Asia report: Markets rebound amid flurry of regional data

Investors closely monitored private surveys of business activity in Japan and Australia, in addition to the release of the October producer price index from South Korea.

“Asian stocks edged up on Tuesday, recovering slightly from their lowest level since November 2022, while the dollar softened as traders awaited economic data that could signal the next moves by the US Federal Reserve,” said TickMill market analyst Patrick Munnelly.

“Oil prices bounced back from some of the losses of the previous day as markets feared that the war between Israel and Hamas could spread to a wider conflict in the oil-producing region.

“Japan’s Nikkei rose 0.21% after dropping as much as 1.4% earlier.”

Most markets in the green, Hong Kong and New Zealand return from holiday

In Japan, the Nikkei 225 index saw a modest gain of 0.2%, closing at 31,062.35, while the Topix index rose 0.09% to reach 2,240.73.

Notable performers on Tokyo’s benchmark included Shiseido, which surged by 3.37%, Mitsui Mining and Smelting, with a 2.87% increase, and Taiyo Yuden, up by 2.39%.

China’s markets also exhibited strength, with the Shanghai Composite advancing by 0.78% to settle at 2,962.24 and the Shenzhen Component rising by 0.61%, reaching 9,483.90.

Key gainers in Shanghai included Baotailong New Materials, posting a 10.14% increase, and Black Peony, which saw a gain of 10.1%.

Meanwhile, Hong Kong’s Hang Seng Index faced a minor setback on its return from holiday, declining 1.05% to close at 16,991.53.

Notable fallers in the special administrative region included Xinyi Solar, down 4.73%; JD Health, off 3.82%; and Longfor Properties, which lost 3.78%.

The Kospi index in South Korea emerged as a winner, rising 1.12% to reach 2,383.51.

Among the leading gainers in Seoul were SKC, with an impressive 8.03% increase, and Celltrion, which rose by 6.76%.

In Australia, the S&P/ASX 200 index posted a modest gain of 0.19%, closing at 6,856.90, with notable performers in Sydney including Lynas Rare Earths, which surged by 12.36%, and Pilbara Minerals, up by 5.87%.

New Zealand’s S&P/NZX 50 index experienced a decline as it also returned from a long weekend, falling 0.3% to close at 10,960.62.

Key decliners in Wellington included Eroad, down 5.97%, and Ryman Healthcare, which was 3.45% weaker by the end of trading.

In the currency markets, the dollar was last down 0.17% on the yen, trading at JPY 149.45.

The greenback also retreated from its downunder counterparts, falling 0.55% against the Aussie to AUD 1.5695 and decreasing 0.27% against the Kiwi to change hands at NZD 1.7060.

The oil market exhibited stability, with Brent crude and West Texas Intermediate futures last up 0.39% to $90.18 per barrel on ICE and $85.82 per barrel on NYMEX, respectively.

Japan, Australia and South Korea in economic focus

In economic news, Japan saw business activity contracting for the first time since December last year, according to au Jibun Bank’s flash estimates.

The country’s composite purchasing managers index (PMI) dipped to 49.9 from September’s 52.1, with the main contributor being a sharper fall in manufacturing activity as the manufacturing PMI dropped to 47.6, compared to September’s 48.7.

Although services activity continued to expand, it did so at the slowest pace this year, with the services PMI standing at 51.1, down from September’s 53.8.

“The Bank of Japan is likely to view the sluggish headline manufacturing index as confirming its view that Japan is far from a self-sustaining recovery,” said Duncan Wrigley at Pantheon Macroeconomics.

“The fall in the employment index raises doubts over the strength of unions’ bargaining positions in the upcoming spring shunt wage negotiations, despite certain unions demanding a 5% increase.

“We expect the BoJ to hold fast on its negative policy rate in the fourth quarter, while making a tactical tweak to the yield curve control policy, but only if the market doesn’t expect it.”

In Australia, business activity hit a 21-month low in October, as Juno Bank’s flash estimates indicated.

The country’s composite PMI reached 47.3, a drop from the previous month’s 51.5.

Manufacturing reached a six-month low at 48.0, while services PMI stood at 47.6, marking a 10-month low.

Juno Bank attributed the decline to reduced output driven by lower new orders and a decline in business confidence, all while cost pressures remained elevated.

On the other hand, South Korea saw its producer price index (PPI) increase by 1.3% year-on-year in September, a faster rate than the 1% gain seen in August.

That marked the second consecutive month of PPI increases, following 12 months of contraction from July 2022 to June 2023.

Reporting by Josh White for Sharecast.com.