Asia report: Most markets rise, Australian retail sales surge

Markets in Asia were mostly higher on Friday, as investors kept a watchful eye on Covid-19 developments, and reports from Beijing suggested the recent resurgence of the coronavirus was under control in the Chinese capital.

In Japan, the Nikkei 225 was up 0.55% at 22,478.79, as the yen strengthened 0.02% against the dollar to last trade at JPY 106.95.

Of the major components on the benchmark index, robotics specialist Fanuc was up 0.49%, Uniqlo owner Fast Retailing added 1.91%, and technology giant SoftBank Group was 0.68% firmer.

The broader Topix index went against the regional trend, slipping 0.02% by the close to settle at 1,582.80.

Fresh economic data out of Japan left a mildly disappointing taste in investor mouths, as consumer price index inflation was unchanged in May at 0.1%, missing consensus expectations for a 0.2% rise.

Core deflation, meanwhile, was also stable at -0.2%, wider than forecasts for an easing to -0.1%.

“Looking ahead, CPI deflation should take hold from this month and last until the end of the year, even if global oil prices continue to recover,” said Pantheon Macroeconomics senior Asia economist Miguel Chanco.

“Crucially, the unfavourable base effects from last October’s consumption tax hike will hold back the exit from price declines in the fourth quarter.

“The Bank of Japan is unlikely to be too concerned with this looming bout of deflation - given its commodity-driven nature - and with the trajectory still broadly in line with its April projection.”

On the mainland, the Shanghai Composite was ahead 0.6% at 2,967.63, and the smaller, technology-centric Shenzhen Composite jumped 1.19% to 1,931.10.

South Korea’s Kospi managed gains of 0.37% to 2,141.32, while the Hang Seng Index in Hong Kong added 0.73% to 24,643.89.

The blue-chip technology stocks were mixed in Seoul, with Samsung Electronics up 1.15%, while chipmaker SK Hynix lost 0.93%.

Fresh resurgences in Covid-19 infections remained at the top of the agenda for investors on Friday, after five US states reported record spikes in cases overnight.

Arizona, California, Florida, South Carolina and Texas all posted record single-day increases in infections on Thursday.

In Beijing, meanwhile, the chief epidemiologist of the Chinese Center for Disease Control and Prevention Wu Zynyou said late on Thursday that the recent outbreak of Covid-19 in the city was now under control.

The Chinese capital reported a single case on Thursday last week after more than 50 days without any domestically-transmitted infections, which had jumped to 106 new cases on Monday.

A total of 31 new cases were reported on Tuesday, dropping to 21 on Wednesday, with most linked to a wholesale produce market on the south western flanks of the city.

“When I say that it’s under control, that doesn’t mean the number of cases will turn zero tomorrow or the day after,” said Wu, according to a translation from Reuters.

“The trend will persist for a period of time, but the number of cases will decrease, just like the trend that we saw in January and February.”

Oil prices were higher as the region entered the weekend, with Brent crude last up 2.72% at $42.64 per barrel, and West Texas Intermediate advancing 3.12% to $40.05.

In Australia, the S&P/ASX 200 eked out gains of 0.1% to 5,942.60, as investors there softed through the latest retail numbers from the Bureau of Statistics.

On a seasonally-adjusted preliminary basis, retail sales were up 16.3% in May, making for the largest ever rise in the 38-year history of the survey.

It came after the biggest ever month-on-month fall of 17.7% in April amid coronavirus lockdowns in the country’s states and territories, while on a year-on-year basis, sales were up 5.3% in May.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 reversed earlier losses to close 0.26% above the waterline at 11,254.74.

Wellington’s bourse was led higher by the Port of Tauranga, which rocketed 9.9% to a record high - a move which market analysts noted was encouraged by an index reweighting.

The down under dollars were a mixed picture against the greenback, with the Aussie last strengthening 0.28% against the dollar to AUD 1.4553, while the Kiwi weakened 0.04% to NZD 1.5561.