Asia report: Most markets fall, China service sector ticks higher

Investors in the Asia-Pacific region were mostly left disappointed at the end of trading on Thursday, with most markets in negative territory amid concerns over slowing economic growth in the United States.

India's central bank also made a surprise move, choosing to hold interest rates steady in its latest policy decision.

“Asian equities are trading with a subdued tone heading into the holiday weekend, with most money centres winding down for early closure tomorrow,” said Patrick Munnelly, market analyst at TickMill Group.

“The risk tone has softened in the past couple of sessions driven by concerns that weaker data prints out of the US whilst seemingly dovish from a rates pricing perspective, investors sense a growing fear that the data points to a slow down in growth that hints towards recession.”

However, Munnelly said that a “glimmer of optimism” came overnight from better-than-expected Caixin services data out of China, which pointed towards a significant uptick in services activity, giving the country’s re-opening narrative a “much-needed shot in the arm”.

“The standout underperformer on the overnight session was the Nikkei 225, which traded down over 1% after reports that Bank of Japan director Kazuo Momma suggested the recent retreat in global bond yields provided the Bank with a window to exit its yield curve control strategy, leaving investors increasingly uneasy about the termination of the accommodative monetary policy environment.”

Most markets weaker after Wall Street falls overnight

In Japan, the Nikkei 225 was down 1.1% at 27,507.65, while the Topix fell 0.91% to 1,965.74.

Among the big losers on Tokyo’s benchmark were Mazda Motor, down 4.96%, Tokyo Electron, off 4.53%, and Ebara Corporation, which slid 4.49%.

The Shanghai Composite in China edged down 0.01% to 3,312.22, while the Shenzhen Component also fell 0.04% to 11,854.27.

Shanghai’s worst performers included IReader Tech, down 8.21%, and Hundsun Tech, which lost 7.69%.

Hong Kong's Hang Seng Index was marginally up by 0.01% at 20,277.01, with notable gainers including SMIC, up 7.67%, Hansoh Pharmaceutical Group, ahead 5.65%, and Alibaba Health Information Technology, which rose 3.75%.

South Korea's Kospi was down 1.44% at 2,459.23, with Samsung Engineering sliding 5.22% and LG Innotek losing 4.49%.

In Australia, the S&P/ASX 200 fell 0.31% to 7,214.90, with Nickel Industries down 5.59% and Genesis Energy falling 4.18%.

Finally, New Zealand's S&P/NZX 50 was up 0.17% at 11,886.63, with Scales Corporation jumping 6.56%, and Restaurant Brands NZ growing 4.51%.

In currency markets, the yen was last 0.08% against the dollar to trade at JPY 131.42, while the Aussie was off 0.4% at AUD 1.4940, and the Kiwi retreated 0.63% against the greenback to change hands at NZD 1.5927.

Oil prices were also down slightly, with Brent crude futures last down 0.25% on ICE at $84.78 per barrel, and the NYMEX quote for West Texas Intermediate off 0.32% to $80.35.

India hits pause button on rate hikes, China service sector grows

On the economic front, India’s Reserve Bank surprised markets by keeping the repurchase rate at 6.5% - the same level as April last year.

The repo rate is the interest rate at which the RBI lends money to commercial banks and financial institutions against government securities.

The decision came against the majority of economists' forecasts, with Reuters reporting that out of the 60 economists it polled, just 13 predicted a pause in rates, while the rest anticipated a 25-basis point hike.

In China, the Caixin services purchasing managers’ index (PMI) for March showed the service sector continued to grow, with a reading of 57.8, above the 50-point mark that separates expansion from contraction.

It was the fourth consecutive month of acceleration, and the highest reading since November 2020.

Caixin noted that the rise in activity was driven by a sustained and sharper increase in new business.

“We think that policymakers will view the March PMIs as indicating that China’s recovery is gradually gaining momentum, despite weaknesses in certain sectors, like exports and smaller manufacturers,” said Pantheon Macroeconomics chief China economist Duncan Wrigley.

“Therefore, they are likely to maintain a wait-and-see approach, before considering a significant policy shift.

“They will be poised to add further growth support measures later in the year, if the domestic demand recovery flags.”

Meanwhile, Australia's trade balance in February widened to AUD 13.84bn, up from the AUD 11.69bn Canberra recorded in January.

The figure topped economists' expectations for a decline to AUD 11.1bn.

Goods and services imports fell 9% year-on-year in February, while exports edged down by 3%.

Reporting by Josh White for Sharecast.com.