Asia report: Most markets rise, oil prices surge on OPEC cut

Most markets in the Asia-Pacific ended in positive territory on Monday, buoyed by a surprise cut in oil production by OPEC and its allies, which saw energy prices surge.

Investors also digested fresh manufacturing data after a number of releases across the region.

“Asia’s equity markets start the holiday-shortened trading week with modest gains, as investors digest a surprise move by OPEC+, with the announcement of a supply cut issued Sunday afternoon,” said TickMill market analyst Patrick Munnelly.

“The cartel has committed to slash supply by 1.6 million barrels, leading to an 8% surge in crude oil prices ticking above $80 per barrel.”

Munnelly noted that global markets ended March and the quarter in a positive tone last week, with Wall Street’s benchmark S&P 500 notching up a 7% gain, while the Nasdaq added 17% as markets repriced the potential for rate cuts into the back end of 2023.

“In China, the March Caixin manufacturing PMI index edged back to 50 from 51.6 in February.

“The hotly anticipated China reopening impulse continues to prove lacklustre, with the economy showing modest improvements with the exit from Covid restrictions.”

Most markets manage gains as oil prices leap

Japan's Nikkei 225 rose 0.52% to close at 28,188.15, while the Topix climbed 0.71% to 2,017.68.

Nippon Sheet Glass jumped 6.47% in Tokyo, while JGC Corporation gained 5.85%, and Inpex Corporation rose 5.51%.

In China, the Shanghai Composite added 0.72% to 3,296.40, and the Shenzhen Component surged 1.39% to 11,889.42.

Among the leaders in Shanghai were ArcSoft Corporation, which soared 16.81%, while Advanced Micro Fabrication climbed 11.11%.

Hong Kong's Hang Seng Index edged up 0.04% to 20,409.18, with SMIC rising 7.53%, Sands China gaining 6.96%, and China Overseas Land and Investment up 6.54%.

South Korea's Kospi fell 0.18% to 2,472.34, with DB Insurance down 4.41% and SKC down 4.37%.

Australia's S&P/ASX 200 rose 0.63% to 7,223.00, with Corporate Travel Management up 5.42% and Lynas Rare Earths up 4.42%.

Meanwhile, New Zealand's S&P/NZX 50 dropped 0.38% to 11,838.79, with Skellerup falling 5.35% and Pacific Edge down 4.65%.

In currency markets, the yen was last 0.39% weaker against the dollar at JPY 133.38, while the Aussie strengthened 0.36% to AUD 1.4904, and the Kiwi retreated 0.2% from the greenback to change hands at NZD 1.6012.

Oil prices surged after the OPEC announcement, with Brent crude last rising 5.48% on ICE to $84.27 per barrel, and the NYMEX quote for West Texas Intermediate climbing 5.66% to $79.95.

Manufacturing data in focus across the region

Manufacturing purchasing managers’ indices (PMIs) for March were at the top of the economic news agenda, showing mixed performances for the region's economies.

China's unofficial Caixin/Markit PMI missed expectations at 50, down from February's 51.6, while the official PMI came in higher than expected at 51.9.

“Chinese policymakers will probably be monitoring the data in the rest of the first half to assess if strong growth in diverse services sectors is generating enough jobs to support the consumption rebound, and if buoyant infrastructure and manufacturing investment will drive industrial output,” said Duncan Wrigley at Pantheon Macroeconomics.

“If the first half data suggest a significant slippage in domestic demand, China will be poised to add support in the second half.”

Japan's PMI rose to 49.2, although still below the 50-level mark that separates growth from contraction.

“We think that incoming Bank of Japan governor Kazuo Ueda is likely to keep easy monetary policy settings on hold at his first policy meeting on 28 April,” Duncan Wrigley added.

“The manufacturing PMI indicates continued activity decline, while the Tokyo headline CPI edged down 0.2 percentage points to 3.3% year-on-year in March, on the back of government energy subsidies that took effect in February.”

South Korea's manufacturing sector PMI recorded its steepest contraction in six months, falling to 47.6 from February's 48.5, attributed to weak customer demand.

“We see nothing in the Korean data that is likely to shift the Bank of Korea’s worries about Korea’s growth output,” Pantheon’s Wrigley explained.

“As a result, the Bank is likely to keep the policy rate on hold for the rest of the year, expecting elevated consumer inflation to slow gradually.”

Meanwhile, the ASEAN region recorded its 18th straight month of growth, with Myanmar leading for the first time in 32 months with a record high PMI of 55.5 in March.

Elsewhere in data, Australia’s building approvals rose 4% in February on a month-on-month basis, led by an increase in private sector houses approved, which rose 11.3%.

However, year-on-year building approvals fell by 31.1%.

The Reserve Bank of Australia was expected to raise its benchmark cash rate by 25-basis points on Tuesday to 3.85%, as it continued to try returning consumer inflation back to the 2% to 3% range.

Finally, in Indonesia, the core inflation rate for March slowed to 2.94% year-on-year, below analysts' expectations of 3.05% and February's rate of 3.09%, while headline inflation came in at 4.97% year-on-year, below expectations of 5.2%.

Reporting by Josh White for Sharecast.com.