ASIA-PACIFIC: Mixed economic signals from the Asia-Pacific region left markets in a state of flux on Friday, as investors digested a range of data from China and Japan, with notable developments in inflation and industrial profits.
The trading session saw a return to action in Australia and New Zealand following the Boxing Day holiday, while markets across Asia reacted to a mix of economic reports.
In a Sharecast news report, Swissquote Bank senior analyst Ipek Ozkardeskaya summed up the sentiment: “Those glued to their screens, hoping for Santa’s arrival, were left disappointed.”
Despite a mixed set of U.S. job data showing a rise in jobless claims—the highest in three years—there was no immediate boost for equity markets or dovish sentiment from the Federal Reserve.
In China, equities saw some support after the government announced a massive fiscal stimulus plan, including the sale of a record 3 trillion yuan in special treasury bonds aimed at bolstering consumption and investment.
However, economic data revealed ongoing struggles, with industrial profits down nearly 5% year-on-year and a major workforce contraction in the property sector, underscoring the bumpy road ahead for the country’s recovery.
Nikkei soars while South Korea, and Hong Kong struggle
Japan’s Nikkei 225 index surged 1.8%, closing at 40,281.16, with notable performances from companies like DeNA and Nidec Corporation, which jumped 15.58% and 4.14%, respectively. The Topix also gained 1.26%.
China’s Shanghai Composite managed a slight uptick of 0.06%, closing at 3,400.14, while the Shenzhen Component dipped 0.13%. Stocks like Fujian Dongbai Group and Anyuan Coal Industry Group saw impressive gains, rising over 10%.
In contrast, South Korea’s Kospi 100 fell 0.61%, dragged down by sharp losses in Korea Zinc and Samsung Securities. Hong Kong’s Hang Seng Index also saw a minor dip of 0.04%, with declines in Zhongsheng Group, Nongfu Spring, and JD.com contributing to the lacklustre performance.
Australia’s S&P/ASX 200 managed a modest 0.5% rise, driven by strong performances from Mesoblast and Iperionx, while New Zealand’s S&P/NZX 50 outperformed with a 1% gain, buoyed by advances from Pacific Edge and Ryman Healthcare.
Currency markets, oil prices show small moves
In the currency markets, the U.S. dollar showed a mixed performance, slipping 0.16% against the yen to JPY 157.74 but gaining 0.14% against the Aussie to AUD 1.6097. The Kiwi fell slightly by 0.1%, trading at NZD 1.7765.
Oil prices saw modest gains, with Brent crude futures up 0.76% to $73.82 per barrel, while West Texas Intermediate rose 0.8% to $70.18.
In economic news, China’s industrial profits fell at a reduced rate in November, declining 7.3% year-on-year—an improvement over October’s 10% drop. However, industrial profits were still on track for their steepest decline in over 20 years, reflecting persistent weaknesses in domestic consumption and a sluggish housing market.
On a more optimistic note, the World Bank slightly revised China’s 2024 growth forecast upward to 4.9%, offering some hope for the year ahead, though the industrial sector remains in a tough spot.
Meanwhile, Japan saw its core inflation accelerate to 2.4% in December, up from 2.2% in November, driven by sustained inflation in services.
Factory output, however, fell in November, marking the first decline in three months, pointing to weak external demand.
Japan’s labour market remained steady, with the jobless rate holding at 2.5%, but the broader economic outlook faces pressure as the government unveiled a record budget for the upcoming fiscal year. This ¥115.5 trillion budget, focused on debt servicing and social security costs, faces political hurdles as the ruling government lacks a parliamentary majority.
Looking ahead
As markets enter the final stretch of the year, the mixed economic data from China and Japan, coupled with ongoing inflation concerns, leaves investors uncertain about the direction of global recovery.
With China’s road to recovery expected to be challenging and Japan’s inflationary pressures mounting, the region remains in a state of economic flux, with markets waiting for clearer signs in the new year.