Asia report: Stocks fall, yen weakens further as China holds rates

Markets closed lower in Asia on Thursday, as Japan’s currency weakened even further against its American counterpart to reach a more-than-three-decades low point.

In Japan, the Nikkei 225 was down 0.92% at 27,006.96, as the yen strengthened 0.04% to last trade at JPY 149.84, having earlier hit a seven-year low.

Tech investing giant SoftBank Group was up 0.64%, while robotics specialist Fanuc was down 0.83% and Uniqlo owner Fast Retailing fell 2.18%.

The broader Topix index was off 0.51% by the end of trading in Tokyo, closing at 1,895.41.

Japanese government bond yields were rising as the yen weakened, with the 10-year earlier topping the Bank of Japan’s 0.25% red line before slipping back to 0.246%, while the 20-year reached 1.158%.

The Bank of Japan announced an emergency bond-buying programme worth up to JPY 200bn, with half of that for five-to-10 year bonds and half for 10-to-20 year notes.

Economic news out of Japan showed the country’s deficit narrowing somewhat in September, to a provisional JPY 2.09trn.

That compared to an August figure of JPY 2.82trn, and Reuters-polled expectations for a deficit of JPY 2.17trn.

“The preliminary data on exports by commodity shows a rebound in semiconductor exports, which grew 14.1% month-on-month in September, rebounding from -12.8% in August,” noted Duncan Wrigley at Pantheon Macroeconomics.

“This likely reflects electronics manufacturers replenishing semiconductor inventories after previous supply chain disruptions during the second quarter lockdowns in China.

“These companies would also in September have been cautious about the upcoming US curbs on China’s access to semiconductor technology.”

Those restrictions came in on 7 October, and turned out “even tougher” than industry expectations, Wrigley said.

“We expect Japanese exports to slow in the coming months, because of a weakening global economy, especially in China.

“Export demand in the EU is also likely to cool over winter because of the impact of the energy crisis.”

On the mainland, the Shanghai Composite was off 0.31% at 3,035.05, and the technology-centric Shenzhen Component was 0.56% weaker at 10,965.33.

The People’s Bank of China stood pat on its key interest rates in its latest decision, as had been widely anticipated by market participants.

It held the one-year loan prime rate at 3.65%, and the five-year rate at 4.3%, having also left its medium-term policy rates unchanged earlier in the week.

“We view this as an implicit acknowledgment that monetary policy easing would be ineffective in boosting the economy, which is dragged down by the impact of zero-Covid policy and property sector woes,” Duncan Wrigley at Pantheon added.

“The ongoing 20th Party Congress has not given a signal that the government is considering any significant shift in short-term policy.

“We will be monitoring the close of the Congress over the weekend for further clues on policy thinking for the rest of this year and beyond.”

South Korea’s Kospi lost 0.86% to 2,218.09, while the Hang Seng Index in Hong Kong slid 1.4% to 16,280.22.

Mainland China-focussed airlines were in the green in the special administrative region after Bloomberg reported that Beijing officials were considering a relaxation of the quarantine requirements for arriving passengers.

Beijing’s Air China was up 3.32%, Shanghai-based China Eastern Airlines added 2.17%, and Guangzhou-focussed China Southern Airlines was 1.91% firmer.

Seoul’s blue-chip technology stocks were in the red, with Samsung Electronics down 0.54% and SK Hynix 2.91% lower.

Oil prices were higher as the region went to bed, with Brent crude futures last up 1.53% at $93.82 per barrel on ICE, and West Texas Intermediate rising 1.67% on NYMEX to $86.98.

In Australia, the S&P/ASX 200 was down 1.02% at 6,730.70, as fresh data out of Canberra showed the country’s jobless rate remained steady.

The unemployment rate in the sunburnt country came in at 3.5% in September, according to the Australian Bureau of Statistics, which was in line with both August’s reading and the expectations of analysts polled by Reuters.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 was 0.78% weaker at 10,832.03, led lower by medical technology manufacturer Fisher & Paykel Healthcare, which tumbled 4.4% in Wellington.

The down under dollars were both stronger on the greenback, with the Aussie last ahead 0.36% at AUD 1.5890, and the Kiwi advancing 0.2% to NZD 1.7598.

Reporting by Josh White at Sharecast.com.