Asia report: Markets finish higher as China stimulates markets
Markets in Asia finished higher on Wednesday, as investors focussed on fresh stimulus in China implemented on the back of the ongoing outbreak of the novel coronavirus strain in the region.
In Japan, the Nikkei 225 was up 1.02% at 23,319.56, as the yen weakened 0.14% against the dollar to last trade at JPY 109.67.
Among the benchmark’s major components, automation firm Fanuc was up 1.24% and technology conglomerate SoftBank Group was 1.33% higher, while fashion company Fast Retailing lost 0.28%.
The broader Topix index was also in the green, rising 1.02% by the end of trading in Tokyo to close at 1,701.83.
On the mainland, the Shanghai Composite was ahead 1.25% at 2,818.09, and the smaller, technology-heavy Shenzhen Composite was 2.48% firmer at 1,678.64.
The recovery in China came after markets there plunged more than 7% on Monday, when traders had their first chance to react to the coronavirus outbreak after the extended Lunar New Year holiday.
Beijing’s central bank cut reverse repurchase rates on Monday in a bid to add liquidity to the economy, with the seven-day reverse repo rate going down 10 basis points to 2.4%, and the 14-day rate falling by the same amount to 2.55%.
The People’s Bank of China then added CNY 1.7trn to the country’s money markets through Monday and Tuesday, through reverse repurchases.
It said on Wednesday that it was not carrying out any open market operations during the session, as it believed there was “adequate liquidity in the current banking system, which is sufficient to meet the market demand”.
The ongoing coronavirus, meanwhile, was continuing to have an effect on China, with large parts of the country still closed, travel numbers dwindling, and falling demand having an impact on businesses.
“Shares in Asia rose on the hopes of fresh Chinese stimulus, but gains were capped by data showing Chinese service sector activity hit a three-month low in January,” said London Capital Group analyst Jasper Lawler.
“Given the supply chain disruption caused by the coronavirus, we’d expect more Chinese data heading south to weigh on equities.”
South Korea’s Kospi managed gains of 0.36% to finish at 2,165.63, while the Hang Seng Index in Hong Kong rose 0.42% to 26,786.74.
The blue-chip technology stocks were higher in Seoul, with Samsung Electronics up 1.02% and chipmaker SK Hynix ahead 0.62%.
Korea-based carmaker Hyundai Motor announced the temporary suspension of all production assembly lines in China on Wednesday, as a result of supply chain disruption amid the coronavirus outbreak.
Shares in Hyundai were flat by the end of trading.
Oil prices were higher as the region went to bed, with Brent crude last up 2.55% at $55.37 per barrel, and West Texas Intermediate ahead 2.27% at 50.76%.
In Australia, the S&P/ASX 200 added 0.39% to end its trading day at 6,976.10, although the hefty financials subindex was just below the waterline.
The major banking plays were mixed in Sydney, with Australia and New Zealand Banking Group up 0.58% and National Australia Bank 0.04% firmer, while Commonwealth Bank of Australia was down 1.22% and Westpac Banking Corporation lost 0.28%.
Across the Tasman Sea, New Zealand’s S&P/NZX 50 was 0.8% higher at 11,604.08, led higher by Tourism Holdings, which was up 7.1% by the end of trading.
It was an afternoon turnaround for the travel and tourism play, which sank in morning trading after the company warned of a likely 14% fall in annual profit thanks to the impact of coronavirus and Australian bushfires on tourist numbers, as well as its previously-announced issues in the US.
Both of the down under dollars were stronger on the greenback, with the Aussie last ahead 0.4% at AUD 1.4781, and the Kiwi advancing 0.02% to NZD 1.5404.