Asia report: Markets mixed after Fed's overnight rate hike

Investors in the Asia-Pacific region reacted in a mixed state to the latest rate hike from the US Federal Reserve on Thursday.

The federal funds rate target was raised to its highest level since 2007, at a range of 5% to 5.25%.

However, the US central bank hinted that a pause in its tightening cycle could be on the cards.

“As widely expected, the US Federal Reserve raised interest rates by 25-basis points at its meeting last night,” said TickMill market analyst Patrick Munnelly.

“In his press conference, Fed chief [Jerome] Powell was reticent about the notion of any rate cuts into the back end of the year; Powell’s rhetoric during the press conference certainly hinted towards a pause in rate rises with the standard caveat of ‘data dependency’.

“Powell went to great lengths to assuage concerns regarding the regional banking sector in the US, however, post the press conference markets took a dive on news that PacWest Bancorp is set to consider strategic options and/or an asset sale.”

That, Munnelly noted, led to all US benchmarks ending the day in the red, with losses just shy of 1%.

“Asian equity markets are trading with a mixed tone.

“The Nikkei remains closed and as participants returned from Golden Week holidays offshore and onshore Chinese indices managed to carve out gains even in the light of disappointing PMI data and further liquidity reduction via the People’s Bank of China.”

Markets in Japan indeed remained closed, this time for the Greenery Day public holiday.

Stocks in a mixed state after Fed’s 25-basis point hike

In China, the Shanghai Composite gained 0.82% to close at 3,350.46, while the Shenzhen Component lost 0.57% to close at 11,273.87, as traders returned from the extended Labour Day holiday.

Some of the best performers in Shanghai included Arcplus Group, China Publishing Media, and China South Media, all of which saw gains of over 10%.

Hong Kong's Hang Seng Index gained 1.27% to close at 19,948.73.

Ping An Insurance, Citic Pacific, and China Life Insurance were among the top performers, all seeing gains of over 5%.

The Kospi in South Korea closed almost flat, losing just 0.02% to close at 2,500.94. Samsung Electronics, Hyundai Heavy Industries, and KakaoBank were among the biggest losers, with declines of over 2%.

In Australia, the S&P/ASX 200 lost 0.06% to close at 7,193.10, with the worst-performing stocks included Super Retail Group, National Australia Bank, and Mineral Resources, which all saw declines of over 4%.

New Zealand's S&P/NZX 50 gained 0.51% to close at 11,968.55, with the best-performing stocks included Fonterra Shareholders Fund, Scales, and Vista, which all saw gains of over 2%.

In the currency markets, the yen was last 0.12% stronger on the dollar to trade at JPY 134.55, while the Aussie advanced 0.12% to AUD 1.4973.

The Kiwi was ahead 0.35% on the greenback as well, to change hands at NZD 1.5997.

On the energy front, Brent crude futures were last up 0.9% on ICE at $72.98 per barrel, while the NYMEX quote for West Texas Intermediate gained 0.6% to $69.01.

China’s manufacturing sector slips into contraction territory

In economic news, China's manufacturing sector saw a decline in activity in April, slipping into contraction territory for the first time in three months, according to the Caixin manufacturing purchasing managers' index (PMI).

The index came in at 49.5, which was below estimates, and down from March's level of 50.0, amid a reduction in new orders.

“We think China’s multi-speed recovery will continue in the second quarter, but initial indications are that overall economic growth momentum is likely to slow quarter-on-quarter from the first quarter - even though the year-on-year growth numbers will be flattered by base effects from the second quarter 2022 lockdown,” said Duncan Wrigley at Pantheon Macroeconomics.

“Top 100 developer housing sales slowed more m/m in April, after the strong March figures on the back of the release of pent-up demand.”

Meanwhile, Australia's trade surplus increased to AUD 15.27bn in March, up from February's AUD 14.15bn, according to official data.

The figure exceeded market expectations for a decline to AUD 12.65bn, with exports up 3.8% to AUD 59.3bn, driven by metal ores and minerals.

