Asia report: Markets mixed as business sentiment improves in Japan

Markets in Asia closed in a mixed state on Monday, as investors in the region got their first chance to react to the US approval of the Pfizer-BioNTech vaccine for Covid-19.

In Japan, the Nikkei 225 was up 0.3% at 26,732.44, as the yen strengthened 0.31% against the dollar to last trade at JPY 103.72.

Automation specialist Fanuc was down 0.35%, while among the benchmark’s other major components, fashion firm Fast Retailing was up 0.26% and technology conglomerate SoftBank Group advanced 2.21%.

The broader Topix index ended the session 0.48% higher in Tokyo, closing at 1,790.52.

Business sentiment was on the up in the country, according to the latest Tankan survey from the Bank of Japan, with the headline index, which reflects sentiment among large manufacturers, rising to -10 for December compared to -27 in September.

That was ahead of market expectations for a reading of -15 in a survey by Reuters.

The large non-manufacturing index, meanwhile, increased to -5 in the fourth quarter, from -12 in the third, also above the consensus of -7.

“From our standpoint, this was the bigger surprise, in view of the unrelenting acceleration of Japan’s third virus wave,” said Pantheon Macroeconomics senior Asia economist Miguel Chanco.

“The sectors most exposed to a further tightening of social-distancing measures - retailing and hospitality - saw a continued improvement in the current quarter.”

Chanco said the recovery was “fragile”, as the risk of another debilitating nationwide state of emergency remained high.

“Overall, the year-over-year change in our weighted average of the manufacturing and non-manufacturing indices support our forecast for only a soft 0.4% quarter-on-quarter rise in GDP for the fourth quarter, following the third quarter’s 5.3% bounce.

“This implies a modest moderation in the year-on-year contraction, to around -3.5% from -5.7%.”

On the mainland, the Shanghai Composite was ahead 0.66% at 3,369.12, and the smaller, technology-heavy Shenzhen Composite gained 1.07% to 2,247.69.

South Korea’s Kospi was down 0.28% at 2,762.20, while the Hang Seng Index in Hong Kong lost 0.44% to 26,389.52.

The blue-chip technology stocks were in the green in Seoul, with Samsung Electronics up 0.54% and SK Hynix 1.3% firmer.

Over the weekend, director of the US Centers for Disease Control Robert Redfield gave the authority’s approval for Pfizer’s coronavirus jab, meaning vaccines can now be given to people 16 and older.

That followed approval from the Food and Drug Administration (FDA).

On Monday, Singapore followed suit, with prime minister Lee Hsien Loong confirming that the city-state’s Health Sciences Authority had given the vaccine the go-ahead.

Oil prices were higher by the end of the Asian day, with Brent crude last up 1.06% at $50.50 per barrel, and West Texas Intermediate ahead 1.05% at $47.06.

In Australia, the S&P/ASX 200 rose 0.26% to 6,660.20, while across the Tasman Sea, New Zealand’s S&P/NZX 50 was down 0.65% to 12,835.12.

The down under dollars were both stronger on the greenback, with the Aussie last ahead 0.15% at AUD 1.3226, and the Kiwi retreating 0.05% at NZD 1.4072.