Asia report: Stocks rise on Japan data, India rate hike

Hong Kong led broad gains on Asian stock markets on Wednesday, as Alibaba Group soared, while India’s central bank tacked 50 basis points onto its key interest rate.

In Japan, the Nikkei 225 was up 1.04% at 28,234.29, as the yen weakened 0.88% against the dollar to last trade at JPY 133.76.

It was a positive session for the benchmark’s major components, with automation specialist Fanuc up 2.38%, fashion firm Fast Retailing rising 0.03%, and technology conglomerate SoftBank Group 2.45% firmer.

The broader Topix index was ahead 1.18% by the end of trading in Tokyo, settling at 1,969.98.

Fresh economic data showed Japan’s economy contracting by 0.5% year-on-year in the first quarter, which was better than the initial estimate of a 1% shrinkage.

“The scope for optimism here is, though, counterbalanced by the fact that inventory build is largely responsible for the upside surprise,” noted analysts at Rabobank.

On the mainland, the Shanghai Composite was up 0.68% at 3,263.79, and the technology-heavy Shenzhen Component rose 0.82% to 12,033.26.

South Korea’s Kospi was the region’s odd one out, slipping 0.01% to 2,626.15, while the Hang Seng Index in Hong Kong jumped 2.24% to 22,014.59.

Technology plays led the gains in the special administrative region, with Alibaba Group rocketing 10.12%, NetEase jumping 5.66%, and Tencent Holdings 6.47% higher.

The blue-chip tech stocks were mixed in Seoul, meanwhile, with Samsung Electronics down 0.31%, while SK Hynix rose 1.92%.

Interest rates remained in focus in the region, as the Reserve Bank of India raised its policy repo rate - the rate at which it lends to commercial banks - by 50 basis points to 4.9%.

That was smack in the middle of the range of analyst expectations, who had pencilled in a rise of between 25 and 75 basis points.

“It may be noted in this context that the repo rate still remains below its pre-pandemic level,” the central bank’s governor Shaktikanta Das said after the decision was announced.

Analysts at TD Securities said governor Das “sounded hawkish” in the press conference, dropping mention of ‘staying accommodative’ and highlighting upside risks to inflation, expecting inflation to stay above the top end of the Reserve Bank’s target band for three quarters.

“Unsurprisingly, the RBI raised its fiscal year 2023 inflation forecast, increasing it to 6.7% from 5.7% previously,” TD Securities said.

“Inflation is surging, with CPI having hit 7.8% year-on-year in April - well above the RBI's 2% to 6% target range amid ongoing supply pressures.

“Government efforts such as banning wheat exports [and] cutting taxes on fuel will likely help to contain some of the rise in inflation, but will be insufficient on their own.”

Oil prices were higher at the end of the Asian day, with Brent crude futures last up 0.88% on ICE at $121.63 per barrel, and West Texas Intermediate rising 1.06% to $120.68 on NYMEX.

In Australia, the S&P/ASX 200 was 0.36% firmer at 7,121.11, while across the Tasman Sea, New Zealand’s S&P/NZX 50 eked out gains of 0.01% to 11,266.54.

The down under dollars were both weaker against the greenback, with the Aussie last off 0.57% at AUD 1.3908, and the Kiwi retreating 0.65% to NZD 1.5507.

Reporting by Josh White at Sharecast.com.