Imports also expanded, by 2.5% to AUD 44.02bn, mainly due to non-industrial transport equipment.

Finally, Hong Kong’s monetary authority raised its base interest rate to 5.5% in response to the Fed’s overnight hike.

The city’s base rate is determined by a formula involving the average of the five-day moving averages of the overnight and one-month Hong Kong Interbank Offered Rates (HIBOR), or 50-basis points above the lower end of the US federal funds rate, whichever is higher.

As the average of the HIBORs was 3.28%, the Hong Kong Monetary Authority set the base rate at 5.5%.

The Hong Kong dollar has been pegged to the greenback since 1983, trading between HKD 7.75 and HKD 7.85 against the dollar.

Reporting by Josh White for Sharecast.com.

SHANGHAI COMPOSITE +27.18 (+0.82%) 3,350.46

RISERS
Arcplus Group +10.05% CNY 10.73
China Publishing Media +10.04% CNY 10.96
China South Media +10.03% CNY 15.25
China TV Media +10.03% CNYT 13.06
Duzhe Publishing & Media +10.03% CNY 8.67

FALLERS
Eurocrane China -8.27% CNY 13.31
Changyuan Group -8% CNY 5.29
Cangzhou Dahua -7.63% CNY 15.73
Huangshan Tourism A -7.34% CNY 13.25
Anji Microelectronics Tech -7.32% CNY 249.96

HANG SENG INDEX +249.57 (+1.27%) 19,948.73

RISERS
Ping An Insurance +7.73% HKD 59.25
Citic Pacific +5.65% HKD 10.28
China Life Insurance +5.19% HKD 15.40
Industrial and Commercial Bank of China +5.05% HKD 4.370
China Merchants Bank +4.79% HKD 39.40

FALLERS
China Resources Beer Holdings -4.81% HKD 57.35
Budweiser -4.29% HKD 22.30
Haidilao International -2.17% HKD 18.92
Galaxy Entertainment Group -1.71% HKD 54.70
China Resources Mixc -1.48% HKD 40.05

KOSPI -0.46 (-0.02%) 2,500.94

RISERS
SK Bioscience +16.39% KRW 83,100
SK Biopharma +6.73% KRW 72,900
Hanmi Science +6.3% KRW 43,050
SD Biosensor +4.81% KRW 21,800
Hanmi Pharm Co +4.11% KRW 329,500

FALLERS
Samsung Electronics -3.91% KRW 237,700
Hyundai Heavy Industries -2.36% KRW 57,900
KakaoBank -2.28% KRW 23,550
Hotel Shilla -1.98% KRW 84,100
Kakao -1.89% KRW 57,200

S&P/ASX 200 -4.30 (-0.06%) 7,193.10

RISERS
Evolution Mining +7.2% AUD 3.87
Kelsian Group +4.44% AUD 6.35
Atlas Arteria +3.73% AUD 6.67
PSC Insurance Group +3.55% AUD 4.67
Breville Group +3.54% AUD 21.36

FALLERS
Super Retail Group -7.14% AUD 12.49
National Australia Bank -6.41% AUD 26.72
Mineral Resources -4.59% AUD 68.63
Westpac Banking Corporation -4.11% AUD 21.25
Mercury NZ -3.55% AUD 5.70

S&P/NZX 50 +60.56 (+0.51%) 11,968.55

RISERS
Fonterra Shareholders Fund +5.28% NZD 3.79
Scales +4.81% NZD 3.27
Vista +2.4% NZD 1.28
Ryman Healthcare +2.09% NZD 5.37
Arvida +1.98% NZD 1.030

FALLERS
Synlait Milk -3.9% NZD 1.48
Westpac Banking Corporation -2.97% NZD 22.90
Restaurant Brands NZ -2.78% NZD 7.34
NZX -1.74% NZD 1.130
SkyCity Entertainment -1.74% NZD 2.26