Asia report: Stocks fall on souring global sentiment

Stocks in the Asia-Pacific region were lower at the close on Monday, as negative sentiment continued to drag global markets lower.

In Japan, the Nikkei 225 was down 2.66% at 26,431.55, as the yen weakened 0.31% against the dollar to last trade at JPY 143.76.

Automation specialist Fanuc was down 1.76%, fashion firm Fast Retailing slipped 0.84%, and technology conglomerate SoftBank Group tumbled 5.18%.

The broader Topix index was off 2.71% by the end of trading in Tokyo, settling at 1,864.28.

Fresh data out of Tokyo showed a swing to expansion in the services sector, while manufacturing growth slowed.

The country’s flash services purchasing managers’ index (PMI) rose to 51.9 in September, from 49.5 in August, while the flash manufacturing PMI fell to 51.0 from 51.5.

A PMI reading above 50 denotes expansion, while one below shows contraction.

“Stocks of purchases also fell, dragging on the headline, while an improvement in supplier delivery times suggests that the damage on regional supply chains from China’s omicron lockdown continues to be repaired, despite the recent renewed tightening of restrictions,” said Craig Botham at Pantheon Macroeconomics of the manufacturing slowdown.

“New export orders also improved, though remained below 50, implying a moderating rate of decline.

“This also implies a domestic source for September’s manufacturing weakness, which we think stems from Typhoon Nanmadol, which disrupted power supplies and forced evacuations in parts of Japan.”

On the mainland, the Shanghai Composite was off 1.2% at 3,051.23, and the technology-heavy Shenzhen Component slipped 0.4% to 10,962.56.

The People’s Bank of China announced an increase in its foreign exchange reserve ratio earlier, taking its requirement on forex forward sales to 20% from 0% from 28 September, making the purchase of yuan renminbi more expensive.

South Korea’s Kospi tumbled 3.02% to 2,220.94, while the Hang Seng Index in Hong Kong was 0.44% weaker at 17,855.14.

Operators of casinos in gambling oasis Macau were on the front foot in the special administrative region, after Hong Kong lawmakers announced an easing of its hotel quarantine requirements for inbound travellers.

Galaxy Entertainment was up 7.18%, Sand China leapt 15.65%, SJM Holdings added 12.57%, and Wynn Macau was 11.06% firmer.

The blue-chip technology stocks were weaker on the Korean peninsula, meanwhile, with Samsung Electronics down 1.1% and SK Hynix losing 1.2%.

Bank of Korea's governor reiterated its median forecasts for the US Fed to hike interest rate targets to 4.4% by the end of 2022 in a meeting with politicians in Seoul.

“We see the Fed raising interest rates by 75 basis points at the next meeting, and another shock could come from how much they’ll hike after that,” Rhee Chang-yong told lawmakers.

Oil prices were on the back foot at the end of the Asian day, with Brent crude futures last down 0.85% on ICE at $85.42 per barrel, and the NYMEX quote for West Texas Intermediate off 0.74% at $78.16.

In Australia, the S&P/ASX 200 was 1.6% lower at 6,469.40, while across the Tasman Sea, traders in New Zealand had the day off for a public holiday.

Both of the down under dollars were weaker against the greenback, with the Aussie last off 0.14% at AUD 1.5340, and the Kiwi retreating 0.09% to NZD 1.7423.

Reporting by Josh White at Sharecast.com.