Asia report: Most markets fall as Bank of Korea holds rates

Stock markets in the Asia-Pacific region ended mostly in negative territory on Thursday, as prolonged uncertainty over the resolution of the US debt ceiling issue weighed on investor sentiment.

Hong Kong's Hang Seng Index suffered the most, hitting its lowest point so far this year, while the Bank of Korea kept its policy rates unchanged for a third straight month.

“Asian equities were mainly lower overnight as caution prevailed in the region following Wall Street's losses,” said TickMill Group market analyst Patrick Munnelly.

“The market sentiment was influenced by concerns over the US debt ceiling and the release of the Federal Open Market Committee minutes, which revealed a division among officials regarding support for further interest rate hikes.

“The credit rating agency Fitch said that it has put the US’s credit rating on watch as concerns mount regarding the US debt ceiling.”

Munnelly noted that the Nikkei 225 index managed to stay afloat, but lacked significant positive drivers or notable data release catalysts.

“The Hang Seng and Shanghai Composite also recorded modest declines - both markets were affected by ongoing tensions between the United States and China.”

Most markets in the red amid dour global sentiment

Japan's benchmark Nikkei 225 managed to swim against the tide, ending the day up 0.39% at 30,801.13, while the broader Topix index slid down 0.29% to 2,146.15.

Semiconductor company Advantest saw a notable surge on Tokyo’s benchmark, with shares up by 16.22%. Nippon Electric Glass and Dainippon Screen Manufacturing also experienced gains of 4.45% and 4.36% respectively.

Mainland China's stock markets ended in the red, with the Shanghai Composite down 0.11% at 3,201.26, and the Shenzhen Component Index dropping 0.22% to 10,896.58.

Hangzhou Electronic Soul Network plunged 9.9% in Shanghai, and China Science Publishing slipped 8.41%.

The Hang Seng Index in Hong Kong fared worst, dropping 1.93% to 18,746.92, with shipping company Orient Overseas shares falling 6.76%, electric vehicle manufacturer BYD down 5.4%, and ENN Energy falling 4.34%.

South Korea's Kospi index slipped 0.5% to 2,554.69, as video game publisher NCSoft dropped 6.28%, and Daewoo Shipbuilding fell 5.98%.

Australia's S&P/ASX 200 was also down, closing 1.05% lower at 7,138.20, as Treasury Wine Estates took a 7.84% hit, while Gold Road Resources fell by 6.43%.

New Zealand's S&P/NZX 50 narrowly dropped 0.1% to 11,959.85, with logistics software provider Eroad losing 10.94% and cargo company Mainfreight down 3.31%.

On the currency front, the yen was last 0.02% weaker against the dollar at JPY 139.5, while it slipped 0.24% on the Aussie to trade at AUD 1.5319.

The Kiwi made suffered more significant losses against the greenback, falling 0.53% to change hands at NZD 1.6448.

Oil prices meanwhile dipped slightly, with Brent crude futures last down 1.06% on ICE at $77.53 per barrel, and the NYMEX quote for West Texas Intermediate slipping 1.21% to $73.44.

Bank of Korea maintains rates again, RBNZ governor confirms pause

In economic news, the Bank of Korea maintained its key interest rate at 3.5% for the third straight time, matching what economists had pencilled in, according to Reuters polling.

The decision came after the central bank's governor Rhee Chang-yong said earlier in May that talking about rate cuts was premature, given current inflation.

“The BoK lowered its 2023 GDP growth forecast to 1.4% from 1.6% at its February meeting, on the back of its downgraded assessments of the IT sector outlook and the spillover benefit of China’s reopening,” said Duncan Wrigley at Pantheon Macroeconomics.

“The Bank also noted uncertainties about growth in major advanced economies.

“We think the BoK will stick to the 3.5% policy rate for the rest of the year, and that Governor Rhee’s hawkish stance is a kind of insurance policy against global financial market risks and to prevent capital outflows.”

In contrast to the persistent consumer inflation, however, South Korea's producer price index (PPI) saw a year-on-year increase of just 1.6% in April, compared to the 3.3% rise recorded in March.

On a monthly basis, PPI dipped by 0.1%, following a 0.1% rise in the prior month.

Meanwhile, Reserve Bank of New Zealand governor Adrian Orr said further rate hikes were unlikely in the near term.

The central bank hiked its official cash rate by 25-basis points on Wednesday, to 5.5%, but in a surprise move, it indicated an end to its current tightening cycle.

