Asia report: Stocks mixed as RBNZ stands pat on rates

10th Apr 2024 10:00

(Sharecast News) - Asia-Pacific markets finished with a mixed performance on Wednesday, influenced by Japan's corporate inflation data for March and a rate decision from New Zealand's central bank.

The Reserve Bank of New Zealand kept its official cash rate on hold, saying that a restrictive policy stance was still necessary in the current economic environment.

"Asian stocks traded higher despite Fitch's rating downgrade of China, which caused a slight domestic sell-off," said TickMill market analyst Patrick Munnelly.

"However, analysts believe that the downgrade does not accurately reflect the future performance of the economy.

"China's Shanghai Composite was down by just under half a percent."

Munnellly noted that Hong Kong's Hang Seng Index managed to escape the selling, and was trading up by nearly two percent.

"In other markets, Japan's Nikkei is taking aim at the 40,000 handle again, with the yen's decline expected to contribute to this push.

"Bank of Japan Governor Ueda emphasised that the central bank has no intention to adjust monetary policy directly based on fluctuations in the yen's strength or weakness."

Most markets fall on mixed day for region

In Japan, the Nikkei 225 index saw a modest 0.48% decline, closing at 39,581.81, while the Topix index slipped 0.43% to 2,742.79.

Notable decliners on Tokyo's benchmark included IHI, down 5.44%; Chugai Pharmaceutical, off 3%; and CyberAgent, which lost 2.75%.

China's markets faced downward pressure, with the Shanghai Composite index dropping by 0.7% to 3,027.34 and the Shenzhen Component index declining by 1.6% to 9,297.96.

Cultural Investment Holdings and Delixi Xinjiang Transportation were among the biggest losers in Shanghai, falling 10.04% and 9.99%, respectively.

In contrast, Hong Kong's Hang Seng Index exhibited resilience, recording a gain of 1.85% to reach 17,139.17 by the end of trading.

ENN Energy rose 7.39%, Zhongsheng Group added 7.26%, and Hang Seng Bank advanced 6.01% to lead the gainers in the special administrative region.

South Korean markets remained closed for the National Assembly Election Day.

In Australia, the S&P/ASX 200 index edged up by 0.31% to 7,848.50, supported by gains from Stanmore Resources and Liontown Resources, of 6.31% and 4.25%, respectively.

New Zealand's S&P/NZX 50 index closed with a modest increase of 0.46% to 11,971.92, with Wellington's gains led by Pacific Edge, up 4.88%, and Sanford, ahead 3.32%.

In currency markets, the dollar was last 0.05% stronger on the yen, trading at JPY 151.83, while it advanced 0.06% against the Aussie to AUD 1.5095.

The greenback declined on the Kiwi, however, retreating 0.26% to change hands at NZD 1.6458.

On the oil front, Brent crude futures were last up 0.34% on ICE to $89.72 per barrel, while the NYMEX quote for West Texas Intermediate rose 0.33% to $85.51.

Corporate goods inflation accelerates in Japan, RBNZ maintains interest rates

In economic news, Japan's corporate goods price index (CGPI) rose 0.8% in March on a year-on-year basis, marking an acceleration from the revised 0.7% uptick seen in February.

That aligned with the expectations of economists surveyed by Reuters, and signified the third consecutive month of growth in the corporate inflation rate.

On a month-on-month basis, the CGPI increased by 0.2%, slightly lower than the 0.3% uptick pencilled in by Reuters polling.

Elsewhere, New Zealand's central bank opted to maintain its benchmark interest rate at 5.5%, consistent with the predictions of economists polled by Reuters.

The Reserve Bank of New Zealand affirmed that sustaining a restrictive monetary policy stance remained imperative to further alleviate capacity pressures and inflation.

Despite ongoing challenges, including consumer price inflation persisting above the bank's 1% to 3% target range, the bank said it was confident that maintaining rates at a restrictive level over an extended period would help to steer inflation back within its desired range by the end of the year.

Reporting by Josh White for Sharecast.com.