Asia report: Most markets rise as Topix reaches fresh record

Asia-Pacific markets finished mostly higher on Thursday, with Japan's major stock indexes reaching all-time highs.

The surge came as Japanese companies agreed the largest wage hikes in three decades, with pay expected to rise by 5.1%, according to the Rengo labour union.

“Asian equities rose as economic data reinforced the Federal Reserve's case for interest rate cuts, and the yen rebounded from its lowest level against the dollar since 1986,” said TickMill market analyst Patrick Munnelly.

“Technology companies drove the MSCI Asia-Pacific gauge to its highest level in over two years, with Japan's Topix reaching a record intraday high and stocks in South Korea, Taiwan, and Australia also climbing.

“The S&P 500 and Nasdaq 100 set records in a short session before a US holiday, while US futures contracts saw minimal movement.”

Muinnelly noted that the yen strengthened after hitting its lowest level against the dollar since 1986, amid speculation that the Bank of Japan would gradually tighten regulations.

“The dollar index declined for the third consecutive session.

“Weak US economic data has raised the possibility of a rate cut in September, leading to a potential longest run of weekly gains for global equities since March.”

Most markets rise as Japan’s indices reach records

In Japan, the Topix index broke its previous record set in December 1989, closing at 2,898.47, a 0.92% increase.

The Nikkei 225 also hit a new peak, ending at 40,913.65, up 0.82%, surpassing its previous high from March.

Leading the gains on Tokyo’s benchmark were Sumitomo Metal Mining, up 7.7%; Sumitomo Dainippon Pharma, rising 6.82%; and Kyowa Kirin, which was 6.26% firmer.

Contrarily, China's markets faced declines, as the Shanghai Composite fell 0.83% to 2,957.57, and the Shenzhen Component dropped 0.99% to 8,673.83.

Notable losses in Shanghai included Kangxin New Materials, down 10.2%; Chahua Modern Housewares, off 9.89%; and Zhejiang Shengda Bio-Pharm, which was 9.78% weaker.

Hong Kong’s Hang Seng Index increased 0.28%, closing at 18,028.28, with top performers including Trip.com Group, up 4.75%; Tingyi, ahead 4.47%; and Li Auto, which was 3.99% stronger.

South Korea’s Kospi gained 1.11%, closing at 2,824.94.

Among the leading stocks in Seoul were Hanmi Science, up 6.58%; GS Holdings, ahead 5.18%; and Mirae Asset Daewoo Securities, which was 5% stronger.

Australia’s S&P/ASX 200 rose 1.19% to 7,831.80.

ZIP Co saw the largest gain with a 10.82% increase, followed by Bellevue Gold, up 6.5, and Magellan Financial Group, which closed 6.08% higher.

New Zealand’s S&P/NZX 50 dropped by 0.38% to 11,746.66, with Port of Tauranga down 4.72%, Kiwi Property Group off 2.4%, and Ryman Healthcare 2.3% weaker.

In currency markets, the dollar was last down 0.25% on the yen to trade at JPY 161.28, and also lost 0.25% against the Aussie to AUD 1.4877.

The greenback was also weaker on the Kiwi, retreating 0.21% to change hands at NZD 1.6350.

Oil prices declined, with Brent crude futures last down 0.41% on ICE at $86.98 per barrel and the NYMEX quote for West Texas Intermediate falling 0.49% to $83.47.

Japanese companies announce biggest wage hikes in 30 years

In economic news, Japanese companies announced the most significant wage increases in 30 years, according to Rengo, the country's largest labour union.

A recent survey revealed that union-backed workers would see an average monthly pay rise of 5.1% for the financial year ending March 2025.

Large firms with 300 or more unionised employees reported wage hikes of 5.19%, while smaller companies increased wages by 4.45%.

The boost in wages was expected to drive a cycle of rising prices and incomes, potentially enabling the Bank of Japan to raise interest rates and normalise monetary policy.

In Hong Kong, S&P Global reported a decline in the composite purchasing managers’ index (PMI), which fell to 48.2 in June from 49.2 in May.

That marked the second consecutive month of decreased private sector output, with June experiencing the fastest rate of contraction in over two years.

Australia's trade surplus meanwhile narrowed significantly in May, dropping to AUD 5.77bn from AUD 6.03bn in April.

The decrease was steeper than economists' predictions.

Exports rose 2.8%, mainly driven by metal ores and minerals, while imports increased by 3.9%, bolstered by fuels and lubricants.

Reporting by Josh White for Sharecast.com.