Asia report: Most markets rise, PBoC holds medium-term lending rate

Asia-Pacific markets kicked off the week with mostly positive momentum, as investors positioned themselves ahead of a flurry of economic data releases.

The region saw mixed performances across indices, with strong gains in Japan and South Korea, while Chinese and Hong Kong markets faced slight declines.

“The market's response to fund manager Scott Bessent's selection as the next US Treasury Secretary has dominated Asian trade,” said Patrick Munnelly at TickMill.

“Asian markets are trading mostly higher on Monday, buoyed by the positive performance on Wall Street on Friday, with significant gains in Japan, Indonesia, and South Korea.

“The general investor sentiment is satisfied that Bessant is a well-known candidate rather than an unknown one.”

Munnelly noted that Bessent's fiscally conservative rhetoric had pushed 10-year Treasury yields lower, but added that it was unclear if he would be able to reduce deficits while extending soon-to-expire tax cuts.

“He has mentioned reducing spending and boosting economic growth in order to address the massive amount of US debt and bring the budget deficit down to 3% of GDP.

“Critics would point out that the United States has seen robust growth for a long time and that the deficit has only become bigger, and that the amount of discretionary spending that may be reduced is insignificant when compared to necessities like Medicare and defence.

“Though the tariff levels stated, like 60% on Chinese goods, were ‘maximalist’ stances that might be softened, Bessent has advocated for tariffs and suggested that they be ‘layered in gradually’.

Most markets start the week on a high note, China an exception

In Japan, the Nikkei 225 surged 1.3% to close at 38,780.14, and the Topix added 0.71% to end at 2,715.60.

Key drivers included Keisei Electric Railway, which soared 13.83%, and Recruit Holdings, up 4.39%.

Mainland China's markets underperformed, with the Shanghai Composite slipping 0.11% to 3,263.76 and the Shenzhen Component dropping 0.17% to 10,420.52.

The losses were led by significant declines in Wuxi Commercial Mansion Grand Orient and Shanghai Jin Jiang International Industrial Investment, both plunging over 10%.

Investors in the country were awaiting critical industrial production figures due later in the week.

Hong Kong’s Hang Seng Index fell 0.41% to 19,150.99, dragged down by steep losses in BOC Hong Kong and New World Development.

South Korea’s Kospi 100 performed strongly, advancing 1.31% to 2,543.18.

Notable gainers included HD Korea Shipbuilding & Offshore Engineering, which rose 7.44%, and Netmarble Games, up 7.34%.

Australia’s S&P/ASX 200 hit a record high, inching up 0.28% to 8,417.60.

The index was buoyed by Mesoblast’s 11.63% surge and steady performances from Genesis Energy and GQG Partners.

Inflation data for the sunburnt country is due Wednesday.

New Zealand’s S&P/NZX 50 climbed 1.18% to 13,196.08, supported by a 4.82% rise in KMD Brands and a 4.42% gain for Genesis Energy.

In currency markets, the dollar was last down 0.27% on the yen to trade at JPY 154.36, as it weakened 0.25% against the Aussie to AUD 1.5343, and lost 0.27% on the Kiwi, changing hands at NZD 1.7097.

Meanwhile, oil prices dipped, with Brent crude futures last down 0.82% on ICE at $74.55 per barrel, and the NYMEX quote for West Texas Intermediate falling 1% to $70.53.

PBoC maintains medium-term lending rate, NZ trade deficit narrows

In economic news, China’s central bank maintained its medium-term lending facility rate at 2.0% on Monday, keeping CNY 900bn (£98.77bn) of one-year loans to financial institutions unchanged.

The decision by the People’s Bank of China looked designed to stabilise the yuan, which had faced downward pressure following the US presidential election of Donald Trump.

In New Zealand, exports rose 7.5% year-on-year in October to NZD 5.8bn (£2.7bn), driven by strong demand for dairy products such as milk powder, butter, and cheese, according to government data.

Imports also increased, climbing 3% to NZD 7.3bn compared to September’s revised NZD 7.06bn.

The country’s trade deficit narrowed significantly to NZD 1.54bn from NZD 2.15bn in the prior month.

Singapore meanwhile saw its headline inflation rate decline to 1.4% in October, a marked drop from 2% in September and below the 1.8% forecast by economists.

That represented the lowest inflation rate since March 2021.

The decline was largely due to falling car prices and slower increases in rental costs.

Core inflation, which excludes accommodation and private transport costs, eased to 2.1%, down from 2.8% in September and lower than the expected 2.5%.

The Monetary Authority of Singapore attributed the slowdown to easing service inflation and a slower rise in the costs of electricity, gas, and other essentials.

Reporting by Josh White for Sharecast.com.