Asia report: Most markets weaker on renewed recession fears

Stock markets were broadly lower across the Asia-Pacific region on Friday, after a trifecta of interest rate rises in the UK, US and Europe earlier in the week led to growing fears of global recession.

In Japan, the Nikkei 225 was down 1.87% at 27,527.12, as the yen strengthened 0.43% on the dollar to last trade at JPY 137.19.

Automation specialist Fanuc was down 1.25%, fashion firm Fast Retailing lost 3.51%, and technology conglomerate SoftBank Group was 3.8% lower.

The broader Topix index was 1.2% weaker by the end of trading in Tokyo, ending the session at 1,950.21.

Fresh data out earlier showed Japan’s factory sector was performing at its weakest level in more than two years.

The Au Jibun flash manufacturing purchasing managers’ index (PMI) came in at a seasonally-adjusted 48.8 for December, down from November’s final print of 49.0 and making for the lowest reading since October 2020.

A PMI reading above 50 indicates expansion for a sector on a month-on-month basis, while one below 50 denotes contraction.

“Manufacturing firms continued to struggle in the face of subdued demand conditions and severe inflationary pressures,” said analysts at S&P Global.

The services sector, meanwhile, expanded further in December, with the service activity index for Japan coming in at 51.7, up from 50.3 in November.

“We think the improvement in the services PMI will not be enough to convince the Bank of Japan that domestic demand is strong enough to drive sustained inflation,” said Duncan Wrigley at Pantheon Macroeconomics.

“The Bank views relatively high consumer inflation in Japan as cost-push, not demand-pull, and driven by high international energy and food prices, and the weak yen.”

Wrigley noted that BoJ governor Haruhiko Kuroda had said that wage increases were not keeping up with inflation.

“We do not expect the BoJ to change policy settings at its meeting next week, nor signal any serious reconsideration until it feels more confident about the economic outlook at home and abroad.”

On the mainland, the Shanghai Composite slipped 0.02% to 3,167.86, and the technology-heavy Shenzhen Component was off 0.56% at 11,295.03.

A number of Chinese technology firms were weaker in their mainland listings on Friday, after officials in Washington took the wraps off a blacklist of firms that would be restricted from trading with the US.

The United States said the companies were being placed under restrictions for their work in helping the Chinese military to modernise its technology.

Cambrion Technologies was down 5.19% in Shanghai, while camera maker Hangzhou Hikvision Digital Technology was 1.63% lower in Shenzhen.

AstraZeneca vaccine ingredient supplier WuXi Biologics was meanwhile removed from the list, leading to its shares jumping 5.45% in Hong Kong trading.

South Korea’s Kospi was 0.04% lower at 2,360.02, while the Hang Seng Index in Hong Kong managed gains of 0.42% to 19,450.67.

The blue-chip technology stocks were mixed in Seoul, with Samsung Electronics up 0.34%, while SK Hynix was 2.24% lower.

Oil prices were lower as the region entered the weekend, with Brent crude futures last down 2.28% on ICE at $79.36, while the NYMEX quote for West Texas Intermediate falling 2.3% to $74.36.

In Australia, the S&P/ASX 200 was 0.78% lower at 7,148.70, while across the Tasman Sea, New Zealand’s S&P/NZX 50 eked out a rise of 0.01% to 11,603.66.

The down under dollars were in a mixed state against the greenback, with the Aussie last 0.24% weaker at AUD 1.4955, while the Kiwi strengthened 0.21% to NZD 1.5729.

Reporting by Josh White for Sharecast.com.