Asia report: Most markets rise as Fed leaves rates unchanged

Asia-Pacific stock markets largely ended Thursday in positive territory, influenced by the US Federal Reserve's overnight decision to maintain its current interest rate stance.

Although the Fed did not alter rates, it outlined plans for two additional 25-basis-point rate increases before year-end, signalling a relatively hawkish direction.

“Asian equity markets traded predominantly higher, however gains were limited as the market digested the aftermath of the Federal Open Market Committee meeting,” said TickMill Group market analyst Patrick Munnelly.

“Initially, there was a hawkish reaction to the Fed's dot plot projections, but it was partially reversed during the press conference as chairman [Jerome] Powell distanced himself from the projections.

“Attention in the region then turned to a series of significant data releases.”

Most markets gain on back of Fed decision

Japan's Nikkei 225 slipped marginally by 0.05% to close at 33,485.49, while the broader Topix index was down 0.02% at 2,293.97.

Major losers on Tokyo’s benchmark included pharmaceutical company Eisai, down 5.91%; e-commerce giant Rakuten, off 5.28%; and Daiichi Sankyo, another pharma firm, which shed 3.98%.

Meanwhile, mainland China stocks enjoyed a positive day, with the Shanghai Composite rising 0.74% to 3,252.98 and the Shenzhen Component jumping 1.81% to 11,182.94.

GuangZhou Baiyun Electric Equipment soared 10.03%, and GuangDong Super Telecom gained 10.01%.

Hong Kong's Hang Seng Index delivered a robust performance, adding 2.17% to close at 19,828.92.

Leading the gains in the special administrative region, Shenzhou International climbed 11.4%, athletic wear manufacturer Li Ning Co advanced 8.85%, and technology platform Meituan jumped 7.78%.

South Korea's Kospi index bucked the overall trend, dropping 0.4% to 2,608.54, as Hanmi Science declined 5.69% and Hanmi Pharm Co decreased by 4.13%.

Australia's S&P/ASX 200 edged up 0.19% to 7,175.30, as Insurance Australia Group increased 4.59% and transportation company Aurizon Holdings improved 4.48%.

In New Zealand, the S&P/NZX 50 slightly moved up 0.08% to 11,687.45.

Dairy processing company Synlait Milk grew by 4.73% and agribusiness firm Scales Corporation appreciated by 4.14%.

In the currency market, the yen was last 0.67% against the dollar at JPY 141.03, while the Aussie strengthened 0.35% to trade at AUD 1.4663.

The Kiwi, meanwhile, retreated 0.37% from the greenback to change hands at NZD 1.6169.

Crude oil prices were meanwhile higher, with Brent crude futures last up 1.12% on ICE at $74.02 per barrel, and the NYMEX quote for West Texas Intermediate rising 1.11% to $69.03.

China cuts medium-term lending rates, Japan trade data turns around

In economic news, China's central bank reduced its main medium-term lending rates in a decision long-predicted by observers.

The People's Bank of China made a cut of 10-basis points on its one-year medium-term lending facility (MLF) loans, worth CNY 237bn, bringing it down from 2.75% to 2.65%.

“We think that the PBoC’s rate cuts are likely to be part of a broad but limited stimulus package intended to keep the economy ticking over and on track for the relatively modest ‘about 5%’ GDP growth target for 2023,” said Duncan Wrigley at Pantheon Macroeconomics.

“Other support is likely to include fiscal and quasi fiscal measures, such as tapping policy bank credit lines and policy development financial instruments to channel funds to fixed asset investment.

“The government has already announced VAT and social security payment incentives for SMEs, and banks are likely to funnel cheap credit to smaller firms.”

A surprise turnaround meanwhile marked Japan's economic headlines as the country's exports in May rose by 0.6% year on year.

The performance greatly defied economists' predictions of a 0.8% decline, as polled by Reuters.

The total export figure reached JPY 7.29bn, surpassing May 2022's JPY 7.25bn.

Furthermore, the fall in imports was less than anticipated, decreasing only 9.9% year on year to JPY 8.67bn, in contrast to last year's JPY 9.62bn.

Japan also saw a 42% reduction in its trade deficit year-on-year, registering JPY 1.37bn against May 2022's JPY 2.37bn.

“Japanese exports are likely to remain weak in the second half, given dim global demand prospects,” Pantheon’s Duncan Wrigley added.

“China’s growth is flagging, while the US is flirting with recession, and the German economy is already in a technical recession.

“The dismal global outlook is a key reason why the Bank of Japan will probably leave policy settings unchanged tomorrow, despite signs of a gradually broadening domestic recovery.”

Finally on data, Australia's economic outlook brightened with a robust increase in employment figures for May.

Job numbers jumped 75,900, shattering expectations of a 15,000 increase as projected by Reuters.

The rebound came after a net employment dip to 4,000 in April.

Meanwhile, Australia's seasonally-adjusted unemployment rate marginally improved, declining from 3.7% in April to 3.6% in May.

Reporting by Josh White for Sharecast.com.