Asia report: Stocks fall across region, RBNZ warns of further hikes

Asia-Pacific markets saw a mixed day of trading on Wednesday, led lower by Hong Kong equities, while China’s benchmark index closed at its lowest level in more than a month.

Investors were considering several corporate earnings reports and fresh comments from US Federal Reserve members.

“Stocks in the Asia-Pacific region displayed a mixed performance in the wake of volatile trading on Wall Street,” said TickMill market analyst Patrick Munnelly.

“The US dollar weakened, and treasury bonds gained ground following dovish comments from the Federal Reserve.

“Investors also considered the Reserve Bank of New Zealand’s decision to keep interest rates unchanged but hinted at the possibility of future rate hikes.”

Munnelly said the Nikkei 225 fluctuated in Japan, initially impacted by a stronger currency but later recovering from its lows.

“The Bank of Japan reiterated its commitment to maintaining an accommodative policy and implementing further easing measures if necessary.

“On the contrary, the Hang Seng index in Hong Kong and the Shanghai Composite index both declined, with challenges in the property sector and rising domestic money market rates.

“The People’s Bank of China’s open market operations resulted in a net daily drain, adding to the complexities influencing the regional market dynamics.”

Stock markets in the red, Australia a notable exception

In Japan, the Nikkei 225 index slipped by 0.26% to settle at 33,321.22 points, while the Topix index recorded a decline of 0.51% to reach 2,364.50 points.

The losses on Tokyo’s benchmark were led by Sumitomo Dainippon Pharma, down by 4.89%, Kobe Steel, down by 4.3%, and Seven & i Holdings, down by 3.83%.

In China, the Shanghai Composite dropped 0.56% to close at 3,021.69 points, and the Shenzhen Component fell 0.91% to 9,744.39 points.

Among the notable losers in Shanghai were Beijing Urban Construction, down by 9.25%, and Hunan Heshun Petroleum, down by 7.6%.

Hong Kong’s Hang Seng Index experienced a slide of 2.08%, closing at 16,993.44 points.

Leading the losses in the special administrative region was Meituan, with a drop of 12.18%, JD Health International, down by 7.14%, and Country Garden Services, down by 6.23%.

South Korea’s Kospi showed relative stability with a marginal decline of 0.08%, closing at 2,519.81 points.

Notable decliners in Seoul included Coway, down by 4.36%, and Samsung Engineering, down by 4.03%.

In contrast, Australia’s S&P/ASX 200 index managed to gain 0.29%, reaching 7,035.30 points.

Key performers in Sydney included Fisher & Paykel Healthcare, up 7.87%, and Perseus Mining, up 6.65%.

New Zealand’s S&P/NZX 50 index experienced a minimal decline of 0.01%, closing at 11,235.94 points, led lower by Pacific Edge, down by 4.95%, and Arvida Group, down by 4.72%.

In currency markets, the dollar was last up 0.04% on the yen, trading at JPY 147.54, as it gained 0.34% against the Aussie to AUD 1.5091.

However, the greenback declined on the Kiwi after that country’s central bank announcement, retreating 0.24% to change hands at NZD 1.6257.

In oil markets, Brent crude futures were last up 0.86% on ICE to $82.38 per barrel, while the NYMEX quote for West Texas Intermediate was ahead 0.85% to $77.06.

RBNZ holds rates, Aussie inflation decelerates

In economic news, the New Zealand dollar surged after the Reserve Bank of New Zealand decided to maintain its official cash rate at 5.5%.

Alongside the decision, the central bank warned that rates might need to rise further to combat inflation.

The move propelled the Kiwi to its highest level in nearly four months.

The RBNZ emphasised the persistence of elevated inflation in its announcement and underscored the necessity of maintaining a restrictive monetary policy to manage it.

“Last night saw the RBNZ leave rates unchanged as expected, although a relatively hawkish stance from the bank helped drive NZD-USD into the highest level since 1 August,” said Scope Markets chief market analyst Joshua Mahony.

“Coming at a time when everyone has been focusing on how disinflation could bring forward the timing of a rate cut, the RBNZ are worried that long-term 10-year inflation expectations are creeping upwards.

“With markets increasingly casting aside central bank warnings that rates will be higher for longer, the RBNZ insistence that banks need to heed that exact advice does further justify recent NZD strength.”

In Australia, the weighted inflation rate for October showed a more substantial deceleration than anticipated, registering at 4.9% as opposed to the 5.2% expected by economists polled by Reuters.

That also marked a decline from the 5.6% observed in September, while the overall inflation rate stood at 4.8%, marking its lowest level since January 2022.

According to the country's statistics bureau, housing, food, non-alcoholic beverages, and transport were identified as the sectors contributing significantly to price increases.

“Australia Inflation for October gives the RBA reason to pause, slowing to 4.9% from 5.6% last time and against a forecast 5.2%,” said Markets.com chief market analyst Neil Wilson.

Meanwhile, Thailand’s central bank opted to keep its benchmark interest rate steady at 2.5% for the first time since August last year.

The decision aligned with the expectations of economists polled by Reuters and marked the first pause after eight consecutive meetings in which the Bank of Thailand raised rates by a cumulative 200 basis points from the historically low 0.5%.

Reporting by Josh White for Sharecast.com.