Asia report: Stocks fall as real wages drop further in Japan

Asia-Pacific markets experienced widespread declines on Monday, influenced by weak economic indicators and anticipation of key economic data from the US and China later in the week.

Fresh wage data out of Japan was also in focus, as real wages in the country fell for the 26th month in a row.

“Asian markets were less sanguine overnight, with local issues tending to dominate sentiment,” said Interactive Investor head of markets Richard Hunter, noting the Japanese wage data.

“Coupled with rising inflation and a falling yen which has depressed consumer sentiment, the economy on the ground is rather weaker than the benchmark index, which has benefited from the weaker currency as exports have become cheaper.”

Hunted added that China’s real estate sector was not at its usual place in the forefront of investor attention, as shipping shares fell markedly with Cosco Shipping falling more than 7%.

“The news will neither temper the more recent pessimistic view of investors on the region, nor does it give any immediate indication of an economic recovery which investors have been pining for this year.”

Markets in the red across the Asia-Pacific region

In Japan, the Nikkei 225 fell by 0.32% to close at 40,780.70, and the Topix index dropped 0.57% to 2,867.61.

The decline came on the heels of a report from Japan’s Ministry of Health, Labor, and Welfare showing that real wages fell by 1.4% year-on-year in May, marking the 26th consecutive month of decline.

Leading the losses on the benchmark index were Kawasaki Kisen Kaisha, down 4.46%, Yaskawa Electric, which decreased by 4.39%, and Hitachi Zosen, falling by 3.66%.

Chinese markets also faced significant downturns, as the Shanghai Composite declined by 0.93% to 2,922.45, and the Shenzhen Component saw a sharper drop of 1.54%, closing at 8,561.95.

Notable decliners in Shanghai included Beijing Piesat Information Technology, which plummeted by 16.77%, Bomin Electronics at 9.99% lower, and Sunny Loan Top Co, which lost 9.97%.

Hong Kong's Hang Seng Index dropped by 1.55% to 17,524.06, with significant losses from Orient Overseas International, down 6.23%; BYD Electronic International, off 6.03%; and Hansoh Pharmaceutical Group, which was off 5.41%.

South Korea's Kospi saw a slight decline of 0.16% to 2,857.76, with major losers including HMM, Samsung Life and Youngone Holdings, down 5.32%, 5.02% and 4.9%, respectively.

Australia's S&P/ASX 200 decreased by 0.76%, ending at 7,763.20, with declining stocks led by Arcadium Lithium, down 4.46%, followed by a 3.88% fall for IGO and a 3.56% drop for Bluescope Steel.

New Zealand’s S&P/NZX 50 index fell by 0.42% to 11,745.53, with Eroad dropping by 5.6%, Contact Energy by 4.04%, and Restaurant Brands New Zealand by 3.27%.

In currency markets, the dollar was last up 0.19% on the yen to trade at JPY 161.06, as it increased 0.18% against the Aussie to AUD 1.4843, and climbed 0.18% on the Kiwi to change hands at NZD 1.6303.

Oil prices saw a modest decline, with Brent crude futures last down 0.55% on ICE at $86.06 per barrel, and the NYMEX quote for West Texas Intermediate dropping 0.76% to $82.53.

Real wages fall for the 26th straight month in Japan

In economic news, Japanese workers experienced the fastest increase in average base pay in 31 years in May, with a 2.5% rise driven by substantial pay hikes from annual wage negotiations.

The increase marked the highest since January 1993 - a period closely following the burst of Japan's asset bubble.

Part-time workers reportedly saw particularly significant wage gains.

Despite the nominal wage growth, real wages, adjusted for inflation, fell for the 26th consecutive month.

The ongoing decline was attributed to the yen's weakening and rising commodity prices, which had escalated import costs.

Nominal wages, encompassing total cash earnings per worker, grew 1.9% to JPY 297,151 yen, showing an acceleration from April's 1.6% increase and marking the highest year-on-year rise in 11 months.

However, when accounting for inflation, wages decreased 1.4% in May, following a revised 1.2% decline in April.

Reporting by Josh White for Sharecast.com.