The second quarter’s 0.7% GDP growth was driven by inbound tourism and falling import prices, while goods exports were weak and domestic demand fell.

“This uneven picture seems to be intact as we enter the second half, while inflation is cooling more slowly than the BoJ projected.”

Wrigley said Friday’s national consumer price index data would likely be unchanged at 3.2% on the year in July, propped up by the lagged effect of last year's import cost surges.

“We think the Bank will focus on the soggy domestic economy and falling real wages in sticking to the negative policy rate, at -0.1%, to support the economy in the second half.”

Australia's economic landscape also drew attention, as its seasonally adjusted unemployment rate climbed slightly to 3.7% in July.

The increase from June's 3.5% was slightly more than the 3.6% expected by analysts.

In Singapore, the city-state’s economic performance was marked by a pronounced decline in non-oil domestic exports according to fresh data.

The metric plummeted by 20.2% year-on-year in July, surpassed only by January's dramatic 25% year-on-year fall.

July’s print was also a steeper drop than June's revised decline of 15.6%, and a greater fall than the 14.4% markets had expected.

On a broader scale, July's total trade shrunk by 20.8%, intensifying the 19.3% downturn in June.

Exports suffered an 18.4% decline, with imports receding by 23.4%.

Reporting by Josh White for Sharecast.com.