Asia report: Stocks mixed on eve of Lunar New Year holiday

Stock markets in the Asia-Pacific region closed in a mixed state on Friday, with Japan’s benchmark hitting fresh 34-year highs.

Many bourses across the region were either closed or only traded for limited hours ahead of the Lunar New Year holiday.

“Many Asian markets observe holidays today, with those open displaying mixed but relatively minor fluctuations,” said Patrick Munnelly at TickMill Group.

“Anticipation surrounds potential further stimulus measures in China.”

Munnelly noted that remarks from a European Central Bank official suggested that this year could see interest rate cuts if no adverse events occurred, although they cautioned that market expectations could be overstated.

“In contrast, the Bank of England's [Jonathan] Haskel, who recently voted for a rate increase, voiced a desire for more evidence regarding the reduction of inflation risks.”

Japan leads gains in mixed, quiet day for regional trading

Japan's Nikkei 225 index surged to fresh 34-year highs on Friday, reaching 36,897.42, marking a modest increase of 0.09%.

Leading the gains on the benchmark index was Fujikura, soaring by 23.85%, followed by Nisshinbo Holdings which rose 9.24%, and SoftBank Group, climbing by 8.72%.

However, the broader Topix index experienced a slight dip of 0.19% in Tokyo, closing at 2,557.88.

Chinese markets remained closed ahead of the long Lunar New Year holiday, as did those in South Korea.

In a truncated half-day session prior to the Lunar New Year, Hong Kong's Hang Seng Index experienced a decline of 0.83%, closing at 15,746.58.

Among the biggest losers were Orient Overseas International, dropping by 8.5%, Country Garden Services, sliding by 6.69%, and Longfor Properties, declining by 6.67%.

Australia's S&P/ASX 200 index saw a marginal uptick of 0.07%, closing at 7,644.80, led higher by Liontown Resources, up 10.4%; Boral, rising by 8.32%; and REA Group, advancing by 5.92%.

In New Zealand, the S&P/NZX 50 index experienced a minor decline of 0.08%, closing at 11,862.95.

Key decliners in Wellington included ANZ Group, down by 2.72%; SkyCity Entertainment, falling by 1.89%; and Argosy Property, slipping by 1.74%.

In currency markets, the dollar was last 0.07% stronger on the yen to trade at JPY 149.43.

The greenback meanwhile weakened slightly against both its Aussie and Kiwi counterparts, declining 0.22% on the former to AUD 1.5370, and decreasing 0.73% against the latter to change hands at NZD 1.6283.

On the oil front, both Brent crude and West Texas Intermediate saw modest gains, with Brent futures last up 0.16% on ICE at $81.76 per barrel, and the NYMEX quote for WTI increasing 0.41% to $76.53.

Central bank comments in Australia, Japan in focus

Central bank speak was the theme of the day in the region, after Reserve Bank of Australia governor Michelle Bullock expressed cautious optimism about recent inflation readings, but emphasised that inflation remained "too high" for the country.

Speaking before the Standing Committee on Economics in Canberra, Bullock said the central bank expected inflation to only reach the upper end of its 2% to 3% target range by 2025.

After a fourth-quarter inflation rate of 4.1%, Bullock stressed that such a figure was unacceptable and was far from the RBA’s desired midpoint of 2.5%.

Regarding the possibility of interest rate adjustments, Bullock said the bank had not definitively decided on further increases, but also had not dismissed the option entirely.

In Japan, Bank of Japan governor Kazuo Ueda addressed concerns about monetary policy during a session in the country's lower house of parliament.

According to CNBC, Ueda acknowledged the likelihood of continued accommodative monetary conditions even if the bank decided to discontinue its negative interest rates policy.

Responding to inquiries from an opposition lawmaker in the lower house budget committee, Ueda's stance echoed that of his deputy, Shinichi Uchida, who said on Thursday that the BoJ was unlikely to pursue aggressive interest rate hikes even after ending its negative interest rate policy.

Reporting by Josh White for Sharecast.com.