Asia report: Stocks join global sell-off, RBNZ stands pat

Asia-Pacific markets saw significant sell-offs by the end of trading on Wednesday, reflecting a similar downward trend on Wall Street that resulted from a dip in US bank performances.

Central bank moves were also in focus, after the Reserve Bank of New Zealand stood pat on interest rates for the second consecutive time.

“The market is a bit of a mess, and while the focus has been on robust US data and the implications for Fed policy through the lens of soaring US yields, August is turning out to be a clunker for Asia markets from both China and the US knock-on effects,” said SPI Asset Management managing partner Stephen Innes.

“On Wednesday, most Asian stocks experienced declines due to further deteriorating economic conditions in China.

“These concerns were exacerbated by resurfacing anxieties about a more aggressive stance from the US Federal Reserve, causing a wholesale lack of interest in high-risk assets.”

Innes said the performance of regional stocks mirrored a subdued trend set by Wall Street, which followed stronger-than-anticipated US retail sales figures, highlighting the potential for increased inflationary pressures.

The data was subsequently painting a more hawkish picture of interest rates within the world's largest economy.

“The already frail sentiment was further strained by discouraging data on China home prices, contributing to the prevailing apprehensions surrounding China's struggling real estate sector.

“These concerns placed downward pressure on local stocks.

“Concurrently, the apprehensions in the face of higher US yields also triggered notable losses in the Asian technology stock sectors.”

Regional markets react to Wall Street's decline with sell-off

In Japan, the Nikkei 225 fell 1.46% to close at 31,766.82, while the broader Topix index was down 1.29%, finishing at 2,260.84 points.

Among the leading losers on Tokyo’s benchmark was Nippon Sheet Glass with a sharp decline of 5.96%, followed by JGC Corporation which was down by 4.33%, and Nissan Chemical Industries slipping 4.04%.

In mainland China, both the Shanghai Composite and the Shenzhen Component indices faced setbacks.

The Shanghai Composite was down 0.82% to 3,150.13, while the Shenzhen Component decreased 0.94% to 10,579.56.

Gansu Guofang Industry & Trade Group's stocks plummeted by 9.74% in Shanghai, and Haohua Chemical Science & Technology shares dipped 8.53%.

Hong Kong's Hang Seng Index was not spared from the downturn, dropping 1.36% to 18,329.30.

Notable losers from the special administrative region included Orient Overseas International, down by 4.7%, followed closely by Li Ning Co and ANTA Sports Products, which lost 4.02% and 3.61% respectively.

South Korea's Kospi index saw a more pronounced decline of 1.76% to close at 2,525.64.

LG Household & Healthcare's stocks took a significant blow, dropping by 7.07%, while Hanwha Ocean Co witnessed a 6% fall.

The Australian S&P/ASX 200 index shed 1.5% to finish the day at 7,195.20.

Fletcher Building experienced a steep decline of 9.27% in Sydney trading, and Megaport's shares decreased by 5.72%.

In New Zealand, the S&P/NZX 50 index recorded a milder fall of 0.49% to 11,763.11.

Fletcher Building also had a tough day in its native market, dropping 8.38%, whereas Restaurant Brands New Zealand faced a decline of 4.38%.

On the currency front, the dollar was last down 0.01% on the yen at JPY 145.55, while it weakened 0.28% against the Aussie to trade at AUD 1.5449.

The greenback saw a more pronounced decrease against the Kiwi, retreating 0.54% to change hands at NZD 1.6712.

Oil prices meanwhile showed resilience amidst the market turmoil, with Brent crude futures last up 0.09% on ICE to stand at $84.97, and the NYMEX quote for West Texas Intermediate edging up 0.07% to $81.05.

New Zealand central bank maintains policy rate; Japan business sentiment improves

In economic news, the Reserve Bank of New Zealand (RBNZ) opted to keep its benchmark policy rate unchanged at 5.5% at its latest meeting, marking the second consecutive time the official cash rate remained static.

The decision aligned with the projections of financial experts polled by Reuters.

In its official statement, RBNZ highlighted that the prevailing interest rate was acting as a curb on spending, and thus limiting inflationary pressures.

Elsewhere, business optimism in Japan received a boost in July, with the Reuters Tankan survey revealing an uptrend in business sentiments among major Japanese corporations.

The manufacturing sector's index saw a considerable rise, moving to +12 from its June figure of +3.

Meanwhile, the non-manufacturing sector also demonstrated positive growth, with its index reaching +32, a significant jump from the previous month's +23.

For the Tankan surveys, an index value above zero indicates favourable market conditions, while a figure below zero points towards unfavourable dynamics.

Reporting by Josh White for Sharecast.com.