Speaking to CNBC, Orr said on Thursday that the 5.5% rate was “sufficiently restrictive” to curb inflation in New Zealand, which currently stood at 6.7%.

He was optimistic that inflation would moderate to 3% by the middle of next year, and further decrease to 2% by mid-2025.

The Reserve Bank of New Zealand’s official monetary policy target remained for inflation to remain below 2%.

Reporting by Josh White for Sharecast.com.

NIKKEI 225 +118.45 (+0.39%) 30,801.13

RISERS
Advantest Corporation +16.22% JPY 16,340.0
Nippon Electric Glass +4.45% JPY 2,673.0
Dainippon Screen Manufacturing +4.36% JPY 13,640.0
Sumco Corporation +3.83% JPY 2,035.0
Yaskawa Electric Corporation +3.47% JPY 5,970.0

FALLERS
Daiichi Sankyo -4.38% JPY 4,581.0
Kawasaki Kisen Kaisha -4.08% JPY 3,170.0
Sumitomo Osaka Cement -3.25% JPY 3,420.0
T&D Holdings -2.99% JPY 1,917.0
CyberAgent Inc -2.81% JPY 1,004.0

SHANGHAI COMPOSITE -3.49 (-0.11%) 3,201.26

RISERS
Hangzhou Cable +10.07% CNY 6.67
Hanma Technology +10.07% CNY 7.87
Dalian Thermal Power +10.02% CNY 6.37
Guangxi Guidong Electric Power +10.02% CNY 4.83
CIG ShangHai A +10% CNY 68.19

FALLERS
Hangzhou Electronic Soul Network Technology -9.9% CNY 45.31
China Science Publishing & Media -8.41% CNY 34.62
GuangDong Super Telecom -7.3% CNY 29.19
Argus Shanghai Textile Chemicals -6.95% CNY 14.19
Great Wall Motor -6.17% CNY 24.80

HANG SENG INDEX -369.01 (-1.93%) 18,746.92

RISERS
Alibaba Health Information Technology +2.14% HKD 4.77
CK Infrastructure +1.54% HKD 42.85
Xiaomi +0.96% HKD 10.50
Hengan International Group +0.14% HKD 34.85
China Resources Mixc +0.00% HKD 37.00

FALLERS
Orient Overseas International -6.76% HKD 102.00
BYD Co H -5.4% HKD 234.60
ENN Energy -4.34% HKD 99.30
Li Ning Co -4.32% HKD 45.35
Zhongsheng -4.08% HKD 29.40

KOSPI 100 -7.05 (-0.28%) 2,528.51

RISERS
SK Hynix +5.94% KRW 103,500
SK Square +2.7% KRW 45.600
SK IE Technology +2.28% KRW 89,700
Doosan Bobcat +1.82% KRW 55,800
Naver Corporation -1.48% KRW 206,000

FALLERS
NCsoft Corporation -6.28% KRW 358,000
Daewoo Shipbuilding -5.98% KRW 29,100
Hanjinkal -3.53% KRW 42,350
Cheil Worldwide -3.39% KRW 17,930
Celltrion -3.3% KRW 173,100

S&P/ASX 200 -75.60 (1.05%) 7,138.20

RISERS
NextDC +4.37% AUD 12.19
Altium +4.28% AUD 38.48
Telix Pharmaceuticals +3.91% AUD 11.95
Infratil +3.46% AUD 9.26
BSP Financial Group +3.01% AUD 5.13

FALLERS
Treasury Wine Estates -7.84% AUD 11.76
Gold Road Resources -6.43% AUD 1.745
Regis Resources -5.58% AUD 1.945
Domino’s Pizza Enterprises -5.38% AUD 45.69
De Grey Mining -4.8% AUD 1.29

S&P/NZX 50 -11.98 (-0.1%) 11,959.85

RISERS
Fonterra Shareholders Fund +4.05% NZD 3.60
Investore Property +3.55% NZD 1.46
Heartland Group +3.18% NZD 1.62
Vista Group +2.88% NZD 1.43
Fletcher Building +1.81% NZD 5.07

FALLERS
Eroad -10.94% NZD 0.57
Mainfreight -3.31% NZD 68.41
Precinct Properties NZ -2.42% NZD 1.21
Meridian Energy -2.36% NZD 5.37
Genesis Energy -2.17% NZD 2.71