Asia report: Stocks rise as China industrial profits show improvement

Asian markets displayed a mixed performance on Wednesday as trading resumed after the Christmas break.

China and Hong Kong stocks saw gains, propelled by a surge in video-game shares, while Australia stocks reached a near two-year high.

“Wall Street launched the final week of 2023 on a positive trajectory, extending the year-end rally that positioned the market on the verge of achieving a record high,” said SPI Asset Management managing partner Stephen Innes.

“And holding true to its historical form, the ‘Santa Claus rally’ marches on as more dry powder enters the picture.

“A moderation in headline and core inflation has created a pathway for central banks to ease off on restrictive policies.

“As inflation subsides, the Federal Reserve sees higher real rates becoming increasingly economically unfavourable, possibly reducing the necessity for policy rates to remain in prohibitive territory.”

Markets in the green across the Asia-Pacific region

In Japan, the Nikkei 225 index rose by 1.13% to reach 33,681.24, while the Topix index also climbed by 1.13% to 2,365.40.

The gains on Tokyo’s benchmark were led by Sumitomo Dainippon Pharma, up 5.61%; Kawasaki Kisen Kaisha, ahead 5.31%; and SoftBank Group, which rose 4.23%.

In mainland China, the Shanghai Composite gained 0.54%, closing at 2,914.61, and the Shenzhen Component increased by 0.38% to reach 9,191.74.

Among the leading gainers in Shanghai were Cashway Technology and Clenergy Xiamen Technology, both surging by 10.02%.

Hong Kong's Hang Seng Index jumped 1.74% to close at 16,624.84, led by NetEase, up 11.89%; Zhongsheng Group ahead 7.65%; and Li Auto, which was 6.79% firmer.

The Kospi index in South Korea edged up 0.42% to 2,613.50, with Kumyang jumping 11.66% and Posco International adding 10.66% by the close.

Australia's S&P/ASX 200 was 0.79% firmer to reach 7,561.20, marking a near two-year high.

Notable gainers included Liontown Resources, with a 6.27% improvement; and Arcadium Lithium, which was 6.24% higher.

In New Zealand, the S&P/NZX 50 climbed 0.38% to close at 11,678.43, with Fonterra Shareholders Fund rising 4.79% and Pacific Edge ahead 4.25%.

On the currency front, the dollar was last up 0.15% on the yen, trading at JPY 142.61, while it was down 0.19% against the Aussie to change hands at AUD 1.4625, and remained unchanged on the Kiwi at NZD 1.5804.

Oil prices showed slight declines, with Brent crude futures last down 0.47% on ICE at $80.69 per barrel, and the NYMEX quote for West Texas Intermediate decreasing 0.64% to $75.09.

China industrial profits show improvement in November

Industrial profits in China saw a substantial boost in November, with a double-digit increase of 29.5%, following a modest 2.7% rise in October.

The surge in profits was primarily fueled by an overall improvement in the manufacturing sector and a notable upswing in industrial output during the same month.

Despite the positive momentum seen in November, the data from the National Bureau of Statistics (NBS) showed that industrial earnings for the first 11 months of 2023 still carried a year-on-year contraction of 4.4%.

That still represented an improvement from the 7.8% drop reported to October.

Reporting by Josh White for Sharecast.com.