Asia report: China bounces, rest of region falls further

Most stock markets in Asia closed in the red on Tuesday, with the stark exception of bourses in mainland China, which staged a rebound after Monday’s losses.

In Japan, the Nikkei 225 was down 1.32% at 26,629.86, as the yen strengthened 0.16% on the dollar to last trade at JPY 134.20.

Robotics specialist Fanuc was down 0.68%, Uniqlo owner Fast Retailing lost 0.16%, and tech investing giant SoftBank Group slid 2.56%.

The broader Topix index was 1.19% weaker by the end of trading in Tokyo, closing at 1,878.45.

On the mainland, the Shanghai Composite added 1.02% to 3,288.91, and the technology-centric Shenzhen Component was 0.2% firmer at 12,023.79.

South Korea’s Kospi was off 0.46% at 2,492.97, while the Hang Seng Index in Hong Kong closed unchanged at 21,067.99.

The blue-chip technology stocks were in a mixed state in Seoul, with Samsung Electronics down 0.32%, while SK Hynix managed gains of 0.1%.

“The prospect of higher interest rates has done little to improve the attractiveness of stocks on a valuation basis, since the likely pressure on profit margins in particular are set to feed through to the next set of quarterly numbers due around the end of this month,” said Interactive Investor head of markets Richard Hunter.

“While a tight labour market and rising wages are friendly for the economy, this is not necessarily the case for companies who bear the brunt of additional cost pressures.”

Hunter said the “darkening mood” damaged Wall Street’s major indices overnight, where the flagship S&P 500 moved into bear market territory, now having dropped by 21% in the year to date.

“Unsurprisingly, the sour mood passed over into Asian markets, where the prospects of a delayed reboot to the Chinese economy in light of further lockdowns added to the global growth concerns.

“More positively, the possibility of some monetary easing from the Chinese authorities and that much of the bad news is being priced in has left the optimists with some small room for manoeuvre.”

Oil prices were higher as the region went to bed, with Brent crude futures last up 0.73% on ICE at $123.16 per barrel, and the NYMEX quote for West Texas Intermediate ahead 0.6% at $121.65.

In Australia, the S&P/ASX 200 tumbled 3.55% to 6,686.00, while across the Tasman Sea, New Zealand’s S&P/NZX 50 was 2.59% lower at 10,641.36.

The down under dollars were both weaker against the greenback, with the Aussie last off 0.39% at AUD 1.4496, and the Kiwi retreating 0.32% to NZD 1.6024.

Reporting by Josh White at Sharecast.com.