Asia report: Stocks fall as Japan household spending figures undershoot

Asia-Pacific markets mostly declined on Friday as investors prepared for a key US jobs report later in the global day, and reacted to disappointing household spending data from Japan.

The region saw broad losses across major indices, with Hong Kong markets closed due to Super Typhoon Yagi.

“Overnight, investors seem on edge as they anticipate the release of US employment data, which could determine the extent and timing of future rate cuts in the world's largest economy,” said TickMill market strategy partner Patrick Munnelly.

“Asian markets maintained their tight ranges, and the dollar suffered further losses.

“Japan’s Nikkei experienced a further 1.8% decline, resulting in a near 5% decline for the week.”

Munnelly noted that oil prices were on the brink of their most challenging week in over a year, as they continued to float just above a “critical” $69 handle.

“The near-term trajectory of oil prices is likely contingent upon the payroll data.”

Markets in the red across the Asia-Pacific region

In Japan, the Nikkei 225 dropped by 0.72% to close at 36,391.47, and the Topix fell by 0.89% to 2,597.42.

The market was weighed down by underperforming stocks such as Rakuten, which plunged 4.96%, Daikin Industries, down 3.75%, and Mitsubishi Heavy Industries, which lost 3.66%.

Investors were discouraged by household spending figures that came in below expectations, adding to concerns about the domestic economic outlook.

China’s markets also saw declines, with the Shanghai Composite falling 0.81% to 2,765.81 and the Shenzhen Component dropping 1.44% to 8,130.77.

Leading the losses were Shanghai Huili Building Materials, Triumph Science & Technology, and Shenzhen Sunxing Light Alloys Materials, each losing around 10%.

South Korea’s Kospi index dropped 1.21% to 2,544.28.

Notable decliners included SK IE Technology, which tumbled 7.97%, along with Posco Future M and Posco ICT, down 7.89% and 7.36% respectively.

In Australia, the S&P/ASX 200 declined by 0.39% to close at 8,013.40.

Key sectors underperformed, with Pilbara Minerals falling 6.59%, Whitehaven Coal dropping 5.57%, and Paladin Energy losing 4.91%.

New Zealand’s S&P/NZX 50 fell 0.5% to 12,615.51, as stocks like Eroad, Freightways, and Skellerup Holdings saw losses of around 3%.

In currency markets, the dollar was last down 0.61% on the yen to trade at JPY 142.57, while it weakened 0.06% against the Kiwi to NZD 1.6057.

The greenback did see a slight increase of 0.08% on the Aussie, however, changing hands at AUD 1.4847.

Oil prices were relatively steady, with Brent crude futures last down 0.21% on ICE at $72.54 per barrel, and the NYMEX quote for West Texas Intermediate slipping 0.27% to $68.96.

Household spending falls short of forecasts in Japan

In economic news, Japan's household spending in July grew modestly by 0.1% in real terms compared to the prior year, falling short of the 1.2% rise anticipated by economists in a Reuters poll.

That followed a 1.4% decline in June, showing a slight improvement but still underwhelming market expectations.

According to the country's statistics bureau, the average household spent JPY 290,931 for the month, marking a 3.3% increase in nominal terms.

On the income side, households saw more robust gains, with average monthly income rising 8.9% in nominal terms and 5.5% in real terms, reaching JPY 694,483 in July.

While the weak spending figures could limit the Bank of Japan’s flexibility to raise interest rates, the strong wage growth reported earlier in the week could provide some counterbalance to these concerns.

Reporting by Josh White for Sharecast.com.