Asia report: Stocks mixed as Japan's manufacturing sector contracts

Stocks were mixed in the Asia-Pacific region on Wednesday, with Hong Kong once again leading the gains, as investors awaited signs of the US Federal Reserve’s likely trajectory in its latest meeting minutes.

In Japan, the Nikkei 225 was down 1.45% at 25,716.86, as the yen strengthened 0.25% on the dollar to last trade at JPY 130.69.

Automation specialist Fanuc managed gains of 0.1%, while fashion firm Fast Retailing was down 1.24% and technology conglomerate SoftBank Group was 0.07% lower.

The broader Topix index was 1.25% weaker by the end of trading in Tokyo, settling at 1,868.15.

In fresh data out of Japan, the au Jibun flash manufacturing purchasing manufacturers’ index (PMI) showed the sector contracting for the second month in a row.

The PMI came in at 48.9 for December, down slightly from November’s reading of 49.0, and making for the lowest print since October 2020, when it reached 48.7.

PMI readings below the 50-point level denote contraction, while those above represent expansion for a sector.

“The final PMI confirms the gloomy short-term situation for Japanese manufacturing, and will not persuade the Bank of Japan that domestic demand is sufficiently strong to drive sustained inflation,” said Duncan Wrigley at Pantheon Macroeconomics.

“Governor Kuroda said the Bank's surprise tweak to the 10-year yield target in December was about mitigating the side-effects of yield curve control on the financial markets, and that it was too early to discuss an exit from easing policy.

“No doubt the BoJ will be parsing the services PMI, out on Friday, for glimmers of hope.”

On the mainland, the Shanghai Composite managed gains of 0.22% to 3,123.52, and the technology-heavy Shenzhen Component was off 0.2% at 11,095.37.

South Korea’s Kospi gained 1.68% to 2,255.98, while the Hang Seng Index in Hong Kong jumped 3.22% to 20,793.11.

Chinese healthcare and technology plays were among the leading gainers in the special administrative region, with Alibaba Health Information Technology jumping 8.87% and Hansoh Pharmaceutical Group 7.68% firmer.

Among the tech stocks, Alibaba Group was up 6.87% and Baidu was 8.19% higher, while NetEase was 5.99% firmer by the end of the day.

Sentiment was lifted in China’s tech sector during the day, after Alibaba’s financial affiliate Ant Group was granted approval to expand its consumer finance operations.

The blue-chip technology stocks rocketed in Seoul, meanwhile, with Samsung Electronics up 4.33% and SK Hynix surging 7.14%.

Investors were closing out their positions at the end of the trading day in Asia, and looking across the Pacific for a batch of much-awaited releases from the US.

The Job Openings and Labor Turnover Survey, or ‘JOLTS’, was due to be released later in the global day, as were the minutes of the Federal Reserve’s most recent policy meeting.

Oil prices were lower at the end of the Asian day, with Brent crude last down 2.55% on ICE at $80.01 per barrel, and the NYMEX quote for West Texas Intermediate falling 2.65% to $74.89.

In Australia, the S&P/ASX 200 added 1.63% to 7,059.20, while across the Tasman Sea, New Zealand’s S&P/NZX 50 rose 1% to 11,587.48.

The down under dollars were both stronger on the greenback, with the Aussie last ahead 2.07% at AUD 1.4558, and the Kiwi advancing 1.27% to NZD 1.5792.

Reporting by Josh White for Sharecast.com.