Asia report: Stocks mixed as investors look to Fed decision

Asia-Pacific markets closed with mixed results on Wednesday, as investors closely followed the Federal Reserve's upcoming decision on interest rates.

The moves came after US consumer price inflation registered at a modest 4% overnight, its lowest level in two years, boosting hopes for a reprieve in rate hikes from the US central bank.

“Asian equity markets traded with a somewhat mixed performance as the region displayed caution ahead of the Federal Open Market Committee (FOMC) policy announcement,” said TickMill market analyst Patrick Munnelly,

“The Nikkei 225 index extended its gains by 1.5%, benefiting from recent currency movements and widespread anticipation that the Bank of Japan (BoJ) will maintain its accommodative monetary policy later in the week.

“The Hang Seng remained relatively flat, while the Shanghai Composite saw a modest increase.”

Munnelly noted that the People’s Bank of China’s decision to cut rates for its standing lending facility by 10-basis points, and the National Development and Reform Commission's (NDRC) notice to reduce costs, including VAT exemptions and reductions for small businesses until the end of the year, provided support to those indices.

“Reports indicated that China is considering broad stimulus measures, including property support and rate cuts; however, Chinese stocks experienced limited gains due to softer-than-expected loan and financing data.”

Stocks react to US CPI data with mixed performances

In Japan, the Nikkei 225 and Topix both saw positive movement, with gains of 1.47% and 1.31% respectively, closing at 33,502.42 and 2,294.53 points.

Market sentiment was bolstered by strong performances on Tokyo’s benchmark from Toyota Motor, up 6.28%; Trend Micro, which added 6.01%; and Sumitomo Metal Mining, which was ahead 5.83%.

Chinese markets, on the other hand, painted a contrasting picture, as the Shanghai Composite dipped 0.14% to close at 3,228.99 points, while the Shenzhen Component recorded a slight uptick of 0.26% to end the day at 10,984.56 points.

Notable losers in Shanghai included Hunan New Wellful, which tumbled 9.86%; and HNA Tech, which was off 4.4%.

Over in Hong Kong, the Hang Seng Index dropped 0.58% to 19,408.42, dragged down by Trip.com Group, down 5.25%; China Unicom Hong Kong, off 3.09%; and China Merchants Bank, which was 2.52% lower.

South Korea's Kospi closed lower by 0.72% at 2,619.08 points, pressured by a 5.09% decrease in Posco Future M, and a 4.14% fall for Kogas.

On a brighter note, Australian and New Zealand markets posted gains, with the S&P/ASX 200 up by 0.32% at 7,161.70 points and the S&P/NZX 50 gaining 0.22% to 11,678.62 points.

Mercury NZ rose 5.33% and Mineral Resources added 5.01% to lead Sydney’s gains, while in Wellington, Eroad was up 5.26% and Skellerup was ahead 4.05%.

On the currency front, the yen was last 0.2% stronger on the dollar to trade at JPY 139.94, while the Aussie was ahead 0.28% at AUD 1.4737.

The Kiwi was also advancing on the greenback, and was last 0.29% closer, changing hands at NZD 1.6216.

In oil markets, Brent crude futures were last up 1.25% on ICE at $75.22 per barrel, and the NYMEX quote for West Texas Intermediate added 1.12% to $70.20 per barrel.

Korean trade prices weaken as its labour figures hold up

On the economic front, South Korean export prices plunged by 11.2% year-on-year in May, recording the steepest drop since March 2010 when they declined 12.2%.

The deterioration came on the heels of a 7.2% fall in April.

Similarly, import prices tumbled 12% year-on-year, intensifying from a 6% decrease in the prior month.

In contrast, South Korea's job market showed positive signs, with the unemployment rate sliding to a record low of 2.5% in May.

That rate matched the lowest figure last seen in August of last year.

According to official government statistics, the employed population in May reached 28.84 million - a 1.2% year-on-year increase.

The ratio of employment to the total population in May was 63.5%, marking a modest year-on-year gain of 0.5 percentage points.

Meanwhile, the number of unemployed individuals in May reduced to 787,000, a notable year-on-year reduction of 11.5%.

Elsewhere, the Monetary Authority of Singapore announced a downward revision to the city-state’s gross domestic product (GDP) forecasts for 2023.

The full-year forecast was pared back to 1.4%, a significant trim from the previous projection of 1.9% delivered in February.

Looking further ahead, the nation's GDP was now estimated to grow by 2.5% in 2024.

Reporting by Josh White for Sharecast.com.