Asia report: Stocks mixed, Japan GDP revised downwards

Asia-Pacific markets finished with a mixed performance on Friday, as Japan's economic outlook faced an unexpected setback with third-quarter GDP revised downward.

India's central bank was also in focus, holding benchmark lending rates steady.

"Most stocks traded higher, but gains were limited due to cautious sentiment ahead of the US non-farm payrolls jobs report and recent Bank of Japan speculation," said TickMill market analyst Patrick Munnelly.

"The Nikkei 225 underperformed due to a firmer currency and downward revision in Japan's third-quarter GDP.

"The Hang Seng and Shanghai Composite shrugged off early indecision, with the downside cushioned by a net liquidity injection from the People's Bank of China."

Stocks finish week in mixed state across region

In Japan, the Nikkei 225 and Topix recorded losses of 1.68% and 1.5% to close at 32,307.86 and 2,324.47, respectively.

The losses on Tokyo's benchmark were led by Mitsui Engineering & Shipbuilding, Nippon Sheet Glass, and Toppan Printing, registering respective declines of 8.42%, 5.59%, and 5.26%.

In contrast, China saw a more positive trend, with the Shanghai Composite up 0.11% at 2,969.56 and the Shenzhen Component rising 0.36% to 9,553.92.

China Suntien Green Energy and Huali Industries led the gains in Shanghai, with increases of 10.06% and 10.03%, respectively.

Hong Kong's Hang Seng Index experienced a slight dip of 0.07% to 16,334.37, led lower by Chow Tai Fook Jewellery Group, which lost 5.24%; China Resources Land, down 4.64%; and China Overseas, losing 3.86%.

South Korea's Kospi displayed resilience with a gain of 1.03% to 2,517.85.

Prominent performers in Seoul included Celltrion and Posco Holdings, posting increases of +6.41% and +5.48%, respectively.

Australia's S&P/ASX 200 index added 0.3% to reach 7,194.90, led higher by Santos with a gain of 6.15%, and Allkem, which rose 4.33%.

New Zealand's S&P/NZX 50 experienced a marginal decline of 0.01%, settling at 11,495.64.

Pacific Edge lost 5.49%, and SkyCity Entertainment Group was off 4.28%, leading Wellington's losses.

In currency markets, the dollar was last 0.05% stronger on the yen, trading at JPY 144.20.

The greenback was meanwhile mixed against its down under counterparts, weakening 0.17% against the Aussie to AUD 1.5122, while it rose 0.27% on the Kiwi to change hands at NZD 1.6251.

On the oil front, Brent crude futures were last up 1.86% on ICE at $75.43 per barrel, while the NYMEX quote for West Texas Intermediate was ahead 1.83%, reaching $70.61.

Japan GDP revised downwards as wage decline continues

In economic news, Japan's third-quarter gross domestic product (GDP) figures were revised downwards overnight, contrary to economists' predictions.

The world's third-largest economy contracted by 0.7% quarter-on-quarter, a more substantial decline than the initially estimated 0.5% contraction and the consensus forecast from a Reuters poll.

On an annualised basis, Japan's GDP shrank by 2.9% during the third quarter, surpassing both the initial estimate of 2.1% and economists' expectations of 2%.

Elsewhere in Japan, the trend of declining real wages persisted for the 19th consecutive month, with a 2.3% year-on-year decrease in October.

Although the decline was less severe than the revised 2.9% fall in September, it raised concerns about the potential impact on the Bank of Japan's (BOJ) monetary policy.

The BoJ has emphasised that sustaining wage increases remains critical when considering any shift away from its current ultra-loose stance.

"The BoJ has signalled its readiness to normalise monetary policy in 2024, through media leaks, but the economic outlook is deteriorating and inflation is cooling," said Duncan Wrigley at Pantheon Macroeconomics.

"Deputy governor Himino on Wednesday extolled the benefits to a 'wide range of households and firms' of ending negative interest rates, as long as it was done properly.

"But the downward revision in third quarter GDP data points to a weak domestic economy and the November PMIs indicate slowing manufacturing and services sectors."

Wrigley noted that Tokyo core inflation, excluding fresh food, slowed to 2.3% year-on-year in November, not far above the BoJ's target inflation rate of 2%.

"Governor Ueda said yesterday that he told Prime Minister Kisha the Bank will monitor the strength of domestic demand, whether higher wages push up services prices and the 2024 wage outlook in setting monetary policy.

"We still expect the BoJ to drop its negative rate policy in Q2 next year, using the spring wage negotiations as a pretext, even though economic and inflationary data probably won't justify policy tightening."

Meanwhile, India's central bank maintained its key lending rate at 6.5%, marking the fourth consecutive policy meeting where the repurchase rate remained unchanged.

According to Reuters, all six Reserve Bank of India's (RBI) monetary policy committee members unanimously voted to retain the repo rate.

The decision came as inflation in India moderated for three consecutive months, reaching a four-month low of 4.87% in October.

Reporting by Josh White for Sharecast.com.