Asia report: Stocks rise across region, RBNZ hikes rates again

Stock markets in Asia were in positive territory at the close on Wednesday, with Hong Kong’s main bourse gaining almost 6% on the back of a solid session on Wall Street overnight.

In Japan, the Nikkei 225 was up 0.48% at 27,120.53, as the yen weakened 0.15% against the dollar to last trade at JPY 144.34.

Automation specialist Fanuc was down 0.21%, while fashion firm Fast Retailing rose 0.92% and technology conglomerate SoftBank Group added 2.29%.

The broader Topix index was ahead 0.32% by the end of trading in Tokyo, settling at 1,912.92.

Japan’s service sector got a boost in a new batch of data, with the services purchasing managers’ index rising to 52.2 in its final reading.

That was up from 49.5 in August and on the flash reading of 51.9, and well above the 50-point level that separates expansion from contraction.

Craig Botham at Pantheon Macroeconomics said the final reading suggested the country’s post-Covid rebound continued in the dying days of September, as expected.

“A drop in case numbers, and an increased willingness to ‘live with’ the virus, likely drove the rebound in service sector activity in September,” he said.

Looking at the granular data, new orders jumped to 52.9 from 50.0, and business expectations rose to 58.6 from 58.1, which Botham described as “a sharp contrast” to the fall seen in the flash reading.

An increase in work backlogs, to 51.7, from 50.7, also hinted at further improvements in activity to come, he said.

“As we know by now, reopening brings with it inflationary pressures, and even Japan is no different,” Craig Botham said, adding that input prices climbed to 63.1 from 62.3 in August, while output prices rose to 53.1 from 51.9.

“Employment improved marginally in September, though the subindex is still depressed relative to its history.

“Overall though, this marks a small step in the right direction from the BoJ’s perspective, hinting as it does at an improving labour market.”

Mainland China markets were still closed for the ‘Golden Week’ holiday, which is due to end on Friday.

Elsewhere, South Korea’s Kospi was up 0.26% at 2,215.22, while the Hang Seng Index in Hong Kong returned from a holiday to surge 5.9% to 18,087.97.

Anglo-Asian banking giant HSBC jumped 5.7% by the close in the special administrative region, after reports it was considering the sale of its Canadian operation.

One of HSBC’s major shareholders, Ping An Insurance Group, leapt 9.6% on the news.

Chinese electric car maker BYD was also in focus, surging 9.27% after it reported year-on-year growth of 187% in passenger vehicle sales for September.

The firm also inked a deal with car hire giant Sixt, which would see the latter buying 100,000 more electric cars from BYD between now and 2028.

Seoul’s blue-chip technology stocks were well above the waterline as well, with Samsung Electronics up 1.45% and SK Hynix ahead 4.18%.

Fresh data out of South Korea showed core inflation hastening slightly in September, with the core consumer price index rising 4.1% year-on-year in September, compared to 4% in August.

Headline inflation slowed, however, with the main CPI print coming in at 5.6%, compared to the 5.7% pencilled in by economists in Reuters polling, and the 5.7% it reported in August.

“The central bank expects inflation to remain in the 5% to 6% range for a significant period of time on a weaker won and oil production cuts,” noted SP Angel analyst John Meyer.

Oil prices were lower at the end of the Asian day, with Brent crude futures last down 0.56% on ICE at $91.29 per barrel, and the NYMEX quote for West Texas Intermediate falling 0.61% to $85.99.

In Australia, the S&P/ASX 200 was up 1.74% at 6,815.70, while across the Tasman Sea, New Zealand’s S&P/NZX 50 rose 0.81% to 11,180.01.

The Reserve Bank of New Zealand sated market expectations in its latest decision adding 50 basis points to interest rates.

Its official cash rate now stood at 3.5% as the central bank worked to “maintain price stability and contribute to maximum sustainable employment”.

Analysts at TD Securities said the RBNZ's statement “threw cold water” to an imminent pivot, however.

“While the bank had considered the option of hiking 75 basis points at today's meeting, the most likely outcome is for a follow up 50 basis point hike at next month's meeting.

“The market is priced for this outcome as is the analyst community so again not much of a market impact.”

The down under dollars were mixed against the greenback, with the Aussie last 0.21% weaker at AUD 1.5414, while the Kiwi strengthened 0.14% on the back of the RBNZ rate hike to last trade at NZD 1.7425.

Reporting by Josh White at Sharecast.com.