Asia report: Most markets fall on renewed rate concerns

Most Asian markets closed lower on Thursday as concerns over further interest rate hikes weighed on investor sentiment globally.

Japan's Nikkei 225 closed down 0.06% at 27,498.87, while the broader Topix index fell 0.16% to 1,994.57.

Among the biggest losers on the benchmark index were Fuji Electric, which dropped 3.18%, NTT Data Corporation, down 2.88%, and Chiba Bank, which fell 2.51%.

In China, the Shanghai Composite slipped 0.05% to 3,310.65, while the Shenzhen Component was down 0.54% at 11,849.51.

Quick Intelligent Equipment and Bethel Automotive Safety Systems were among the major losers, dropping 5.38% and 5.35%, respectively.

Hong Kong's Hang Seng Index also closed lower, falling 0.92% to 20,429.46.

Sands China, Alibaba Group, and Zhongsheng Group were the biggest losers, down 4.9%, 4.68%, and 4.25%, respectively.

South Korea's Kospi, which returned from a public holiday on Wednesday, closed up 0.62% at 2,427.85.

Among the top gainers were Ilsung Pharmaceutical, which surged 29.97%, and Hanssem, which rose 19.73%.

In Australia, the S&P/ASX 200 closed up 0.05% at 7,255.40, with South32 and Nickel Industries among the top performers, rising 5.15% and 5.08%, respectively.

New Zealand's S&P/NZX 50 closed up 0.21% at 11,900.86, with Ryman Healthcare and Fonterra Shareholders Fund rising a respective 3.09% and 2.65%.

In currency markets, the yen weakened 0.38% against the dollar to last trade at JPY 136.71, while the Aussie and Kiwi both retreated against the greenback by 0.58% and 0.68%, respectively, to AUD 1.4877 and NZD 1.6090.

Oil markets were meanwhile buoyant, with Brent crude futures on ICE last up 0.69% at $84.89 per barrel, while the NYMEX quote for West Texas Intermediate was ahead 0.75% at $78.27.

Patrick Munnelly, market analyst at TickMill Group, said the mixed performance in Asia came on the back of a fall in equities on Wall Street overnight amid renewed inflation fears.

“ISM data left Wall Street closing on a whimper, markets are increasingly pricing a higher terminal rate for the US rate cycle, compounded by hawkish rhetoric from Fed members Bostic and Kashkari, both of whom remarked that a 5% terminal rate is required to quash inflation,” Munnelly noted.

“Kashkari specifically stated that services inflation was a primary concern and required real attention.

“As such, the US 10-year yield tipped 4%, with markets pricing a further 75-basis point rise by the FOMC this year.”

On the economic front, South Korea's manufacturing sector remained in contraction territory for the eighth consecutive month in January, according to a fresh purchasing managers index (PMI) reading.

The index stood at 48.5, indicating a contraction, as opposed to a reading of 50 or above, which suggests expansion.

It came as South Korea's industrial output fell by 12.7% year-on-year in January, marking its fourth consecutive month of decline.

The contraction was more severe than the revised December figure of 10.5%, and below economists' expectations of 8.9%, according to Refinitiv.

“Nothing in the PMI data is likely to change the Bank of Korea’s view that inflationary pressures are gradually abating, while the economic outlook is dismal, both at home and abroad,” said Duncan Wrigley at Pantheon Macroeconomics.

“China’s reopening rebound will only partly offset the hit from soft Korean export demand in other key markets, considering the downturn in the global electronics market.

“We therefore expect the Bank to keep its policy rate on hold, at 3.5%, for the rest of this year.”

Meanwhile, Japan's annual corporate survey from the Cabinet Office showed a fall in sector-based gross domestic production forecasts for the year ahead, averaging 1.3%, compared to a previous 1.5%.

The lower outlook was driven by manufacturer expectations, which were lower compared to non-manufacturers.

However, the five-year outlook from the survey showed an improvement, rising to 1.2% from 1.0%, making for the highest reading since 2014.

Reporting by Josh White for Sharecast.com.