Asia report: Most markets weaker as Japan GDP details disappoint

Most bourses in the Asia-Pacific region closed in negative territory on Tuesday, as investors digested the latest data out of Japan, showing its economy shrinking at a slower rate than expected.

In Japan, the Nikkei 225 was down 0.19% at 28,963,56, as the yen weakened 0.22% against the dollar to last trade at JPY 109.49.

Of the major components on the benchmark index, robotics specialist Fanuc was down 1.79%, Uniqlo owner Fast Retailing lost 1.02%, and technology giant SoftBank Group was off 1.64%.

The broader Topix index eked out gains of 0.09% by the end of trading in Tokyo, closing at 1,962.65.

Revised data released by Japan’s government earlier in the day showed the country’s economy contracting by 3.9% in the first quarter.

That was an improvement from the 5.1% shrinkage suggested in the initial estimate, and beat expectations for a 4.8% contraction from economists polled by Reuters.

Pantheon Macroeconomics chief Asia economist Freya Beamish said the outturn was in line with that outfit’s expectations, but described the details as “disappointing”.

“The main contributor to the upgrade was government consumption, where the subtraction was reduced to 0.2 percentage points, from 0.4 percentage points previously, though the extent of the preliminary drop was surprising,” Beamish noted.

“Inventory provided the rest of the boost, contributing 0.4pp in the second reading, up from a 0.3 percentage point addition in the preliminary reading.

“Private consumption was revised down, shaving 0.8 percentage points off the headline, compared with a 0.7 percentage point subtraction previously.”

Beamish said Pantheon had expected business capital expenditure to be revised up, after the Ministry of Finance figures were revealed, but the two datasets remained “out of whack” over the last two quarters.

“The upward revision to inventory leaves more room for a drag on the current quarter, and we could revise down our forecast.

“In any case, we think GDP will be at best flat in the second quarter, though we continue to hold out hope for revisions to capital expenditure in the last two quarters.”

On the mainland, the Shanghai Composite lost 0.54% to 3,580.11, and the smaller, technology-centric Shenzhen Composite was off 0.86% at 2,393.13.

South Korea’s Kospi was 0.13% weaker at 3,247.83, while the Hang Seng Index in Hong Kong slipped 0.02% to 28,781.38.

Seoul’s blue-chip technology stocks were once again mixed, with Samsung Electronics flat, while SK Hynix fell 0.78%.

Oil prices were lower as the region went to bed, with Brent crude last down 0.71% at $70.98 per barrel, and West Texas Intermediate losing 0.69% to $68.75.

“Overnight and heading into this morning, the tone appears to be moderately defensive with Asian stocks a shade weaker, oil slipping, and safe haven bonds on both sides of the Atlantic a smidgen firmer,” said analysts at Rabobank.

In Australia, the S&P/ASX 200 went against the regional trend, tacking on 0.15% to close at 7,292.60, while across the Tasman Sea, New Zealand’s S&P/NZX 50 was also in the green, rising 0.17% to 12,517.65.

The down under dollars were both weaker against the greenback, with the Aussie last off 0.12% at AUD 1.2910, and the Kiwi retreating 0.23% to NZD 1.3865.