Asia markets mostly higher, but Japan falls behind
KV Prasad Jun 13, 2022, 06:35 AM IST (Published)
Listen to the Article (6 Minutes)
Summary
The Japanese benchmark Nikkei 225 was down 0.31 percent in morning trade, while the broader Topix slipped 0.74 percent. Across the Korean Strait, the Kospi was up 0.25 percent, while Hong Kong’s Hang Seng index was up 0.38 percent in early trade
Japan fell behind its regional peers as most major Asian markets rose on Monday as traders digested last Friday’s non-farm payroll in the US and China’s new economic targets announced at the National People’s Congress (NPC) meeting over the weekend.
The Japanese benchmark Nikkei 225 was down 0.31 percent in morning trade, while the broader Topix slipped 0.74 percent. Across the Korean Strait, the Kospi was up 0.25 percent, while Hong Kong’s Hang Seng index was up 0.38 percent in early trade.
Chinese markets were higher, with the Shanghai composite up by 0.69 percent, while the Shenzhen composite added 2.36 percent.
In Australia, the S&P/ASX 200 was up 0.95 percent, boosted by gains in the energy, materials and heavily-weighted financials sector. The sectors were up 2.4, 2.9 and 0.88 percent respectively.
Vishnu Varathan, senior economist at Mizuho Bank, said in his morning note that while the strong non-farm payroll data in the US might suggest another Federal Reserve rate hike, the weak wage data, suggests that the Fed will not rush into a hike.
“For now, the focus on Fed push-back of further tightening may be justifiably buying some relief for broader risk markets. But relief is a fleeting driver of trades,” he said. “Improved global condition, and critically China’s backstop on growth slowdown, are imperative. The NPC provided some guidance, but no immediate panacea.”
China’s new economic targets for 2016, released on Saturday at the National People’s Congress (NPC) meeting, included a revised growth target of between 6.5 and 7 percent, a consumer price index growth target of around 3 percent and a budget deficit at 3 percent of gross domestic product (GDP), Reuters reported.
Evan Lucas, market strategist at IG, said in his morning note that the revised GDP target for 2016 is “almost a ‘whatever it takes’ comment, and shows China will not take its foot off the growth accelerator.”
Qu Hongbin, chief China economist at HSBC, wrote in a morning note that the NPC outcome reflected a “significant expansion” of fiscal policy.
“This will provide greater support to the financing needs of infrastructure projects, which holds the key to [stabilize] growth,” Qu said. “We expected infrastructure investment will be become stronger, and there will be more progresses in tax reduction, increased subsidy to migrant workers’ property purchase needs and other supply side reforms in 2016.”
Chinese infrastructure plays were mixed, with China Communications Construction down 1 percent, while China Railway Construction and China Railway Group were up 2.21 and 1.64 percent, respectively.
In currency trade, the Australian dollar slipped against the US dollar after touching USD 0.7443 Friday, its highest level for 2016. The pair was trading down 0.4 percent at 0.7411 as of 9:51 a.m. HK/SIN time.
Down Under, miners gained broadly, with Rio Tinto up 3.32 percent, BHP Billiton up 5.26 percent and Fortescue adding 11.45 percent, following gains in base metal prices. Iron ore was up 0.7 percent at USD 52.40 a tonne, its highest since October. In his note, Lucas noted that Fortescue, which is up around 73 percent over the past 29 trading days, is the lowest cost iron-ore producer.
Chinese metal players were also higher, with Baoshan Steel adding 4.45 percent, Yunnan Copper up by 6.81 percent and Baotou Steel higher by 2 percent.
But Lucas warned that if China decides to clean up its spare capacity in coal and steel, it might “cap iron ore’s current rise now and into the medium term future.”
The Japanese yen also maintained its strength against the dollar, staying at the 113 handle. The pair traded at 113.72 as of 10:00 a.m. local time. Japanese exporters traded mixed, with Toyota down 2.26 percent and Nissan adding 0.82 percent. A stronger yen is usually a negative for exporters as it reduces their overseas profit when converted into local currency.
In China, before market open, the People’s Bank of China (PBOC) fixed the yuan mid-point rate at 6.5113, compared with Friday’s fix of 6.5284. The dollar/yuan pair traded nearly flat at 6.5125 as of 9:54 a.m. HK/SIN time.
In the energy market, US crude futures were up 1.7 percent at USD 36.53 a barrel as of 10:07 a.m. HK/SIN time, after gaining 9.5 percent last week. Globally traded Brent futures were up 1.65 percent at USD 39.35 a barrel, after gaining 10.31 percent the previous week.
Energy plays across the region were mixed, with Santos adding 1.03 percent and Woodside Petroleum up 2.78 percent. Japanese oil plays Japan Petroleum, Inpex and Fuji Oil were down between 0.65 and 1.98 percent. Chinese mainland energy plays were mostly up, with Sinopec adding 3 percent and China Petroleum up 0.64 percent.
The US non-farm payroll number released Friday showed the US economy added a better-than-expected 242,000 jobs in February, mitigating some concerns that the economy was joining a global economic slowdown. Economists had expected 190,000 new positions.
On Friday, major US indexes closed up, with the Dow Jones industrial average up 0.37 percent, the S&P 500 adding 0.33 percent and the Nasdaq composite gaining 0.2 percent.
Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout
3 Mins Read
Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter
KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow
5 Minutes Read
Daily Newsletter
