Asia report: Stocks mixed after surprise tightening from Singapore, Philippines

Most markets in Asia closed mixed on Thursday, as policymakers in both Singapore and the Philippines made moves to tighten.

In Japan, the Nikkei 225 was up 0.62% at 26,643.39, as the yen weakened 1.04% against the dollar to last trade at JPY 138.82.

Robotics specialist Fanuc was down 0.12%, while Uniqlo owner Fast Retailing added 1.49% and tech investing giant SoftBank Group gained 0.88%.

The broader Topix index was ahead 0.23% by the end of trading in Tokyo, settling at 1,893.13.

On the mainland, the Shanghai Composite was off 0.08% at 3,281.74, and the technology-heavy Shenzhen Component was 0.75% higher at 12,602.78.

South Korea’s Kospi lost 0.27% to 2,322.32, while the Hang Seng Index in Hong Kong was 0.22% weaker at 20,751.21.

The blue-chip technology stocks were mixed in Seoul, with Samsung Electronics down 0.86%, while SK Hynix closed flat.

In central bank action, the Bangko Sentral ng Pilipinas in Manila made a surprise hike during the day, adding 75 basis points to its overnight reverse repurchase rate, taking it to 3.25%.

“In raising the policy interest rate anew, the Monetary Board recognized that a significant further tightening of monetary policy was warranted by signs of sustained and broadening price pressures amid the ongoing normalisation of monetary policy settings,” said central bank governor Felipe Medalla.

Elsewhere, the Monetary Authority of Singapore made an off-cycle tightening decision, announcing the re-centering of the Nominal Effective Exchange Rate’s midpoint.

“This policy move, building on previous tightening moves, should help slow the momentum of inflation and ensure medium-term price stability,” the authority’s statement read.

It was the second change made outside of its two annual monetary policy meetings this year, after a tightening in January.

“After a fairly volatile session, US markets did close lower yesterday, however they did manage to close well off their lows, despite a decline in US 10-year yields, and a surge in US two-year yields, prompting the biggest inversion in this spread since 2000,” said CMC Markets chief market analyst Michael Hewson of the global situation overnight.

“With bond markets increasingly pricing economic slowdown equity markets are struggling to make sense of what comes next when it comes to valuations, with the first test coming later today with JPMorgan Chase second quarter earnings numbers.

“The second puzzle to navigate is how many more rate hikes are coming down the pipe before we see central banks cutting rates again.

“With US markets closing off their lows, and Asia edging higher, markets in Europe look set for a modestly positive open.”

Oil prices were weaker as the region went to bed, with Brent crude last down 1.88% on ICE at $97.70 per barrel, and the NYMEX quote for West Texas Intermediate falling 2.48% to $93.91.

In Australia, the S&P/ASX 200 was ahead 0.44% at 6,650.60, while across the Tasman Sea, New Zealand’s S&P/NZX 50 rose 0.7% to 11,187.97.

Both of the down under dollars were weaker against the greenback, with the Aussie last off 0.25% at AUD 1.4836, and the Kiwi retreating 0.51% to NZD 1.6395.

Reporting by Josh White at Sharecast.com.