Asia report: Markets mixed as Japan returns from extended break

Japan's stocks resumed trading after an extended New Year's holiday, marked by an earthquake and an incident involving Japan Airlines at Tokyo’s Haneda Airport.

“Asian markets experienced widespread declines as the cautious approach persisted from Wall Street, even in the absence of a specific trigger,” said Patrick Munnelly at TickMill Group.

“The Nikkei 225 resumed trading after a prolonged break and recovered some of the losses seen in the region yesterday, with the decline being somewhat limited due to the recent weakening of the yen.

“The Hang Seng and Shanghai Composite both experienced declines, but the Hang Seng's losses were less severe due to gains in oil majors.

“On the other hand, the Shanghai Composite did not benefit from the positive Chinese Caixin services PMI data, which indicated that both domestic and foreign demand are still insufficient.”

Stocks mixed across region, Japan returns from break

In Japan, the Nikkei 225 index fell by 0.53% to close at 33,288.29, while the Topix index managed a slight gain of 0.52%, reaching 2,378.79.

Tokyo Electron, SoftBank Group and Advantest were among the leading decliners on Tokyo’s benchmark, falling 4.95%, 3.86% and 3.79%, respectively.

In China, the Shanghai Composite index declined by 0.43% to 2,954.35, while the Shenzhen Component lost 1.24%, closing at 9,215.24.

Leading the fallers in Shanghai was GigaDevice Semiconductor Beijing, down 5.53%, followed by Fujian Apex Software, which was off 5.07%.

Hong Kong's Hang Seng Index showed relative stability with a marginal decrease of just 0.003%, closing at 16,645.98.

Haidilao International, Zhongsheng Group and ANTA Sports Products were among the biggest fallers in the special administrative region, losing a respective 3.94%, 3.89% and 2.63%.

South Korea's Kospi index slipped 0.78% to close at 2,587.02, with SK Biopharmaceuticals down 7.41% and Celltrion off 5.83%.

In Australia, the S&P/ASX 200 index declined by 0.39% to reach 7,494.10, as Arcadium Lithium and Bellevue Gold slid 9.2% and 4.53%, respectively.

Across the Tasman Sea, New Zealand's S&P/NZX 50 index managed a gain of 0.25%, closing at 11,759.11.

Scales Corporation was the top gainer, rising 2.99%, while Meridian Energy added 2.76% by the end of trading in Wellington.

In currency markets, the dollar was last up 0.56% on the yen, trading at JPY 144.09, while it decreased 0.05% against the Aussie to AUD 1.4847, and weakened 0.14% on the Kiwi to change hands at NZD 1.5986.

Oil prices were in the green, with Brent crude futures last up 0.74% on ICE at $78.83 per barrel, while the NYMEX quote for West Texas Intermediate recorded a gain of 1.05% to $73.40.

Japan to approve earthquake funds, China service sector grows

In economic news, Japan's prime minister Fumio Kishida announced the cabinet's intention to approve reserved funds to address the aftermath of the New Year's Day earthquake that struck the Noto Peninsula in Ishikawa prefecture.

According to Reuters, the meeting scheduled for next Tuesday was set to consider an amount double the JPY 2bn previously disbursed in response to similar disasters.

The reserved funds would be earmarked to address unforeseen government spending needs, but need cabinet approval before use.

In China, a private survey revealed that China's services sector continued its growth trajectory in December, with foreign demand for Chinese services on the rise.

The Caixin China general services business activity index climbed to 52.9 in December, up from 51.5 in November and marking the 12th consecutive month of growth.

Caixin highlighted that the growth rate was the fastest since July.

“Growth momentum across China's service sector continued to revive at the end of 2023,” the report read, also noting a subtle uptick in employment, despite businesses exercising caution in hiring, which was sufficient to absorb new orders and keeping backlogs unchanged.

Business activity in Hong Kong's private sector meanwhile experienced its most significant improvement since April, according to data from S&P Global.

The city's purchasing managers' index (PMI) rose to 51.3 in December, up from 50.1 in November.

S&P noted that new business and output in Hong Kong returned to growth, even though foreign demand conditions remained subdued.

“The improvement in overall sales nevertheless supported faster employment growth, while firms also raised their inventory holdings amid softening cost pressures,” it said.

Reporting by Josh White for Sharecast.com.