Asia report: Stocks rise as China's service sector improves

Stocks in Asia were in the green at the close on Thursday, as investors digested a fresh batch of service sector data from China’s private sector.

In Japan, the Nikkei 225 was up 0.4% at 25,820.80, as the yen strengthened 0.13% on the dollar to last trade at JPY 132.46.

Robotics specialist Fanuc was down 0.2%, while Uniqlo owner Fast Retailing was up 0.15% and tech investing giant SoftBank Group was ahead 1.86%.

The broader Topix index was 0.04% firmer by the end of trading in Tokyo, settling at 1,868.90.

On the mainland, the Shanghai Composite added 1.01% to 3,155.22, and the technology-centric Shenzhen Component jumped 2.13% to 11,332.01.

Fresh data showed an improvement in China’s services sector in December, although it still remained on contraction territory.

The Caixin general services purchasing managers’ index came in at 48 for the month, up from November’s six-month low of 46.7, but still below the 50-point mark that separates expansion from contraction.

Caixin PMI data is seen as reflective of smaller and more entrepreneurial private sector activity in China, while official data from Beijing tends to denote the performance of larger, state-affiliated industry.

“We think the worst economic hit from the Covid exit waves will take place in the first quarter, and that China will enter a reopening rebound from the second quarter onwards, led by the large cities,” said Duncan Wrigley at Pantheon Macroeconomics.

“The People’s Bank of China will likely support the reopening with a rate cut, to boost confidence and private sector credit demand.”

Wrigley noted that senior policymakers indicated their intention to boost domestic demand in December, including consumption and private sector investment.

“The property sector should recover gradually as the economy reopens.”

South Korea’s Kospi managed gains of 0.38% to 2,264.65, while the Hang Seng Index in Hong Kong rose 1.25% to 21,052.17.

The blue-chip technology stocks were on the front foot in Seoul, with Samsung Electronics up 0.69% and SK Hynix rising 0.49%.

Oil prices were in the green as the region went to bed, with Brent crude futures last up 2.33% on ICE at $79.65 per barrel, while the NYMEX quote for West Texas Intermediate was 2.28% firmer at $74.50.

In Australia, the S&P/ASX 200 eked out a rise of 0.06% to 7,063.60, while across the Tasman Sea, New Zealand’s S&P/NZX 50 was 0.55% higher at 11,651.29.

The down under dollars were mixed against the greenback, with the Aussie last 0.04% weaker at AUD 1.4628, while the Kiwi strengthened 0.11% to NZD 1.5871.

Reporting by Josh White for Sharecast.com.