Asia report: Stocks mixed on China inflation, BoJ comments

Asia-Pacific stock markets presented a mixed picture by the end of trading on Monday, ahead of major economic data releases set to come later in the week.

Patrick Munnelly at TickMill Group said the mixed performance was driven by rising yields, triggered by comments from Bank of Japan governor Kazuo Ueda.

“Ueda mentioned the possibility of having enough data by year-end to decide on ending negative interest rates, emphasising a smooth exit strategy,” Munnelly noted.

“This led to varied outcomes in major indices - the Nikkei 225 declined by 0.5%, reacting to governor Ueda's comments, which pushed the 10-year Japanese government bond yield above 0.70% for the first time since 2014.

“However, losses in the index were cushioned by optimism in the banking sector, driven by the exit-related discussions and Japan's plans for substantial economic stimulus measures.”

Mixed performance across region’s markets

Japan experienced varied outcomes, with the Nikkei 225 dropping 0.43% to close at 32,467.76, while the Topix index slightly advanced, adding 0.06% to end at 2,360.48.

Notable decliners on Tokyo’s benchmark included Mitsui Fudosan plummeting by 4.27%, followed closely by Mitsubishi Estate at a loss of 4.07%, and Sumitomo Osaka Cement which decreased by 3.86%.

In China, the markets moved in a more positive direction, as the Shanghai Composite rose by 0.84% to finish at 3,142.78.

Its counterpart, the Shenzhen Component, also exhibited a favourable run, gaining 0.98% to settle at 10,382.38.

Major climbers in Shanghai were HMT Xiamen New Technical Materials, which soared by 9.99% and Appotronics which surged by 9.89%.

Hong Kong's Hang Seng Index experienced a decline, dropping 0.58% to a closing figure of 18,096.45.

The market saw significant slides by Sun Hung Kai Properties, down by 9.68%, New World Development which fell by 6.29%, and Henderson Land which decreased by 4.02%.

South Korea's Kospi index presented a positive trajectory, advancing by 0.36% to reach 2,556.88 at the close of the day.

Prominent gainers in Seoul were Yuhan, which climbed by 9.45% and Netmarble Games, up by 8.82%.

Australia's S&P/ASX 200 index saw a boost, rising by 0.5% to settle at 7,192.30.

Sydney’s notable performers included Magellan Financial Group, up by 4.4%, and Lynas Rare Earths, which gained 3.53%.

Conversely, New Zealand's S&P/NZX 50 index dipped by 0.37%, ending the session at 11,302.41.

The Wellington bourse was overshadowed by a dramatic fall of Eroad shares which plummeted by a staggering 42.45%, on the back of a heavily-discounted NZD 50m offer announced last week.

Eroad announced the offer at 70 NZ cents per share on Wednesday last week - a price almost 50% lower than Tuesday’s closing price of NZD 1.39.

It came after the company beat off a takeover offer by Canada’s Constellation Software in July, with Constellation’s investment vehicle Volaris questioning Eroad’s cut-price fundraise.

“We question why Eroad would offer such a deep discount to incentivise participating in this capital raise,” Volaris said in a statement.

“We question the urgency, need and terms of this capital raise.”

In the currency sector, the dollar was last down 0.95% on the yen, trading at JPY 146.42.

The greenback was also on the back foot against the Aussie, losing 0.89% to AUD 1.5543, while it slid 0.65% on the Kiwi to change hands at NZD 1.6884.

On the oil front, Brent crude futures shed 0.36% on ICE to last stand at $90.32, while the NYMEX quote for West Texas Intermediate followed suit with a 0.63% decline, priced at $86.96 per barrel.

China sees positive movement in consumer inflation; Japan prepares for policy shift

In economic news, China's landscape showed signs of stability in August, as consumer inflation bounced back from the negative realm in data released on Saturday.

The increase in consumer prices in the globe's second-leading economy was pegged at 0.1% annually - slightly below the anticipated 0.2% hike.

When filtering out the fluctuating prices of food and energy, the core inflation rate experienced growth of 0.8%.

“In all, China’s consumer recovery will be protracted and uneven - the health of the property market is key in this recovery as the entire sector accounts for around 25% of the economy, according to our estimation,” said Pantheon Macroeconomics chief China economist Kelvin Lam.

“A stable and growing real estate sector will help secure the nation’s net worth and bolster consumer confidence, while the associated wealth effect will encourage spending by households, supporting China’s strategic goal to be more consumption-led.

“The People’s Bank is fully aware of this and has deployed stimulus policies prior to its peak season in autumn by loosening mortgage requirements, such lowering stamp duties for first and second time buyers and existing mortgage rates.”

Elsewhere, Japan looked set to be gearing up for a monetary shift, with an interview with Bank of Japan governor Kazuo Ueda in the Yomiuri newspaper indicating that the central bank was embarking on a journey to diminish monetary easing.

Ueda highlighted the bank's intent on taking a discreet step away from its exceedingly accommodative monetary stance.

Additionally, he alluded to the close of the year as an opportune moment to evaluate the trajectory of wage hikes, which play a pivotal role in shaping price augmentations.

Reporting by Josh White for Sharecast.com.