Asia report: Regional stocks follow Wall Street lower

13th Nov 2024 09:06

(Sharecast News) - Asia-Pacific markets largely declined on Wednesday, mirroring Wall Street's post-election rally, which lost momentum overnight.

Key indices fell as investors responded to mixed signals, including Japan's corporate goods data, which reported October's producer price growth reaching a new high since July 2022, surpassing expectations.

"A steep uptick in US bond yields alarmed investors ahead of important inflation data that may affect the rate of Federal Reserve policy easing, which caused Asian equities to fall on Wednesday," said Patrick Munnelly at TickMill.

"As the market reopened following the Veterans Day holiday, short-term Treasury rates surged overnight to their highest level since late July, pushing the dollar to a three-month high against the yen in the most recent session.

"Since Donald Trump was reelected to the White House last week, bond rates have risen on the belief that higher tariffs and lower taxes will boost government borrowing and the fiscal deficit."

Munnelly noted that markets also seemed to believe that Trump's suggested policies would increase inflation, and possibly obstruct the Fed's efforts to cut interest rates.

"All of this is still a part of the Trump trade, which is fundamentally about increasing deficit spending.

"The battle between stocks and bonds eventually shifts market sentiment, though, as higher risk-free rates limit valuations, as has been demonstrated in previous market booms, with the Trump trade poster child Bitcoin retreating from a test of $90,000 overnight, although many market participants view this pause as one that will refresh upside momentum."

The forecast for China - a major customer that would be hardest hit by Trump's promised trade tariffs - saw commodities to decline generally, Patrick Munnelly added.

"Beijing's stimulus initiatives have not inspired much hope for an economic recovery thus far.

"Both Hong Kong's Hang Seng and a subindex of mainland Chinese real estate equities fell more than 1%.

"The blue chips from China were flat; both South Korea's Kospi and Japan's Nikkei saw declines."

Most markets close lower as Trump rally falters on Wall Street

In Japan, the Nikkei 225 dropped by 1.66%, closing at 38,721.66, while the broader Topix index fell 1.21% to 2,708.42.

Losses on Tokyo's benchmark were led by companies such as Nexon, which plunged 17.45%, and Sumitomo Metal Mining, down 9.24%.

Chinese markets showed resilience, with the Shanghai Composite gaining 0.51% to 3,439.28 and the Shenzhen Component rising 0.4% to 11,359.29.

Suzhou TZTEK Technology soared by 20%, and Geo-Jade Petroleum advanced 10.08%.

Hong Kong's Hang Seng Index inched down by 0.12% to 19,823.45, with WuXi AppTec and WuXi Biologics among the largest laggards, dropping 4.1% and 3.37%, respectively.

South Korea's Kospi 100 suffered a sharp fall of 2.54% to 2,403.62, weighed down by significant declines in Korea Zinc, which plunged 14.1%, and Hanwha Ocean, down 8.15%.

Australian markets also faced downward pressure; the S&P/ASX 200 slipped 0.75% to 8,193.40, with technology firm NUIX plummeting 22.16%.

In New Zealand, the S&P/NZX 50 declined by 0.59% to 12,674.49, led by Synlait Milk, down 5.13%.

Currency movements reflected a slight strengthening of the dollar, which was last up 0.25% on the yen to trade at JPY 154.99, as it gained 0.13% against the Aussie to AUD 1.5327, and advanced 0.02% on the Kiwi, changing hands at NZD 1.6877.

Oil prices saw moderate gains, with Brent crude futures last up 0.68% on ICE at $72.38 per barrel, and the NYMEX quote for West Texas Intermediate ahead 0.72% at $68.61.

Wholesale prices rise in Japan, Aussie wage growth slows

On the economic agenda for the region was fresh data highlighting mixed inflationary pressures in Japan and Australia.

Japan's corporate goods price index, a measure of wholesale inflation, surged by 3.4% year-on-year in October, marking the highest rate since July 2022.

That reading surpassed both the 3% growth forecasted by economists surveyed by Reuters and the 2.8% increase seen in September, underscoring persistent cost pressures within the Japanese economy.

In Australia, wage growth data indicated slower momentum than anticipated.

The Australian Bureau of Statistics reported that seasonally adjusted wages grew by 0.8% in the third quarter, holding steady with growth rates from the previous two quarters but falling short of the expected 0.9% increase.

On an annual basis, wages grew by 3.5% over the quarter, just shy of the predicted 3.6%, suggesting that wage pressures may not be as robust as previously forecasted.

Reporting by Josh White for Sharecast.com.