Asia report: Markets mixed as China services sector grows

Markets in Asia closed in a mixed state on Tuesday, as Australia’s central bank sated market expectations by standing pat on its monetary policy, while data showed growth in China’s services sector.

In Japan, the Nikkei 225 was down 1.3% at 29,696.63, as the yen weakened 0.29% against the dollar to last trade at JPY 110.50.

Of the major components on the benchmark index, robotics specialist Fanuc was down 0.2%, Uniqlo owner Fast Retailing lost 1.5%, and technology giant SoftBank Group was 1.12% weaker.

The broader Topix index lost 1.47% by the end of trading in Tokyo, closing at 1,954.34.

On the mainland, the Shanghai Composite slipped 0.04% to 3,482.97, and the smaller, technology-centric Shenzhen Composite gained 0.18% to 2,266.20.

China’s services sector grew at a faster clip in March, according to the unofficial Caixin/Markit services purchasing managers’ index (PMI) for the month, which came in at 54.3.

That was above the 51.5 reading for February, and well ahead of the 50-point mark that separates expansion from contraction.

“We find no calendar distortions in March, while distortions were minimally unfavourable in February, so the vast bulk of this rise has nothing to do with the effect of the shifting timing of Lunar New Year,” said Pantheon Macroeconomics chief Asia economist Freya Beamish.

“It is a noisy series, though, and the March leap was somewhat bigger than we expected, even though consensus looked low.

“The pace of increase in new orders picked up to the fastest in three months.”

Beamish noted that fresh activity was enough to lead to the first rise in backlogs of work in five months, and a modest increase in headcount, after a small fall in February.

She added that the output price rises quickened, with survey data continuing to point to a strong rebound in consumer price index inflation, although the “hard data” would still be held back until some semblance of normality returned to the travel industry.

“Finally, confidence bounced to its highest since early 2011, probably reflecting the fact that the outbreak starting in Hebei has been put to bed.

“It’s possible that businesses are getting a little ahead of themselves, though, given the slow progress on the vaccine.”

Markets in Hong Kong were closed for the Easter public holiday, while South Korea’s Kospi eked out gains of 0.2% to 3,127.08.

The blue-chip tech plays were mixed in Seoul, with Samsung Electronics up 0.7%, while SK Hynix fell flat.

Oil prices were higher as the region went to bed, with Brent crude last up 2.3% at $63.58 per barrel, and West Texas Intermediate rising 2.4% to $60.06.

In Australia, the S&P/ASX 200 was ahead 0.84% at 6,885.90, after the Reserve Bank of Australia confirmed it was maintaining its current policy settings.

Its cash rate target was kept unchanged at 0.1%, in line with what economists polled by Reuters had expected.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 fell 0.7% to 12,400.48, led lower by two of the country’s energy generator-retailers, after a rebalancing of the S&P Global Clean Energy Index.

Meridian Energy was down 5.9% and Contact Energy was 4.1% weaker by the end of the day in Wellington.

S&P Global said it was adding 70 new stocks to the Clean Energy Index in a bid to prevent inflationary shocks, such as that which occurred in January, with the move set to seriously reduce the weighting of the New Zealand hydroelectric plays.

Both of the down under dollars were weaker against the greenback, with the Aussie last off 0.54% at AUD 1.3135, and the Kiwi retreating 0.64% to NZD 1.4251.