Asia report: Stocks fall as NZ manufacturing contracts further

Asia-Pacific markets faced a challenging day of trading on Friday, influenced by a lacklustre performance in US markets overnight.

However, South Korea’s benchmark index, the Kospi, stood out as it posted weekly gains of over 1.7% after being boosted by the reimposition of a ban on short selling earlier in the week.

“Asia stocks across the board faced a widespread decline, echoing the negative sentiment emanating from Wall Street that rippled through the region,” said TickMill market analyst Patrick Munnelly.

“Multiple factors contributed to this downturn, including a lacklustre 30-year US auction and Federal Reserve chair [Jerome] Powell’s hawkish stance.

“In the Asia-Pacific arena, the struggle extended beyond global influences, with a mix of earnings reports and persistent challenges in China further weighing on markets.”

Munnelly noted that the Nikkei 225 faced significant headwinds in Tokyo, primarily due to substantial post-earnings declines in major players, including Nissan, Sony and SoftBank.

“Despite these setbacks, the index managed to rebound from its nadir, climbing back above the 32,500 threshold.

“Meanwhile, the Hang Seng and Shanghai Composite indices mirrored the overall negative trajectory, with Hong Kong emerging as the weakest link among regional markets.

“Notably, the tech and financial sectors took the brunt of the hit, emerging as some of the most significant losers in this challenging market environment.”

Equity markets in the red across the region

In Japan, the Nikkei 225 declined 0.24%, closing at 32,568.11, while the Topix index managed a modest gain of 0.07% to reach 2,336.72.

Leading the losses on Tokyo’s benchmark was JGC Corporation, down 11.65%; Nippon Sheet Glass, off 11.54%; and Nikon, which lost 10.53%.

Mainland China’s markets also saw a dip, with the Shanghai Composite sliding by 0.47% to 3,038.97 and the Shenzhen Component dropping 0.53% to 9,978.54.

Fujian Longxi Bearing Group and Changzhou Tenglong Auto Parts led the decliners in Shanghai, falling 9.98% and 9.96%, respectively.

Hong Kong’s Hang Seng Index experienced a decline of 1.76%, closing at 17,203.26, with Xinyi Solar Holdings down 7.94%, SMIC off 6.84%, and Galaxy Entertainment Group losing 6.48%.

South Korea’s Kospi, despite closing down by 0.72% at 2,409.66, still managed to secure a positive weekly performance.

Seoul’s losses on Friday were led by Lotte Chemical and Hanon Systems, which were 8.62% and 6.66% lower, respectively.

Australia’s S&P/ASX 200 index decreased by 0.55% to 6,976.50, with APM Human Services tumbling by 20.72% and Pilbara Minerals falling by 5.9% by the end of trading in Sydney.

In New Zealand, the S&P/NZX 50 index declined by 0.51% to reach 11,140.40, with Investore Property down 3.42% and Meridian Energy off 3.31%.

Currencies in the region were also slightly weaker, with the dollar last up 0.04% on the yen at JPY 151.41, as it increased 0.12% against the Aussie to trade at AUD 1.5726 and advanced 0.08% on the Kiwi to change hands at NZD 1.6981.

Oil markets saw Brent crude futures rise 0.6% on ICE to $80.49 per barrel, while the NYMEX quote for West Texas Intermediate increased 0.54% to $76.15.

New Zealand manufacturing sector contracts for eighth straight month

In economic news, New Zealand’s manufacturing sector continued to face challenges, with October marking the eighth consecutive month of contraction.

The Bank of New Zealand-BusinessNZ performance of manufacturing index (PMI) declined to 42.5 for the month, down from September’s reading of 45.1.

That was significantly below the long-term average activity rate of 52.8 and represented the most substantial contraction since August 2021.

As with similarly-named PMI surveys, a reading above 50 signifies expansion in manufacturing activity, while a reading below 50 indicates contraction.

Reporting by Josh White for Sharecast.com.