Asia report: Markets mixed as wage growth softens in Japan

5th Sep 2024 09:29

(Sharecast News) - Asia-Pacific markets ended mixed on Thursday following a sharp sell-off in the previous session.

Japan's markets led the losses, amid investor concerns over the country's softer-than-expected rise in average monthly cash earnings for July, which could influence future Bank of Japan policy decisions.

"Following mixed signals from Wall Street overnight, Asian stock markets are generally flat on the session except the Nikkei 225, extending the losses in the previous two sessions," said TickMill market strategy partner Patrick Munnelly.

"Traders are being cautious ahead of the more carefully watched US monthly jobs report on Friday.

"Although there has been a significant increase in stocks recently, they are nonetheless hindered by persistent worries about the direction of the economy."

Markets mixed across the region, as Japan leads losses

Japan's Nikkei 225 led the regional losses, falling 1.05% to 36,657.09, while the broader Topix index also declined by 0.48%, closing at 2,620.76.

The losses on Tokyo's benchmark were led by Sharp Corporation, down 4.91%, followed by Chugai Pharmaceutical by 4.58% and Resonac Holdings, off 3.78%.

In contrast, markets in China posted modest gains - the Shanghai Composite edged up by 0.14% to 2,788.31, while the Shenzhen Component increased by 0.28% to 8,249.66.

Notable gainers in Shanghai included Guangdong DFP New Material Group and QuMei Home Furnishings Group, both rising by 10.18%.

Hong Kong's Hang Seng Index inched down by 0.08% to 17,444.30, with significant losses in major energy and banking stocks.

China Petroleum & Chemical Corporation dropped 6.06%, and PetroChina fell by 2.92%.

South Korea's Kospi decreased by 0.21% to 2,575.50, with Posco International leading declines at 7.39%, followed by Yuhan and Posco ICT.

In contrast, Australian and New Zealand markets saw positive movement.

Australia's S&P/ASX 200 gained 0.4% to 7,982.40, driven by strong performances from NEXTDC and Summerset Group.

New Zealand's S&P/NZX 50 rose by 1% to 12,678.66, with notable increases in Infratil and Tourism Holdings.

In currency markets, the dollar was last down 0.15% on the yen, trading at JPY 143.53, while it weakened 0.05% against the Kiwi to NZD 1.6124.

The greenback did manage gains on its Australian counterpart, however, advancing 0.03% to change hands at AUD 1.4876.

On the oil front, Brent crude futures were last up 1.02% on ICE at $73.43, while the NYMEX quote for West Texas Intermediate advanced 0.92% to $69.84.

Average cash earnings growth softens in Japan

In economic news, Japan's wage data for July revealed a 3.6% year-on-year increase in average monthly cash earnings, down from June's 4.5% rise.

Real wages saw a 0.4% year-on-year gain, continuing a positive trend following June's 1.1% increase.

The data would provide the Bank of Japan with potential leeway to consider raising interest rates.

In China, optimism grew among developers as reports emerged that the government was contemplating a two-phase interest rate reduction to support the struggling property sector.

According to Bloomberg, financial regulators proposed reducing interest rates on up to $5.3trn of outstanding mortgages to lower borrowing costs and relieve pressure on the banking sector.

A central bank official reportedly indicated on Thursday that there was "certain room" for adjusting the reserve ratio requirement, currently set at around 7%, although further reductions in deposit and lending rates could be constrained.

Reporting by Josh White for Sharecast.com.