Asia report: Markets mixed on US debt ceiling deal

Asia-Pacific equity markets delivered mixed results at the close of Tuesday's trading, as investors keenly followed the unfolding negotiations in the United States over the debt ceiling.

US Republican House Speaker Kevin McCarthy and President Joe Biden reached a tentative agreement over the weekend, setting the stage for a Congressional vote as early as Wednesday.

“Despite positive developments in the US debt ceiling negotiations, the risk sentiment remained cautious during the Asian trading session,” said TickMill market analyst Patrick Munnelly.

“President Biden and Speaker McCarthy managed to strike a deal that involved reducing spending in exchange for temporarily suspending the debt ceiling until after the next presidential election.

“This agreement is set to be voted on by Congress starting from Wednesday, and if approved, it will prevent a US debt default.”

However, Munnelly noted that despite the potential resolution to the issue, investors were still maintaining a cautious outlook, causing a decline in short-term Treasury bills and most Treasury yields overnight.

“Investors tended to gravitate towards safer investments, seeking stability amidst the prevailing market uncertainties.”

Most markets manage some gains, Australasian bourses fall

In Japan, the Nikkei 225 edged up 0.3% to close at 31,328.16 points, while the broader Topix index fell slightly, down by 0.07% to 2,159.22.

Major movers on Tokyo’s benchmark included Kobe Steel, which saw shares surge by 5.72%, followed by Citizen Holdings and Fujikura, which rose by 4.11% and 3.94%, respectively.

Mainland China markets ended in positive territory with the Shanghai Composite nudging up 0.09% to 3,224.21, while the Shenzhen Component rose more sharply, up by 0.44% to 10,869.55.

The standout performers in Shanghai were Huaihe Energy and IReader Tech, both rocketing up by 10.08% and 10.02% respectively.

Hong Kong's Hang Seng Index posted modest gains, up by 0.24% to 18,595.78, with market heavyweights Baidu and Sunny Optical Tech both climbing 3.34%, while Country Garden Services rose by 2.97%.

South Korea's Kospi led the region with the most significant gains, jumping 1.04% to 2,585.52.

Notable market performers were Hanjinkal and LG Electronics, with share prices soaring by 10.9% and 10.83%, respectively.

In contrast, Australian and New Zealand markets struggled, with the S&P/ASX 200 sliding 0.11% to 7,209.30, pulled down by Paladin Energy, which plummeted by 19.55%, and Sayona Mining, down by 11.91%.

The S&P/NZX 50 in New Zealand similarly closed lower by 0.48% at 11,878.71, with Vista Group and Fletcher Building shares down by 4.23% and 2.51%, respectively.

On the currency market, the yen was last 0.38% stronger on the dollar to trade at JPY 139.91, while the Aussie advanced 0.02% to AUD 1.5290.

Conversely, the Kiwi was weaker against the greenback, retreating 0.1% to change hands at NZD 1.6530.

In oil markets, Brent crude futures were last down 1.62% on ICE at $75.82 per barrel, and the NYMEX quote for West Texas Intermediate was off 1.31% at $71.72.

Jobless rate falls in Japan, Hong Kong trade slides further

In economic news, Japan's unemployment rate dipped to 2.6% in April, slipping from the 2.8% rate in March, and undercutting the 2.7% economists polled by Reuters had pencilled in.

The jobs-to-applicants ratio remained consistent at 1.32, matching the March figure, according to official statistics.

Elsewhere, Hong Kong's exports tumbled 13% year-on-year in April, continuing the 1.5% contraction recorded in the prior month.

The downturn perpetuated a declining trend apparent since January 2021, when the special administrative region last saw year-on-year export growth, of 44% at the time.

February this year saw a serious plunge in exports of more than 36%.

The data showed imports also took a steep dive in April, decreasing 11.9% on the year, also continuing the trend from March when imports fell by 0.6%

Finally on data, Australian building approvals tumbled 8.1% month-on-month in April to land at 11,594 - the lowest figure since April 2012.

Private sector houses saw a decline of 3.8% to 7,939, and private sector dwellings excluding houses plummeted 16.5% to 3,469.

However, the total value of building rose 4.7%.

Reporting by Josh White for Sharecast.com.