Asia report: Stocks surge in China, RBA holds interest rates

The movements came after Chinese authorities announced measures to stabilise equity markets following recent sell-offs.

According to CNBC, a statement from the China Securities Regulatory Commission said it would “guide institutional investors … to enter the market with greater efforts”.

Patrick Munnelly, market analyst at TickMill, said Asian stocks showed a mixed performance as Chinese market stabilisation efforts countered early challenges from Wall Street, where yields reached year-to-date highs following strong ISM services data and recent hawkish Federal Reserve comments.

“The Reserve Bank of Australia kept rates unchanged as expected, and reiterated its hawkish stance.

“The Nikkei 225 was subdued by disappointing household spending and soft wage data, but the downside was cushioned by a series of earnings releases.

“The Bank of Japan (BoJ) is planning a policy shift by April, with a focus on wage outlook.”

Munnelly said it was preparing to end negative interest rate policy (NIRP) and make changes to other policy framework areas, but was expected to proceed cautiously, according to sources cited by Reuters.

“The Hang Seng and Shanghai Composite outperformed, with sentiment boosted by China's recent market stabilisation efforts, including reports that China's sovereign fund will further increase ETF holdings, and the CSRC encouraging listed firms to buy back more shares to inject more capital into the A-share market.”

China and Hong Kong markets lead gains on mixed day

In Japan, the Nikkei 225 index declined by 0.53% to reach 36,160.66, while the Topix index also saw a decrease of 0.68% to stand at 2,539.25.

Leading the losses on Tokyo’s benchmark was Omron, which dropped by 15.27%, followed by Pacific Metals with a decline of 10.07%, and Yamato Holdings down by 7.28%.

In contrast, China saw a substantial uptick, with the Shanghai Composite rising 3.23% to reach 2,789.49, while the Shenzhen Component surged 6.22% to stand at 8,460.38.

Notable performers in Shanghai included Hunan Fangsheng Pharmaceutical, up by 10.05%, and Caihong Display Devices, which gained 10.02%.

Hong Kong's Hang Seng Index also saw a significant rise, increasing by 4.04% to reach 16,136.87.

Leading the gains were Longfor Properties, up by 10.07%, Country Garden Services, with a rise of 10.04%, and Hansoh Pharmaceutical Group, which climbed by 9.59%.

South Korea, on the other hand, experienced a decline in its Kospi index, down by 0.58% to 2,576.20.

Notable decliners in Seoul included Kia, which dropped by 5.66%, and E-Mart, down by 5.24%.

In Australia, the S&P/ASX 200 index saw a modest increase of 0.58%, reaching 7,581.60, led higher by Contact Energy, up 3.91%, and Summerset Group, which saw a gain of 3.7%.

New Zealand markets were closed for the Waitangi Day national holiday.

In currency markets, the dollar was last 0.02% weaker against the yen, trading at JPY 148.65.

The greenback also declined 0.22% on the Aussie to AUD 1.5391, while it decreased 0.01% against the Kiwi, changing hands at NZD 1.6514.

On the oil front, Brent crude futures were last down 0.1% on ICE at $77.91 per barrel, while the NYMEX quote for West Texas Intermediate dropped 0.21% to $72.63.

RBA stands pat on interest rates, as widely anticipated

In economic news, the Reserve Bank of Australia maintained interest rates for the second consecutive meeting, as was widely expected.

During its first board meeting of 2024, the RBA announced on Tuesday that it would keep the cash rate steady at 4.35% - a decision that had been anticipated by all 29 economists surveyed by Reuters.

In a statement, the central bank acknowledged that while recent data showed signs of easing inflation, it still remained at elevated levels.

The RBA emphasised that it would take some time for inflation to consistently fall within its target range and suggested that the path of interest rates would be data-dependent.

Governor Michele Bullock reiterated the bank's commitment to addressing inflation, stating that despite the anticipation of a rate cut among mortgage holders, high inflation in various aspects of daily life remained a significant concern.

Meanwhile, Australia's retail sales experienced modest growth in the fourth quarter of 2023, according to government data.

Retail sales volumes in the country increased by 0.3%, surpassing the 0.1% rise recorded in the previous quarter and exceeding expectations from a Reuters poll.

Ben Dorber, head of retail statistics at the Australian Bureau of Statistics, attributed the rise to lower price growth in retail goods and noted that consumers took advantage of discounts, especially for discretionary items like furniture and electronics.

Dorber also pointed out that when adjusting for population and price growth, sales volumes per person had declined since June 2022 but remained above pre-pandemic levels.

In Japan, household spending for December dipped more than anticipated, falling by 2.5% year on year, contrary to the 2.1% decrease forecasted by economists in Reuters polling.

Although it marked an improvement from the 2.9% drop witnessed in November, the average monthly expenditure per household stood at JPY 329,518.

Furthermore, the average monthly income per household experienced a decline of 4.4% in nominal terms and a 7.2% decrease in real terms compared to the previous year, highlighting ongoing economic challenges.

Reporting by Josh White for Sharecast.com.