Asia report: Markets fall as investors await US payrolls
Stocks closed in the red across the Asia-Pacific region on Friday, as investors closed their pocketbooks ahead of the key nonfarm payrolls report due out of the US later in the global day.
In Japan, the Nikkei 225 was down 0.71% at 27,116.11, as the yen strengthened 0.24% on the dollar to last trade at JPY 144.79.
Automation specialist Fanuc was flat, while fashion firm Fast Retailing rose 0.19%, and technology conglomerate SoftBank Group advanced 0.18%.
The broader Topix index ended the session 0.82% weaker by the end of trading in Tokyo, closing at 1,906.80.
Markets in mainland China were still closed for the fifth consecutive session as the People’s Republic enjoys the ‘Golden Week’ holidays.
Fresh data showed China’s foreign currency reserves falling less than expected in September, meanwhile, to $3.03trn from $3.06trn.
Consensus expectations were for a fall to $2.997trn.
“We estimate that valuation effects likely accounted for the entirety of the decline, with dollar strength pushing down the value of other currency holdings,” said Pantheon Macroeconomics chief China economist Craig Botham.
“SAFE claimed a mix of currency and asset valuation falls underpinned the move, rather than any foreign exchange intervention.
“But the ‘valuation adjusted’ stability of reserves is not a sign that China is not experiencing capital flight pressure.”
Botham noted that the People’s Bank of China had been “very actively” leaning on domestic banks to support the currency, while reserves were declining and the currency weakening despite ongoing large trade surpluses.
“Time will tell whether the recent intervention will provide a sustained rally in the renminbi, but without a change from the Fed, it seems unlikely.”
South Korea’s Kospi was 0.22% lower at 2,232.84, while the Hang Seng Index in Hong Kong was down 1.51% at 17,740.05.
Seoul’s blue chip technology stocks were mixed, with SK Hynix rising 1.45% while Samsung Electronics slipped 0.18%.
The latter reported a 31.7% plunge in third quarter operating profit earlier in the day, as demand for semiconductors slowed.
It was Samsung’s first fall in quarterly profit since the last three months of 20191, according to Refinitiv.
“Ahead of arguably the most eagerly awaited economic release of all, investors continue to grapple with the resolve which the Federal Reserve continues to demonstrate in its fight against inflation,” said Interactive Investor head of markets Richard Hunter of the situation on Friday morning.
The US nonfarm payrolls report was expected to show 250,000 jobs added in September, compared to 315,000 in August, while unemployment was forecast to remain steady at 3.7%.
“A stronger than expected number will send investors running for the hills once more, given that the Fed will retain the green light to proceed unopposed in its policy,” Hunter said.
“In contrast, a weak number could prompt hopes that aggressive rate hiking is beginning to take some effect, which in turn would revive the optimism of a Fed pivot which lifted markets earlier in the week.”
He noted that Asian markets were not escaping the turmoil, which was being exacerbated by local issues such as the “brittle state” of the Chinese economy.
“Sentiment was dampened further overnight as Samsung declared a 32% drop in quarterly earnings, while tech stocks generally across the region remained friendless.”
Oil prices were rising as the region entered the weekend, with Brent crude futures last up 0.39% on ICE at $94.79 per barrel, and the NYMEX quote for West Texas Intermediate rising 0.44% to $88.84.
In Australia, the S&P/ASX 200 was off 0.8% at 6,762.80, while across the Tasman Sea, New Zealand’s S&P/NZX 50 slipped 0.19% to 11,103.79.
The down under dollars were in a mixed state against the greenback, with the Aussie last ahead 0.23% at AUD 1.5576, while the Kiwi weakened 0.06% to NZD 1.7677.
Reporting by Josh White at Sharecast.com.