Asia report: Stocks mixed as investors await Fed decision

by | Jul 26, 2023

(Sharecast News) – Asian stocks mainly declined on Wednesday, largely due to investors’ risk-averse approach in anticipation of a projected interest rate hike by the US Federal Reserve later in the day.
Patrick Munnelly at TickMill Group said the region’s equity markets suffered from a lack of clear direction, as major central bank policy decisions approached.

“The US Federal Reserve is expected to make an announcement today, followed by the European Central Bank and the Bank of Japan later in the week,” he noted.

“In Japan, the Nikkei 225 index swung between gains and losses, affected by softer services PPI data and uncertainty ahead of the Bank of Japan meeting.

“In China, the Hang Seng and Shanghai Composite indices were weaker after a previous stimulus boost lost momentum.

“However, expectations for further support measures and increased liquidity efforts from the People’s Bank of China limited the downside.”

Markets mostly lower in anticipation of US Fed rate hike

The Japanese market was among those seeing a slight decline, with the Nikkei 225 dipping marginally by 0.04% to close at 32,668.34, while the broader Topix index slipped by 0.1% to 2,283.09.

Among the notable falls on Tokyo’s benchmark, IHI Corporation led the declines, dropping 7.02%.

Taiyo Yuden and Yokohama Rubber also registered losses, down by 2.3% and 2.22% respectively.

Chinese stocks also ended the day in negative territory – the Shanghai Composite fell 0.26% to 3,223.03 and the Shenzhen Component shed 0.47% to close at 10,968.98.

Guangxi Radio TV was the largest decliner in Shanghai, plummeting by 6.86%, while GuangDong Super Telecom fell 5.44%.

In Hong Kong, the Hang Seng Index was down by 0.36% to 19,365.14, with Country Garden Services dropping significantly by 7.68%.

Zhongsheng and China Petrol & Chemical H also contributed to the decline, falling by 5.05% and 3.46% respectively.

South Korea’s Kospi 100 suffered the most among major markets in the region, sliding by 1.09% to finish at 2,571.42.

Among individual stocks, Doosan Bobcat and Korea Zinc recorded steep falls, down by 7.93% and 7.25% respectively.

Contrary to the regional trend, Australia and New Zealand’s markets ended the day on a positive note.

The S&P/ASX 200 in Australia climbed by 0.85% to 7,402.00, driven by Beach Energy and Champion Iron, which rose by 6.89% and 5.4% respectively.

Meanwhile, New Zealand’s S&P/NZX 50 nudged higher by 0.17% to 11,954.73, led by NZX and Heartland Group, gaining 1.69% and 1.67% respectively.

In currency markets, the dollar was last down 0.4% against the yen, trading at JPY 140.33, while it was up 0.49% and 0.09% om the Aussie and the Kiwi, changing hands at AUD 1.4795 and NZD 1.6088 respectively.

Oil prices edged lower, with Brent crude futures last down 0.68% on ICE at $83.07 per barrel, while the NYMEX quote for West Texas Intermediate dropped 0.74% to $79.04.

Australian inflation decelerates, Singapore manufacturing stages recovery

In economic news, Australia’s inflation rate slowed for the second consecutive quarter, showing some signs of stabilising after a peak late last year.

The country’s consumer price index (CPI) grew 6% year-on-year in the second quarter, marking a moderation from the 7% growth seen in the first three months of the year, according to the Australian Bureau of Statistics.

That deceleration also followed a 33-year high of 7.8% in the fourth quarter of 2022.

Trimmed mean inflation – an underlying measure closely monitored by the Reserve Bank of Australia – meanwhile registered a decrease to 5.9% in the second quarter, from 6.6% in the first.

Elsewhere, Singapore’s manufacturing sector outperformed expectations in fresh data, despite a year-on-year decline in May.

The manufacturing output fell 4.9%, less than the 6.8% drop forecasted in a Reuters poll.

That was an improvement from the revised 10.5% drop seen in April, which marked the city-state’s most substantial fall in manufacturing output in approximately a decade.

Reporting by Josh White for Sharecast.com.

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