Asia report: Most markets weaker amid rising Covid-19 infections

Most markets in Asia closed weaker on Friday, as rising Covid-19 cases in parts of the region weighed on sentiment.

In Japan, the Nikkei 225 was down 0.16% at 26,763.39, as the yen weakened 0.37% against the dollar to last trade at JPY 103.49.

Automation specialist Fanuc was down 0.52%, while among the benchmark’s other major components, fashion firm Fast Retailing was up 0.31% and technology conglomerate SoftBank Group was 0.05% firmer.

The broader Topix index eked out gains of 0.04% by the end of trading in Tokyo, closing at 1,793.24.

During the day, the Bank of Japan announced a six-month extension to its special Covid-19 measures in its latest monetary policy decision.

It also set the short-term interest rate target to -0.1%, and the 10-year government bond target to around 0%.

The central bank said it would “conduct an assessment for further effective and sustainable monetary easing” as it looked to underpin the economy during the ongoing pandemic.

Pantheon Macroeconomics senior Asia economist Miguel Chanco said the bank’s decision to extend its special Covid-19 support measures came a few months earlier than expected.

“Nevertheless, it is an easy and timely move to make, given the unrelenting acceleration of the country’s third virus wave, which we reckon puts a potential double-dip recession into play,” Chanco explained.

“The adjustment to the emergency loan programme should breathe some life into credit growth, where trends at the margin have cooled substantially over the last few months.

“The flexibility introduced in the additional purchases of corporate debt are unlikely to change things materially in the short run, as they are still running well below the previous upper limits for each asset.”

Chanco said that in terms of the bigger picture, the Bank of Japan had committed to a review of its current policy framework, the results of which would be released at its meeting in March.

“The wording suggests, though, that tweaks to simply enhance the sustainability of the existing framework are more likely than wholesale change.”

On the mainland, the Shanghai Composite was down 0.29% to 3,394.90, and the smaller, technology-heavy Shenzhen Composite lost 0.3% to 2,262.57.

South Korea’s Kospi managed gains of 0.06% to 2,772.18, while the Hang Seng Index in Hong Kong was 0.67% weaker at 26,498.60.

The blue-chip technology stocks were weaker in Seoul, with Samsung Electronics down 0.41% and SK Hynix losing 0.84%.

Rising Covid-19 infections weighed on sentiment on Friday, with the Japanese capital Tokyo seeing a record number of new infections, and daily infections in South Korea topping 1,000 for the second consecutive day.

Oil prices were lower as the region entered the weekend, with Brent crude last down 0.33% at $51.33 per barrel, and West Texas Intermediate losing 0.04% to $48.34.

In Australia, the S&P/ASX 200 lost 1.2% to 6,675.50, while across the Tasman Sea, New Zealand’s S&P/NZX 50 was 1.6% weaker at 12,682.00.

The down under dollars were both weaker against the greenback, with the Aussie last off 0.3% at AUD 1.3152, and the Kiwi retreating 0.43% to NZD 1.4040.