Asia report: Stocks mixed as Bank of Korea pauses rate hikes

Asia-Pacific stock markets have finished Thursday's trading in a mixed state, after the release of the latest minutes from the US Federal Reserve overnight indicated further interest rate hikes were in the pipeline.

In Japan, markets were closed for the Emperor's Birthday holiday.

China’s Shanghai Composite fell by 0.11% to 3,287.48, while the Shenzhen Component also dipped by 0.13% to 11,884.30.

Notable decliners included China National Software, which fell by 7.06%, and Chongqing Chuanyi Automation Co, which was down by 5.47%.

In Hong Kong, the Hang Seng Index fell by 0.35% to 20,351.35.

Decliners included Techtronic Industries, which was down by 18.97%, China Unicom Hong Kong, which fell by 5.42%, and Xinyi Glass, which dropped by 4.25%.

“On the Hang Seng index, Techtronic became the latest target for short sellers, with its share price slumping 19% after Jehoshaphat Research published a report claiming the power tools company has been ‘inflating its profits dramatically for over a decade with manipulative accounting’,” noted Russ Mould at AJ Bell.

“By short selling the stock, Jehoshaphat stands to profit from a decline in the share price.”

South Korea's Kospi index eked out gains of 0.8% to 2,439.09, but decliners included Korea Industrial Co, which fell by 6.14%, and Husteel, which was down by 5.65%.

Australia's S&P/ASX 200 fell by 0.4% to 7,285.40, with Qantas Airways falling by 6.8% and Blackmores down by 6.61%.

New Zealand's S&P/NZX 50 rose by 0.8% to 11,888.55, with Scales Corporation up by 5.43% and Skellerup up by 4.74%.

In currency news, the yen weakened 0.04% against the dollar to last trade at JPY 134.90, while the Aussie and the Kiwi both strengthened 0.26% on the greenback to 1.4660 and 1.6040, respectively.

Oil prices were in the green as the region went to bed, with Brent crude futures last up 0.83% on ICE at $81.27 per barrel, and the NYMEX quote for West Texas Intermediate ahead 0.87% at $74.59.

In economic news, the Bank of Korea stood pat on its key interest rate at 3.5%, sating market expectations.

It made South Korea’s central banks among the first in the region to pause its tightening cycle, after similar moves from Japan and China.

The BoK also said it was expecting economic growth in the country to reach 1.6% this year, less than it previously predicted, amid a global slowdown caused by interest rate hikes.

“Governor Rhee Chang-yong’s tougher rhetoric is probably a response to recent financial market volatility, rather than signalling the likelihood of short-term rate hikes,” said Duncan Wrigley at Pantheon Macroeconomics.

“He noted the stronger dollar and rising long-term market rates in major economies since February.

“We think the chances of another inflationary spike are slim, in light of the soft global economy in the first half.”

Wrigley said the BoK would be monitoring the won carefully.

“Even so, the Bank will likely refrain from monetary tightening this year, with growth still on a slowing trajectory in the first half, and the outlook for a lopsided recovery in the second half.”

Down under, Australian business investment reached its highest level in seven years in the final quarter of last year.

Spending in the food and accommodation sector led the charge, as private capital spending climbed 2.2% in the period, topping market expectations for a 1.3% rise.

In China, authorities have reportedly asked some state-owned enterprises to phase out the use of the big four global accounting firms.

According to Bloomberg, the companies were told to instead hire Chinese or Hong Kong-based accountants when contracts come up for renewal.

Finally on the economic front, Singapore's consumer price index climbed 6.5% year-on-year in January, with food, clothing and transport leading the increase.

Core inflation in the city-state rose 5.5% year-on-year, with the Monetary Authority of Singapore expecting that overall inflation for the year would lie between 5.5% and 6.5%, while core inflation was set to average 3.5% to 4.5%.

Reporting by Josh White for Sharecast.com.