Asia report: Nikkei reaches fresh highs on mixed day for region

Japan's benchmark Nikkei index spearheaded gains across Asia-Pacific markets on Thursday, surging to fresh 34-year highs.

The upswing came amidst reassurances that Japan's central bank would not adopt an aggressive stance on monetary policy tightening, while investors were also digesting fresh inflation data out of China.

“Asian stocks exhibited a mixed performance following Wall Street's attainment of new record levels, with the S&P 500 nearing 5,000,” said TickMill market analyst Patrick Munnelly.

“The Nikkei 225 approached 37K handle driven by positive earnings reports, and SoftBank gained momentum after Arm Holdings' post-earnings surge.

“Meanwhile, the Hang Seng and Shanghai Composite showed mixed results, with tech weakness weighing on the Hang Seng, while the mainland gained ground despite soft inflation data.”

Japan leads broad gains across most of the region

In Japan, the Nikkei 225 jumped 2.06%, closing at 36,863.28 points, while the broader Topix index also saw a positive trajectory, climbing by 0.5% to reach 2,562.63 points.

Leading Tokyo’s main board was Kyowa Kirin, which surged 19.38%, followed by SoftBank Group with an 11.06% increase, and Advantest, rising by 7.56%.

SoftBank was in the green after a robust earnings report from chipmaker Arm, in which it holds a substantial stake.

Arm's results surpassed expectations, propelling its shares up by more than 40%.

SoftBank still retains around 90% of the chip designer's shares since taking it public last September.

In China, the Shanghai Composite index and the Shenzhen Component index both recorded gains, rising by 1.28% and 1.29% to 2,865.90 and 8,820.60, respectively.

Leading the gains in Shanghai was Guangzhou Fangbang Electronics, which surged by 20%, and Harbin Xinguang Optic Electronics, with a notable increase of 17.72%.

However, Hong Kong's Hang Seng Index faced a setback, declining by 1.27% to close at 15,878.07 points.

Major players like WuXi Biologics, WuXi AppTec, and Alibaba Group registered notable declines, with decreases of 7.61%, 7.29%, and 6.14%, respectively.

Meanwhile, South Korea's Kospi index edged up by 0.41% to 2,620.32, with companies like Samsung Fire & Marine Insurance and POSCO Future M emerging as significant gainers, rising by 10.08% and 5.02%, respectively.

In Australia, the S&P/ASX 200 index managed a modest increase of 0.31%, reaching 7,639.20 points, led higher by AGL Energy, which saw a surge of 10.28%, and Liontown Resources, rising by 6.32%.

Conversely, New Zealand's S&P/NZX 50 index experienced a decline of 0.67%, closing at 11,872.33 points.

Pacific Edge and KMD Brands were among the biggest decliners, registering decreases of 3.96% and 2.94%, respectively.

In currency markets, the dollar was last up 0.42% on the yen, trading at JPY 148.80, while it increased 0.61% against the Aussie to AUD 1.5361.

The greenback managed marginal gains of 0.09% on the Kiwi to change hands at NZD 1.6374.

On the oil front, Brent crude futures were last up 0.21% on ICE at $79.38 per barrel, while the NYMEX quote for West Texas Intermediate edged up 0.07% to settle at $73.91.

BoJ governor conservative on rate hikes, China inflation paints mixed picture

In economic news, the Bank of Japan's deputy governor Shinichi Uchida indicated a conservative stance on interest rate hikes, even as the central bank contemplated ending its negative interest rate policy.

According to Reuters, Uchida said the BoJ was “unlikely to raise interest rates aggressively,” maintaining its current benchmark rate at -0.1%.

The central bank had reiterated its commitment to withhold rate increases until it saw sustained inflation at its target of 2%.

Meanwhile, in China, the National Bureau of Statistics released data indicating mixed trends in producer and consumer prices for January.

Producer prices continued their decline for the 16th consecutive month, with the producer price index falling by 2.5% year-on-year.

That was slightly better than the anticipated 2.6% decrease.

“Persistent manufactured goods deflation, barely changed at -3.1% in January, is indicative of weak demand and in some industries low capacity utilisation,” said Pantheon Macroeconomics chief China economist Duncan Wrigley.

“Banks continue to extend loans for expanding or upgrading industrial capacity, especially in national priority sectors like equipment-making and high-tech manufacturing.”

On the other hand, consumer prices in the world's second-largest economy saw a fourth consecutive month of decline, with the consumer price index falling 0.8% on an annual basis in January.

That exceeded the median estimate of a 0.5% decline in a Reuters poll, and represented a sharper drop compared to the 0.3% decrease in December.

However, there was a slight uptick on a monthly basis, with CPI climbing by 0.3% in January from the prior month, although that fell slightly short of median expectations for a 0.4% increase.

“Headline consumer inflation year-on-year should be bumpy in the next few months due to base effects and the holiday season,” Duncan Wrigley at Pantheon added.

“Consumption demand is likely to recover only gradually, as people worry about their incomes prospects amid economic uncertainty, consumer sentiment remains soft, and the woeful property sector follows a U-shaped rebound.

“Policymakers are increasingly calling for demand-side stimulus, but we think this will remain mainly funnelled through fixed asset investment, with only targeted support for private consumption.”

Reporting by Josh White for Sharecast.com.