Asia report: Markets mixed as oil prices fall back

Markets closed in a mixed state in Asia on Monday, with Chinese tech plays once again in focus, as oil prices fell back.

In Japan, the Nikkei 225 was down 0.73% at 27,943.89, as the yen weakened 1.98% against the dollar to last trade at JPY 124.47.

Technology conglomerate SoftBank Group was flat by the end of the day, while among the benchmark’s other major components, automation specialist Fanuc was down 1.11% and fashion firm Fast Retailing was off 1.79%.

The broader Topix index was off 0.41% by the end of trading in Tokyo, closing at 1,973.37.

On the mainland, the Shanghai Composite eked out gains of 0.07% to 3,214.50, and the smaller, technology-heavy Shenzhen Composite was off 0.82% at 2,096.50.

Fresh official data out of Beijing over the weekend showed industrial earnings rising in China in the first two months of the year, with industrial profits up 5% year-on-year for January and February combined.

That news was somewhat overshadowed by the latest wave of Covid-19 in the People’s Republic, however, as the country grappled with its worst outbreak since the virus first emerged in the country in early 2020.

The 26 million residents of its largest city, Shanghai, entered a two-part lockdown on Monday, with half of the city under stay-at-home ordered with mass testing for the coronavirus underway.

Both the Shanghai Stock Exchange and the Shanghai International Port Group said they were maintaining operations, with the bourse moving to online paperwork and relaxing certain deadlines.

South Korea’s Kospi slipped 0.02%, or just 0.42 points, to end the day at 2,729.56, while the Hang Seng Index in Hong Kong was 1.31% firmer at 21,684.97.

Chinese technology shares were again at the top of the agenda in the special administrative region, with Meituan rocketing 11.56%.

The positive moves were on the back of the company reporting better-than-expected revenue for the final quarter of 2021, at CNY 49.52bn (£5.92bn), ahead of the CNY 49.2bn pencilled in by analysts.

Elsewhere, Tencent Holdings rose 2.81% and the wider Hang Seng Tech Index advanced 2.62%, although JD.com lost 1.75% and SenseTime was 1.9% weaker.

Seoul’s blue-chip technology stocks struggled to make headway, meanwhile, with Samsung Electronics down 0.14% and SK Hynix closing flat.

“In the US, inflation numbers and the monthly non-farm payroll data are likely to underline the Federal Reserve’s current focus on the former, with the latter now implying an economy which is nearing full employment,” said Interactive Investor head of markets Richard Hunter of the global picture on Monday morning.

“Indeed, having digested the initial interest rate rise, some are now calling for a more aggressive approach from the Fed in tackling soaring inflation.

“The possibility is now growing for 0.5% hikes at both the May and June meetings.”

Hunter noted that, from the Fed’s perspective, it was a difficult balancing act, with the economy on an apparent recovery trajectory, while the US Treasury yield curve inched closer to inversion.

“This implies concerns that there may be an overshoot on hiking rates, which could result in an unwanted Fed-induced recession.

“Markets were quick to reflect the ongoing dichotomy, with banks rising on a rising interest rate environment at the expense of growth stocks and big tech in particular.

“The more recent recovery in shares has been steady but unconvincing, with the major indices remaining in negative territory in the year-to-date.”

Hunter noted that a “relatively resilient performance” from Asian markets, despite the announcement of the latest lockdown in China, had given a small positive nudge to the UK and European bourses early on Monday.

Oil prices were in the red throughout the session and were sliding further by the end of the Asian day, with Brent crude futures last down 3.53% on ICE at $116.39 per barrel, and West Texas Intermediate 3.86% lower on NYMEX at $109.55.

In Australia, the S&P/ASX 200 was up 0.08% at 7,412.40, while across the Tasman Sea, New Zealand’s S&P/NZX 50 slid 1.21% to 11,909.72.

The down under dollars were in a mixed state against the greenback, with the Aussie last 0.08% stronger at AUD 1.3297, while the Kiwi weakened 0.19% to NZD 1.4395.