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

Most stock markets in Asia closed higher on Tuesday, after the Bank of Korea met investor expectations with its decision to maintain interest rates.

It was the second consecutive month that South Korea's central bank held rates steady, as the country's inflation rate stood at 4.2%.

“Asian equities traded with an upbeat tone to start the holiday shortened trading week, with most major money centres coming back online overnight,” said TickMill market analyst Patrick Munnelly.

“The uptick in risk sentiment was supported by a late upturn on Wall Street.

“Overnight, the Nikkei 225 rescaled the 28,000 handle, with index investors taking yen weakness as a positive for stocks.

“The Hang Seng Index and Shanghai Composite were less buoyant, with Hong Kong playing catch-up, whilst the on-land index was capped as cooling inflation data was coupled with additional geopolitical risk seen in further escalation of tensions over Taiwan.”

Most markets rise as Australasia returns from Easter holiday

In Japan, the Nikkei 225 rose 1.05% to close at 27,923.37, while the Topix increased 0.78% to close at 1,991.85.

Some of the top gainers on Tokyo’s benchmark were Marubeni Corporation, Tokyo Electron, and Taiyo Yuden, which increased by 4.55%, 3.69%, and 3.68%, respectively.

In China, the Shanghai Composite dipped 0.05% to close at 3,313.57, while the Shenzhen Component edged up 0.04% to close at 11,877.15.

Among the biggest losses in Shanghai were Beijing United Information Technology, which fell by 9.36%, and Hubei Xingfa Chemicals, which dropped by 8.98%.

Meanwhile, Hong Kong's Hang Seng Index increased by 0.76%, with Country Garden Holdings and Country Garden Services posting significant gains of 14.15% and 11.53%, respectively.

South Korea's Kospi rose by 1.42% to close at 2,547.86, with SK Biopharma and LG Chemicals emerging as the top gainers, increasing by 9.15% and 7.47%, respectively.

In Australia, the S&P/ASX 200 surged by 1.26% to close at 7,309.90, with Nickel Industries and Sandfire Resources leading the gains, rising by 7.1% and 6.52%, respectively.

New Zealand's S&P/NZX 50 inched up 0.03% to close at 11,873.58, with Pacific Edge and Heartland Group posting gains of 8.64% and 3.92%, respectively.

In currency markets, the yen was last 0.31% stronger on the dollar to trade at JPY 133.19, while the Aussie advanced 0.18% to AUD 1.5031.

The Kiwi, meanwhile, weakened 0.19% against the greenback to change hands at NZD 1.6113.

On the energy front, Brent crude futures were last up 0.24% on ICE at $84.38 per barrel, while the NYMEX quote for West Texas Intermediate gained 0.34% to $80.01.

Korean central bank joins peers in continued pause

In economic news, the Bank of Korea decided to maintain its interest rates at 3.5%, in line with market expectations.

South Korea joined regional peers Australia and India in its decision to pause its tightening cycle.

“We think the Bank of Korea probably will keep its policy rate unchanged for the rest of this year,” said Duncan Wrigley at Pantheon Macroeconomics.

“Global demand prospects are darkening, while the domestic economy is broadly weak.”

Wrigley noted that credit markets were weak after a property developer defaulted late last year, while unsold housing inventories were creeping up.

“Korea’s manufacturing purchasing managers’ index (PMI) fell 0.9 points to 47.6 in March, pulled down by feeble domestic demand and falling new export orders.”

Elsewhere, China's consumer price index for March rose by just 0.7% year-on-year, falling short of the expected 1% increase.

The producer price index meanwhile fell 2.5% year-on-year, which was in line with forecasts by Reuters, and came on the back of decline of 1.4% in the previous month.

“We think China’s declining producer prices will continue this year, given the restrained policy support that is resulting in an imbalanced recovery,” Pantheon’s Duncan Wrigley explained.

“The first quarter industrial capacity data is likely to show a number of industries with falling capacity utilisation.”

Export demand would likely remain soft, Wrigley added, with increased chances of a US recession, while domestic demand was picking up moderately.

“Producer price deflation is likely to translate into export disinflation this year.”

Reporting by Josh White for Sharecast.com.