Asia report: Stocks weaker despite Chinese economic pledge

Stock markets were in the red in Asia on Monday, with promises from Beijing to help stabilise the Chinese economy doing little to lift sentiment.

In Japan, the Nikkei 225 was down 1.05% at 27,237.64, as the yen strengthened 0.28% on the dollar to last trade at JPY 136.22.

Automation specialist Fanuc finished flat, while fashion firm Fast Retailing was 1.1% lower and technology conglomerate SoftBank Group slipped 0.56%.

The broader Topix index was off 0.76% by the end of trading in Tokyo, settling at 1,935.41.

On the mainland, the Shanghai Composite slid 1.92% to 3,107.11, and the technology-heavy Shenzhen Component was 1.51% weaker at 11,124.70.

China’s politburo pledged to work to stabilise the economy after its Central Economic Work Conference last week, adding that it would ensure there was enough financial market liquidity to meet its targets.

The promises came ahead of the People’s Bank of China’s expected setting of one-year and five-year loan prime rates on Tuesday.

South Korea’s Kospi was off 0.33% at 2,352.17, while the Hang Seng Index in Hong Kong was 0.5% lower at 19,352.81.

The blue-chip technology stocks were mixed in Seoul, with Samsung Electronics closing flat, while SK Hynix advanced 0.77%.

“Investors continue to digest last week's central bank activity, as the Fed, the Bank of England, and the European Central Bank all raised interest rates and struck a distinctly hawkish tone,” said Patrick Munnelly, market analyst at TickMill Group.

“Asian equity markets took their lead from a weak close on Wall Street, however, European markets are set to post a rebound this morning, as the macro data calendar begins to wind down and focus is shifting to the potential for a shift in monetary policy in Japan.

“The Japanese government is suggesting a revision to its decade-old joint statement with the Bank of Japan which focuses on a strict 2% inflation target - this implies the potential for a shift away from the yield curve control strategy, these reports have seen the Japanese yen strengthen overnight.”

Oil prices were higher at the end of the Asian day, with Brent crude futures last up 0.71% on ICE at $79.60 per barrel, while the NYMEX quote for West Texas Intermediate was 0.59% firmer at $74.73.

In Australia, the S&P/ASX 200 slipped 0.21% to 7,133.90, while across the Tasman Sea, New Zealand’s S&P/NZX 50 weakened 0.74% to 11,518.14.

The down under dollars were both stronger on the greenback, with the Aussie last ahead 0.5% at AUD 1.4884, and the Kiwi advancing 0.24% to NZD 1.5653.

Reporting by Josh White for Sharecast.com.