Asia report: Most markets rise ahead of debt ceiling talks restart

Negotiations between congressional Republicans and the White House, aiming to circumvent a potential federal debt default, were set to restart on Monday, having made slow yet promising progress last week.

“Asian equities are mostly in the green as US president Joe Biden's optimistic remarks at the G7 summit in Japan suggested a potential improvement in relations with China in the near future,” said Patrick Munnelly, market analyst at TickMill.

“Speculation arose regarding the lifting of certain sanctions previously imposed.

“Nevertheless, market sentiment remained constrained due to ongoing worries about a potential US debt default.”

Munnelly noted that talks between congressional Republicans and the White House on raising the debt ceiling hit a stumbling block on Friday, with disagreements arising over the magnitude of spending cuts.

“However, discussions are expected to resume today.”

Most markets in the green as investors watch US developments

In Japan, the Nikkei 225 index advanced 0.9% to close at 31,086.82 points, while the Topix index rose by 0.66% to finish the session at 2,175.90 points.

Fujikura led the gains on Tokyo’s benchmark, rising by 7.58%, followed by Tokio Marine and Kawasaki Heavy Industries, which were up 5.72% and 3.71% respectively.

Chinese markets also ended the day with gains, as the Shanghai Composite edged up 0.39% to 3,296.47 points, and the Shenzhen Component rose by 0.32% to 11,127.04 points.

Cofco Tunhe Sugar and Fujian Raynen Tech were among Shanghai’s top performers, both surging by over 10%.

In Hong Kong, the Hang Seng Index rallied by 1.17% to 19,678.17 points, as WuXi Biologics led the pack with a 5.69% gain, followed closely by Hansoh Pharmaceuticals, up by 5.46%.

Alibaba Health Information Technology also finished in the green, increasing by 4.7%.

South Korea's Kospi index made gains as well, closing 0.76% higher at 2,557.08 points, with Daewoo Shipbuilding and HD Korea Shipbuilding among the top performers, climbing by 9.06% and 5.97% respectively.

However, the trend did not hold in the antipodes, with Australia’s S&P/ASX 200 slipping 0.22% to 7,263.30 points.

Contact Energy led the losses, dropping by 7.28%, while Core Lithium slipped by 4%.

In New Zealand, the S&P/NZX 50 also dipped, falling by 0.88% to 11,993.00 points, with Fletcher Building and Infratil the biggest laggards, declining by 3.58% and 2.98% respectively.

On the currency front, the yen was last 0.1% stronger on the dollar to trade at JPY 137.84, while the Aussie was 0.08% weaker at AUD 1.5048.

The Kiwi also retreated against the greenback, slipping 0.01% to change hands at NZD 1.5918.

Oil prices were meanwhile mixed, with Brent crude futures last 0.03% lower on ICE at $75.56 per barrel, while the NYMEX quote for West Texas Intermediate held steady at $71.55.

PBoC keeps rates on hold, Korean trade data defies expectations

In economic news, the People's Bank of China (PBoC) maintained its benchmark lending rates for the ninth month in a row.

Economists had expected the decision, which held the one-year loan prime rate steady at 3.65%, and the five -year loan prime rate at 4.30%.

“The markets expect further monetary policy easing, judging by the 10-year Chinese government bond yield hovering just above 2.7% and recent trading in the offshore yuan market,” noted Duncan Wrigley at Pantheon Macroeconomics.

“But the People’s Bank of China’s first quarter Monetary Policy Implementation Report signalled continuity in existing support measures rather than broad rate cuts for now.

“The report noted improvements in the ‘triple pressures’ of demand contraction, supply shock and weakening expectations, while recognising that demand is still insufficient.”

Elsewhere, Japan saw a significant contraction in its core machinery orders in March.

The 3.9% drop month-on-month flew in the face of economists' predictions for a 0.7% rise.

Year-on-year comparisons also revealed a 3.5% decrease in orders, defying the 1.4% rise analysts had pencilled in.

The downturn was also a deviation from February's data, when machinery orders enjoyed a solid 9.8% surge on the year.

Over in South Korea, the country's exports experienced a sharp 16.1% decline in the first 20 days of May, compared to the same period last year, according to customs data.

At the same time, imports dipped 15.3% year-on-year.

The total export value amounted to $32.4bn, while imports stood at $36.7bn, resulting in a trade deficit of $4.3bn for the early part of May.

“Korean exports are likely to remain lacklustre in the second half, given the rising chances of a US recession, a plunge in German factory orders and China’s reopening recovery which is being led by services rather than goods demand,” Duncan Wrigley at Pantheon explained.

“The Bank of Korea probably will keep its policy rate unchanged on Thursday, and is likely to strike a more balanced tone about growth and inflation risks this time, in contrast to its hawkish tone towards inflation at the last meeting.

