Asia report: Most markets rise as yen falls back

Asian markets saw a mixed day of trading on Tuesday, as investors navigated between positive cues from Wall Street and cautious sentiment surrounding China's factory activity.

Traders were also monitoring the yen, amid unconfirmed reports that authorities in Japan had intervened in the currency after it touched the JPY 160 level against the dollar on Monday.

“Asian stocks mostly gained ground, driven primarily by Japanese equities,” said TickMill market analyst Patrick Munnelly.

“Despite the yen holding above its recent 34-year lows, China's PMI data indicated economic expansion, particularly in the manufacturing sector.

“The Caixin manufacturing index climbed to 51.4, marking its highest level in over a year according to the survey.”

Most markets rise as markets monitor yen

In Japan, both the Nikkei 225 and the Topix index posted gains, rising by 1.24% to 38,405.66, and by 2.11% to 2,743.17, respectively.

The surge on Tokyo’s benchmark was propelled by strong performances from companies like Mitsubishi Electric, Komatsu, and Tokuyama, which saw impressive gains of 15.88%, 11.52%, and 11.4%.

However, China's markets showed signs of weakness, with the Shanghai Composite down 0.26% at 3,104.82, and the Shenzhen Component slipping 0.9% to 9,587.12.

ARTS Group and Grinm Advanced Materials bore the brunt of the declines in Shanghai, each plummeting by 10.01%.

Hong Kong's Hang Seng Index managed to eke out a slight gain of 0.09% to 17,763.03, buoyed by notable increases in Haier Smart Home, Orient Overseas International, and Techtronic Industries, which rose by 7.93%, 5.15%, and 4.08% respectively.

South Korea's Kospi index experienced modest growth of 0.17% to 2,692.06, with companies like Amorepacific and LG Household & Healthcare driving the positive momentum with gains of 8.72% and 5.93%.

Australia's S&P/ASX 200 also saw a modest uptick of 0.35% to 7,664.10, supported by Arcadium Lithium and Azure Minerals, which climbed by 8.39% and 8.21%.

In New Zealand, the S&P/NZX 50 mirrored Australia's performance, rising by 0.35% to settle at 11,957.50.

Notable gainers in Wellington included Serko and Pacific Edge, which rose 17.35% and 13.41% respectively.

On the currency front, the dollar was last 0.35% stronger on the yen to trade at JPY 156.90.

The yen’s recent volatility was attributed to intervention by Japanese authorities, according to an overnight report from the Wall Street Journal.

It weakened significantly against the dollar on Monday, but suddenly strengthened following the suspected intervention.

While Japanese officials declined to comment on the intervention, they reaffirmed readiness to address foreign exchange dynamics promptly.

The greenback meanwhile advanced 0.55% against the Aussie to AUD 1.5311, and by 0.54% on the Kiwi to change hands at NZD 1.6819.

Oil prices experienced marginal gains, with Brent crude futures last up 0.29% on ICE at $88.66 per barrel, and the NYMEX quote for West Texas Intermediate edging up 0.24% to $82.83.

Factory activity expands in China, jumps in Japan

In economic news, factory activity in China expanded in April, albeit at a slower pace than the prior month.

The official purchasing managers’ index (PMI) came in at 50.4, slightly surpassing expectations but lower than March's figure of 50.8.

However, the non-manufacturing PMI slowed to 51.2, indicating a deceleration in the services sector.

The composite PMI for April also dipped to 51.7 from 52.7, signalling a moderation in overall economic growth.

Japan's factory output meanwhile jumped in March, marking a significant turnaround from the previous month.

Industrial production rose 3.8% on the month, surpassing economists' expectations.

The increase was driven by robust production in motor vehicles and production machinery.

However, on a year-on-year basis, industrial production declined by 6.7%, underscoring persistent challenges in the Japanese manufacturing sector.

South Korea, on the other hand, faced a downturn in industrial production, reaching its lowest level in 15 months.

March saw a 3.2% month-on-month decline in industrial production, contrasting sharply with the previous month's 2.9% growth.

The drop - the steepest since December 2022 - fell short of expectations, indicating headwinds for South Korea's industrial sector.

Reporting by Josh White for Sharecast.com.