Asia report: Most markets rise, Tokyo core inflation unchanged

Asia-Pacific markets mostly rebounded on Friday, recovering from Thursday's sell-off, which had pushed some regional indexes to their lowest levels in months.

The recovery came as investors digested economic data and awaited further signals from global markets.

“Although the selloff in stocks in the last two weeks has been brutal, and stocks in the US and Europe are expected to register their second week of losses, the actual declines so far have been moderate,” said XTB research director Kathleen Brooks.

“The sell off has been bruising for pockets of the market, and daily sell offs have been very large, specifically for the Nasdaq, but the selling is not indiscriminate.

“Added to this, the mid-cap rally has been impressively resilient during this sell off, as the prospect of falling bond yields boosts cyclical stocks.”

Brooks noted that in the last month, the S&P 500 equal-weighted index was outperforming the S&P 500 index, suggesting that value stocks had outperformed growth.

“Other factors that are positive for value stocks including a robust US economy, which expanded by 2.8% in the second quarter, and growing world trade in Asia, that could benefit value stocks later in the year if it is a sign that the economy in China is picking up.”

Most markets manage gains after a week of losses

In Japan, the Nikkei 225 continued its downward trend, falling for the eighth consecutive day by 0.53% to 37,667.41.

The broader Topix also dipped by 0.38% to 2,699.54.

Tokyo’s headline inflation showed a slight deceleration in July, while core inflation, excluding fresh food prices, remained steady as anticipated.

Leading the losses on Tokyo’s benchmark was chipmaker Renesas Electronics, which plummeted by 5.48% following a reported 29% drop in net profit for the first half of the year.

President Hidetoshi Shibata attributed the decline to misjudged demand for industrial equipment, resulting in a significant sell-off that erased JPY 760bn from its market capitalisation on Thursday alone.

China's markets showed resilience, with the Shanghai Composite rising by 0.14% to 2,890.90 and the Shenzhen Component jumping 1.45% to 8,597.17.

Notable gainers in Shanghai included Jiangsu SINOJIT Wind Energy Technology, Guangdong Dcenti Auto-Parts Stock, and Heilongjiang Interchina Water Treatment, each advancing over 10%.

Hong Kong's Hang Seng Index edged up by 0.1% to 17,021.31, buoyed by strong performances from Haier Smart Home, Alibaba Health Information Technology, and JD.com, which saw gains of 6.1%, 3.49%, and 3.02%, respectively.

South Korea's Kospi climbed by 0.78% to 2,731.90, driven by significant upticks in Hyundai Heavy Industries, up 16.9%; Woori Financial Group, ahead 11.36%; and Samsung Engineering, which was 8.56% firmer.

Australia's S&P/ASX 200 increased by 0.76% to 7,921.30.

The market in Sydney was lifted by Liontown Resources, Coronado Global Resources and Pilbara Minerals, which were up 5.46%, 4.94% and 3.83%, respectively.

New Zealand's S&P/NZX 50, however, fell by 0.38% to 12,349.47, with Restaurant Brands New Zealand down 6.06%, Scales Corporation off 3.41%, and Air New Zealand descending 3.33%.

In currency markets, the dollar was last up 0.1% on the yen to trade at JPY 154.10, while it fell on its antipodean counterparts, losing 0.35% against the Aussie to AUD 1.5242, and retreating 0.23% from the Kiwi to change hands at NZD 1.6948.

Oil prices also saw a modest decline, with Brent crude futures last down 0.38% on ICE to $82.06 per barrel, and the NYMEX quote for West Texas Intermediate slipping 0.41% to $77.96.

Core inflation remains stable in Tokyo, Singapore maintains exchange rate policy

In economic news, traders closely evaluated July inflation data from Tokyo, a key predictor of national trends in Japan.

The city's headline inflation rate slightly decreased to 2.2% in July from 2.3% in May.

Core inflation, which excludes fresh food prices, remained stable at 2.2%, matching market expectations.

However, the so-called ‘core-core’ inflation rate, excluding both fresh food and energy prices - a measure closely monitored by the Bank of Japan - dropped to 1.5% from 1.8%.

Meanwhile, the Monetary Authority of Singapore (MAS) announced it would maintain its current monetary policy, leaving the exchange rate settings for the Singapore dollar unchanged.

Unlike most countries that use interest rates for monetary control, Singapore manages its economy by adjusting the exchange rate to regulate the Singapore dollar's strength.

Reporting by Josh White for Sharecast.com.