“Governor Rhee on 2 May said it is ‘a little bit premature’ to talk about rate cuts, with core inflation still well above the target, and signalled a wait-and-see approach for now.”

On the geopolitical front, China's Cyberspace Administration imposed restrictions on "critical information infrastructure" operators, prohibiting them from procuring products from US-based memory giant Micron Technology.

The decision came after the administration conducted a network security review, which it said found Micron's products to contain “serious potential network security issues”.

It said the ban was vital to eliminate a threat to China's information infrastructure supply chain, and to safeguard its national security.

Neither the specific products affected by the ban, nor the exact security concerns around Micron, were disclosed by the administration.

Reporting by Josh White for Sharecast.com.

NIKKEI 225 +278.47 (+0.9%) 31,086.82

RISERS
Fujikura +7.58% JPY 1,036.0
Tokio Marine Holdings +5.72% JPY 3,024.0
Kawasaki Heavy Industries +3.71% JPY 2,932.0
Keisei Electric Railway +3.63% JPY 5,430.0
Oki Electric Industry +3.39% JPY 823.0

FALLERS
Toyo Seikan Group Holdings -2.92% JPY 2,125.0
Daiichi Sankyo -1.93% JPY 4,875.0
Sky Perfect JSAT Holdings -1.45% JPY 544.0
Okuma Corporation -1.38% JPY 6,410.0
Toho Zinc -1.36% JPY 1,741.0

SHANGHAI COMPOSITE +12.93 (+0.39%) 3,296.47

RISERS
Cofco Tunhe Sugar +10.06% CNY 9.08
Fujian Raynen Tech +10% CNY 14.74}
Guangxi Guidong Electric Power +10% CNY 3.63
Beijing Changjiu Logistics Corporation +9.98% CNY 10.14
Bethel Automotive A +8.15% CNY 69.00

FALLERS
Autobio Diagnostics -7.34% CNY 55.90
Chongqing Dima Industry -6.02% CNY 1.56
Guangzhou Yuetai -5.41% CNY 0.70
360 Security Technology -5% CNY 13.67
Foxconn Industrial Internet -4.64% CNY 15.41

HANG SENG INDEX +227.60 (+1.17%) 19,678.17

RISERS
WuXi Biologics +5.69% HKD 44.55
Hansoh Pharmaceuticals +5.46% HKD 13.14
Alibaba Health Information Technology +4.7% HKD 4.90
Li Ning Co +3.64% HKD 49.85
BYD Co H +3.36% HKD 252.20

FALLERS
CK Infrastructure -4.11% HKD 42.45
Xinyi Glass -1.94% HKD 12.12
Power Assets -1.61% HKD 43.45
China Resources Mixc -0.81% HKD 36.70
China Hongqiao -0.77% HKD 6.46

KOSPI 100 +20.73 (+0.82%) 2,540.24

RISERS
Daewoo Shipbuilding +9.06% KRW 28,300
HD Korea Shipbuilding & Offshore Engineering +5.97% KRW 95,900
Hyundai Heavy Industries +4.87% KRW 118,400
Hyundai Glovis +4.72% KRW 173,200
SK IE Technology +4.25% KRW 85,900

FALLERS
Hybe -6.23% KRW 263,500
Meritz Financial -2.93% KRW 44,750
SD Biosensor -1.99% KRW 17,270
S-1 Corporation -1.59% KRW 55,600
LG Display -1.59% KRW 16,090

S&P/ASX 200 -16.20 (-0.22%) 7,263.30

RISERS
Kelsian Group +3.35% AUD 6.79
Nanosonics +2.86% AUD 5.40
Neuren Pharmaceuticals +2.65% AUD 14.70
Wisetech Global +2.54% AUD 73.01
Sims +2.33% AUD 14.91

FALLERS
Contact Energy -7.28% AUD 7.13
Core Lithium -4% AUD 1.08
Lovisa Holdings -3.9% AUD 24.18
Super Retail Group -3.86% AUD 12.21
Allkem -3.85% AUD 15.00

S&P/NZX 50 -106.74 (-0.88%) 11,993.00

RISERS
Restaurant Brands NZ +4.01% NZD 7.00
Synlait Milk +3.29% NZD 1.57
Sanford +1.95% NZD 4.18
Stride Property +1.55% NZD 1.31
Genesis Energy +1.48% NZD 2.74

FALLERS
Fletcher Building -3.58% NZD 4.85
Infratil -2.98% NZD 9.46
Summerset Group -2.98% NZD 8.80
Investore Property -2.76% NZD 1.41
Ryman Healthcare -2.15% NZD 5.93