Asia report: Most markets fall ahead of BoJ meeting

South Korean shares notably defied the overall trend, driven by gains in defence stocks.

Last week saw most Asia-Pacific markets surge in response to the US Federal Reserve's decision to maintain interest rates, as it outlined plans for rate reductions in both 2024 and 2025.

The Bank of Japan was also in focus as it prepared to hold its final meeting of the year this week.

"Last week, a notable theme in the markets was a divergence in messaging from the Federal Reserve, Bank of England and European Central Bank," said TickMill market analyst Patrick Munnelly.

"The Fed adopted a somewhat dovish tone and did not resist market expectations for significant rate cuts in 2024.

"In contrast, both the BoE and ECB signalled their intent to maintain current interest rates for an extended period."

Despite those contrasting stances, Munnelly said futures contracts softened across the board.

"Market expectations are currently pricing in rate cuts of approximately 150 basis points in the US and the eurozone, and 115 basis points in the UK for the coming year."

Most markets in the red after Monday's session

In Japan, the Nikkei 225 declined by 0.64% to close at 32,758.98, while the Topix index dropped by 0.66%, settling at 2,316.86.

The declines on Tokyo's benchmark were led by Mitsui Engineering & Shipbuilding, down 4.54%; Dai Nippon Printing, off 3.46%; and Recruit Holdings, which was 3.42% lower.

In China, the Shanghai Composite slipped by 0.4% to end the day at 2,930.80, and the Shenzhen Component saw a more substantial decrease of 1.13%, closing at 9,279.39.

Among the notable losers in Shanghai were Cultural Investment Holdings, down 7.54%, and GuangZhou Baiyun Electric Equipment, off 5.72%.

Hong Kong's Hang Seng Index retreated by 0.97%, concluding at 16,629.23, led lower by Xinyi Solar, Sino Biopharmaceutical and China Resources Mixc Lifestyle, with falls of 5.95%, 5.76% and 3.89%, respectively.

In contrast, South Korea's Kospi index managed to eke out a modest gain of 0.13%, closing at 2,566.86, underpinned by a 23.06% jump for EcoPro Materials and a 14.12% improvement for HMM.

Australia's S&P/ASX 200 edged lower by 0.22%, ending the day at 7,426.40, with Sydney's declines led by Pexa Group, down 4.19%, and Meridian Energy with a 3.8% fall.

New Zealand's S&P/NZX 50 index recorded a slight gain of 0.13%, closing at 11,564.98 as Vista Group International jumped 10.34% and Pacific Edge added 4%.

In currency markets, the dollar was last up 0.15% on the yen, trading at JPY 142.36.

The greenback meanwhile decreased 0.5% against the Aussie to AUD 1.4852, while it dropped 0.63% on the Kiwi, changing hands at NZD 1.6004.

On the oil front, Brent crude futures were last up 0.13% on ICE at $76.65 per barrel, while the NYMEX quote for West Texas Intermediate was ahead 0.14% at $71.53.

NZ services sector expands, Singapore export growth slows

In economic news, New Zealand's services sector saw expansion during November, according to fresh survey data.

The Bank of New Zealand/BusinessNZ performance of services index (PSI) posted a reading of 51.2 for November, marking a two-point increase compared to October.

That was, however, still below the survey's long-term average of 53.5.

In PSI measurements, a reading above 50 indicates an expanding service sector, while a reading below 50 signifies a declining one.

Meanwhile, in Singapore, non-oil domestic exports (NODX) experienced a slower growth rate than anticipated in November, according to government data.

NODX recorded a year-on-year growth of 1% for the month, with declines observed in the electronic products category.

The growth figure significantly lagged behind expectations for a 2.3% rise, according to Reuters polling.

Additionally, NODX to key markets such as Taiwan, the European Union and Indonesia declined in November, while exports to other significant markets including the United States, China, Thailand and Hong Kong saw positive growth.

Reporting by Josh White for Sharecast.com.