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Asia report: Markets weaker as China’s ‘Golden Week’ begins

Markets in Asia were on the back foot on the first trading day of the fourth quarter, with Japan’s main board leading the journey south despite positive sentiment among the country’s manufacturers.
In Japan, the Nikkei 225 was down 2.31% at 28,771.07, as the yen strengthened 0.16% on the dollar to last trade at JPY 111.11.

It was a red session for the benchmark’s big names, with automation specialist Fanuc down 2.16%, fashion firm Fast Retailing dropping 4.19%, and technology conglomerate SoftBank Group off 0.8%.

The broader Topix index was 2.16% weaker by the end of trading in Tokyo, settling at 1,986.31.

Sentiment among major manufacturing firms improved in the quarter through September, according to the latest edition of the Bank of Japan’s Tankan survey, with the large manufacturers’ index rising to +18, from +14 in the prior three months.

On the mainland, markets were closed for the first day of the Golden Week holiday, which runs in China until 7 October, while traders in Hong Kong also enjoyed Friday off.

South Korea’s Kospi was 1.62% lower at 3,019.18, with the blue-chip technology stocks on the back foot, as Samsung Electronics down 1.21% and SK Hynix fell 2.91%.

Oil prices were lower as the region entered the weekend, with Brent crude last down 0.42% at $77.98 per barrel, and West Texas Intermediate behind 0.59% at $74.59.

“Despite the US debt ceiling relief, US futures are in the red as Asian equity markets kicked off the new month on quite a negative note,” said Swissquote senior analyst Ipek Ozkardeskaya.

“We saw Japan’s Nikkei index plunge more than 2.5% overnight, as Australia’s ASX 200 slid close to 2% on rising inflation fears, which would keep the central banks’ hands tied with a slower economic recovery due to the skyrocketing energy and commodity prices.

“In summary, the high inflation is about to become a worse headache than the pandemic itself, as at least for the pandemic, central banks had tools to use.”

Ozkardeskaya said that with such high inflation, central bankers had “nothing” to do.

In Australia, the S&P/ASX 200 was 2% weaker at 7,185.50, while across the Tasman Sea, New Zealand’s S&P/NZX 50 was the region’s odd one out, eking out gains of 0.03% to 13,279.15.

The down under dollars were both stronger on the greenback, with the Aussie last ahead 0.14% at AUD 1.3818, and the Kiwi advancing 0.08% to NZD 1.4483.

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