Asia report: Most markets rise as Bank of Korea hikes rates

Most markets in Asia closed higher on Friday, after a much-anticipated consumer inflation print in the US came in cooler than expected overnight.

In Japan, the Nikkei 225 was down 1.25% at 26,119.52, as the yen strengthened 0.55% on the dollar to last trade at JPY 128.54.

Automation specialist Fanuc was down 1.01% and technology conglomerate SoftBank Group was 1.66% weaker, while fashion firm Fast Retailing tumbled 7.95%.

Uniqlo’s owner tumbled after it announced it would raise wages by 40% in a bid to help stem the cost-of-living crisis for its workforce.

The broader Topix index was 0.27% weaker by the end of trading in Tokyo, settling at 1,903.08.

On the mainland, the Shanghai Composite was 1.01% firmer at 3,195.31, and the technology-heavy Shenzhen Component rose 1.19% to 11,602.30.

Fresh data out of Beijing showed exports from China falling less than expected in December, boosting sentiment.

According to the General Administration of Customs, dollar-denominated exports were down 9.9% year-on-year in the last month of 2022, coming in just ahead of the 10% fall economists polled by Reuters were expecting.

Imports also fared better than anticipated, dropping 7.5% on the year in dollar terms, compared to the 9.8% tumble that had been pencilled in.

“We think the worst point of China’s Covid exit wave in terms of the economic hit has passed for big cities, with other regions following close behind,” said Duncan Wrigley at Pantheon Macroeconomics.

“The imminent Chinese New Year holiday period will delay the economic rebound.

“But green shoots are sprouting and consumers have built up savings during the pandemic.”

Wrigley said domestic demand recovery was likely to start in March, building momentum from the second quarter onwards, boosted by rate cuts and targeted policy support.

“This should drive a recovery in China’s import demand for consumer goods, capital equipment, intermediate products and raw materials.”

South Korea’s Kospi gained 0.89% to 2,386.09, while the Hang Seng Index in Hong Kong was 1.04% stronger at 21,738.66.

The Bank of Korea sated market forecasts in its latest monetary policy decision during the day, tacking 25-basis points on to its core interest rate.

Its move took the rate to 3.5% - its highest level since December 2008.

“The board judges that the additional 25-basis point hike is warranted to ensure price stability, as inflation still remains high and is projected to be above the target level for a considerable time,” the central bank said in its statement.

Seoul’s blue-chip technology stocks were mixed, with Samsung Electronics up 0.5%, while SK Hynix was down 1.27%.

Oil prices were slightly lower as the region entered the weekend, with Brent crude futures last down 0.1% on ICE at $83.95 per barrel, and the NYMEX quote for West Texas Intermediate flat at $78.47.

In Australia, the S&P/ASX 200 gained 0.66% to 7,328.10, while across the Tasman Sea, New Zealand’s S&P/NZX 50 added 0.77% to close at 11,754.44.

Both of the down under dollars were weaker against the greenback, with the Aussie last off 0.49% at AUD 1.4421, while the Kiwi retreated 0.62% to NZD 1.5735.

Reporting by Josh White for Sharecast.com.