Asia report: Most markets rise, Japan in the red on fresh data dump

Most Asia-Pacific markets finished with gains on the last trading day of the week on Friday, with Hong Kong’s Hang Seng emerging as the front-runner.

Economic data from Japan, including Tokyo's inflation rate for September, was also in focus.

“Global equities have felt a pinch as US rates broke to the year's highs,” said SPI Asset Management managing partner Stephen Innes.

“While the sensation around the China impulse is improving - to repeat it - the cat-and-mouse game between rates and stocks is well in play as higher rates have injected a lot of turbulence into the US equity market outlook.”

Innes said Chinese markets were stabilising on a “steady drumbeat” of policy support, which should augur well from broader risk sentiment and take some of the heat out of the US dollar rally.

“Mainland investors will keep pushing until a bigger-scale stimulus or a meaningful hook higher in economic momentum signals the comeback is on.”

Equity markets mainly in the green, Japan an outlier

Japan's primary indices finished in negative territory, with the Nikkei 225 experiencing a marginal decline of 0.05% to settle at 31,857.62, while the Topix reflected a more significant fall of 0.94% to 2,323.39.

Some major losers on Tokyo’s benchmark included Mitsui OSK Lines, down 5.3%; Chubu Electric Power, off 5.05%; and Kansai Electric Power, ending the day 4.83% weaker.

Chinese markets were closed for the Mid-Autumn Festival holiday while trading in South Korea remained suspended for the Chuseok autumn harvest festival.

The Hang Seng Index in Hong Kong displayed robust growth, climbing 2.51% to 17,809.66.

Alibaba Health Information Technology led the gains with a significant rise of 10.66%, followed by JD Health International at 7.84% and Zhongsheng Group Holdings at 7.04%.

Australia’s S&P/ASX 200 ticked up 0.34% to reach 7,048.60, with Sydney’s top performers including Brickworks with a rise of 3.74%, South32 adding 3.67%, and Champion Iron closing 3.62% firmer.

New Zealand’s S&P/NZX 50 followed suit, with a gain of 1.06% to end at 11,296.43.

Mainfreight added 3.79%, Synlait Milk rose 3.62%, and KMD Brands ended the day 3.57% higher in Wellington.

In the currency space, the dollar was last down 0.16% on the yen, trading at JPY 149.07.

The greenback saw more pronounced drops against its Aussie and Kiwi counterparts, decreasing by 0.88% to AUD 1.5422 and 1.17% to change hands at NZD 1.6577, respectively.

On the oil front, Brent crude futures slipped 0.49% on ICE to last trade at $94.91 per barrel, while the NYMEX quote for West Texas Intermediate notched up 0.12% to $91.82.

Mixed signals for Japan amid slowing inflation and steady factory output

In economic news, inflation in Tokyo marked its slowest growth in a year, according to fresh data.

For September, the inflation rate stood at 2.8%, slightly lower than the 2.9% observed in August and the slowest since September last year.

Looking at the core inflation rate, which omits the fluctuating prices of fresh food, the figure was pegged at 2.5%.

That was lower than the 2.6% forecast by Reuters polling and fell short of the 2.8% from August.

“The September Tokyo CPI print strengthens the case for the Bank of Japan keeping the policy rate on hold, at -0.1% in the fourth quarter, while gradually phasing out the yield curve control policy,” said Duncan Wrigley at Pantheon Macroeconomics.

“The weak yen and higher international oil prices are likely to spur higher imported costs, but this is unlikely to budge the BoJ’s view that Japan needs accommodative monetary policy.

“The BoJ is looking for signs of demand-pull, rather than cost-push, inflation as evidence that its target of sustainable inflation has been met.”

Wrigley said domestic demand had yet to gain momentum in the broader Japanese economy despite a “sizzling” tourism sector.

“Reported labour shortages in tourism-related areas have not translated into broader wage inflation - nominal wage growth slowed to 1.3% year-on-year in July, from 2.3% in June.

“Governor Ueda last week said the Bank was ‘not fully convinced’ that wage hikes will continue to pick up, as many employers are undecided on their wage plans for next year.”

In the industrial sector, Japan's factory output in August showcased resilience, holding steady from July.

That defied prior anticipations of a 0.8% decline, as predicted by economists in a separate Reuters poll.

However, on a year-on-year assessment, there was a downward trend - industrial output receded for its third consecutive month, marking a 3.7% decline.

In brighter news, Japan’s retail sector outperformed expectations, with sales seeing a year-on-year surge of 7%, surpassing expectations of 6.6%.

It also matched the revised growth rate of July, which also stood at 7%.

Finally, there was apparent stability in the job market, with the country’s unemployment rate persisting at 2.7% for August.

Reporting by Josh White for Sharecast.com.