Asia report: Most markets follow Wall Street lower

China’s latest industrial profit data was in focus, while oil prices fell back from recent highs as geopolitical tension in the Middle East weighed on sentiment.

“This week is likely to be dominated by Nvidia results and a second estimate of US second-quarter GDP,” said AJ Bell investment director Russ Mould.

“Federal Reserve chair Jerome Powell’s virtual confirmation there will be a rate cut at the next meeting in September means the debate now is whether it will be a 25-basis point or 50-basis point cut.”

Most Asian markets follow Wall Street lower

In Japan, the Nikkei 225 edged up by 0.47% to close at 38,288.62, and the Topix gained 0.73% to reach 2,680.80.

The gains on Tokyo’s benchmark were supported by strong performances from companies like Jtekt Corporation, up 5.61%; and Nissui, which rose 4.54%.

China's markets, however, struggled despite reporting a year-on-year increase in industrial profits from January to July.

The Shanghai Composite dropped by 0.24% to 2,848.73, and the Shenzhen Component saw a more substantial decline of 1.11% to 8,103.76.

Major losers included Shanghai Sunglow Packaging Technology, down 10.01%; and Heilongjiang Interchina Water Treatment, which was off 9.85%.

Hong Kong's Hang Seng Index managed to gain 0.43%, closing at 17,874.67, driven by a 9.05% surge in Trip.com Group and a 5.23% gain in China Petroleum & Chemical Corporation.

South Korea’s Kospi dipped by 0.32% to 2,689.25, with losses from major firms like Hana Financial, down 4.07%, and Samsung Securities, which was 3.42% weaker.

Australia's S&P/ASX 200 also declined by 0.16% to 8,071.20, with Lovisa Holdings plummeting by 12.98% and ZIP Co falling by 7.93%.

New Zealand’s S&P/NZX 50 saw a more pronounced drop of 1.1% to 12,451.11, pressured by declines in self-listed exchange operator NZX, down 6.67%, while Tourism Holdings lost 4.81%.

In currencies, the dollar was last up 0.2% on the yen to trade at JPY 144.82, while it weakened against its antipodean counterparts.

The greenback was last down 0.17% on the Aussie at AUD 1.4742, while it retreated 0.32% from the Kiwi, changing hands at NZD 1.6068.

Oil prices also fell, with Brent crude futures last down 0.84% on ICE at $1.6068 per barrel, and the NYMEX quote for West Texas Intermediate slipping 1.01% to $76.64.

China’s industrial profits grow at fastest pace in five months

In economic news, China’s industrial sector reported its fastest profit growth in five months in July, but concerns over weak domestic demand cast doubt on the sustainability of the trend.

The National Bureau of Statistics announced on Tuesday that profits at large industrial companies grew by 4.1% year-on-year in July, up from 3.6% in June.

For the first seven months of 2024, profits increased by 3.6%, reaching CNY 4.099trn (£434.29bn).

This growth slightly outpaced the 3.5% forecast by Bloomberg, reflecting a steady recovery in industrial profits despite challenges such as slowing export growth and emerging trade disputes.

However, the uptick was partly attributed to a low comparison base from early 2023, raising questions about whether these gains can be maintained in the face of ongoing economic headwinds.

Meanwhile, in Japan, the producer price index (PPI) for services came in slightly below expectations, rising by 2.8% compared to the anticipated 2.9%.

However, the prior month’s figure was revised upward by 0.1%, providing a mixed signal on the pricing pressures in the Japanese economy.

Reporting by Josh White for Sharecast.com.