Asia report: Most markets fall on fresh geopolitical concerns

15th Apr 2024 08:20

(Sharecast News) - Asia-Pacific markets were mixed but mostly lower on Monday, against a backdrop of escalating geopolitical tensions and ahead of key economic indicators.

Traders grappled with the aftermath of Iran's drone and missile attacks on Israel over the weekend, while monitoring forthcoming economic updates from China and Japan.

"Asian investors initially focused on reducing risk and playing it safe before buyers emerged as relief around middle east tensions increased risk appetite," said TickMill market analyst Patrick Munnelly.

"With the yen reaching a 34-year low against the dollar, traders are wary of intervention from the Bank of Japan.

"Japanese authorities have not intervened despite warnings, possibly because the yen's decline is justified by US growth and inflation rates outpacing Japan's."

Munnelly said a strong dollar and rising US bond yields could pose problems for Asia by tightening financial conditions and increasing the cost of servicing dollar-denominated debt.

"Geopolitical tensions may not provide much comfort as investors seek to reduce risk in their portfolios."

Most markets fall on fresh geopolitical tensions

In Japan, the Nikkei 225 declined by 0.74%, closing at 39,232.80, while the Topix edged lower by 0.23% to 2,753.20.

Leading the decliners on Tokyo's benchmark was Astellas Pharma, down 7.96%, followed by Takashimaya, off 6.66%, and Sumitomo Dainippon Pharma, which lost 3.69%.

Conversely, Chinese markets demonstrated resilience, with the Shanghai Composite rising by 1.26% to 3,057.38, and the Shenzhen Component climbing by 1.53% to 9,369.70.

Companies such as Guanghui Logistics and CRRC Corporation experienced substantial gains in Shanghai, rising 10.06% and 10.03%, respectively.

Meanwhile, Hong Kong's Hang Seng Index faced a setback, declining 0.72% to 16,600.46, led lower by Chow Tai Fook Jewellery, down 7.92%; Li Ning Co, which was off 4.63%; and Sands China, which lost 4.56%.

In South Korea, the Kospi index dipped 0.42% to 2,670.43, with SKC and SK IE Technology registering notable losses of 5.09% and 4.57%, respectively.

Australia's S&P/ASX 200 also experienced a slight decline of 0.46%, closing at 7,752.50.

Gold Road Resources led the fallers with a drop of 6.59%, followed by NEXTDC, which finished 4.97% weaker.

Similarly, New Zealand's S&P/NZX 50 saw a marginal decrease of 0.21% to 11,916.78, with Oceania Healthcare and KMD Brands leading the move south, falling a respective 4.69% and 3.45%.

In currency markets, the dollar was last up 0.44% on the dollar to trade at JPY 153.91, while it decreased 0.21% against the Aussie to AUD 1.5431.

The greenback saw a slight uptick of 0.09% on the Kiwi, last changing hands at NZD 1.6841.

On the oil front, Brent crude futures were last down 1.19% on ICE to $89.37 per barrel, while the NYMEX quote for West Texas Intermediate lost 1.31% to $84.54.

Core machinery orders top expectations in Japan

In economic news, Japan's core machinery orders defied expectations in February, surpassing forecasts by a significant margin.

The month-on-month increase of 7.7% far exceeded the modest 0.8% rise anticipated by economists surveyed by Reuters.

On a year-on-year basis, core machinery orders declined 1.8%, which was notably less severe than the 6% drop pencilled in.

Core machinery orders, known for their volatility, are closely watched as a leading indicator of capital spending trends in Japan.

Elsewhere, India's wholesale price inflation (WPI) for March edged up slightly, exceeding Reuters' estimates.

Year on year, the country's WPI rose 0.53%, slightly surpassing the forecasted 0.51% increase.

February had seen WPI at a 0.2% reading.

The uptick in March was primarily attributed to higher prices across various sectors, including food, crude petroleum and natural gas products, minerals, and non-food articles.

Reporting by Josh White for Sharecast.com.