Asia report: Stocks mostly lower ahead of key China data

(Sharecast News) - Asia-Pacific markets ended Monday's trading with mixed results, with a general downturn across the region. Investors were awaiting key economic indicators from China, namely its trade balance set for release on Tuesday, followed by inflation data on Wednesday.

"Asian equity markets started the week on a mostly negative note, influenced by last Friday's late decline on Wall Street," said TickMill market analyst Patrick Munnelly.

"The drop in Apple shares post-earnings and reactions to weaker-than-expected non-farm payrolls and higher US hourly earnings contributed to the subdued mood in the region.

"In Japan, the Nikkei 225 initially faced selling pressure, opening below the psychological level of 32,000 handle."

However, Munnelly noted that it later staged a recovery, moving back above that level and finishing in the green.

"On the other hand, the Hang Seng index in Hong Kong and the Shanghai Composite index in China showed mixed performances, with the gains in energy sectors being overshadowed by uncertainties surrounding Chinese developers.

"Investors in the region remained cautious ahead of crucial upcoming releases, including trade data on Tuesday and inflation figures on Wednesday."

Japan equities a bright spot in regional sea of red

In Japan, both the Nikkei 225 and Topix recorded gains, rising by 0.19% to 32,254.56 and 0.41% to 2,283.93, respectively.

Leading the advances on Tokyo's benchmark were Astellas Pharma, up by 10.05%, Nissui by 7.61%, and Toray Industries gaining 5.68%.

In mainland China, markets experienced a decline with the Shanghai Composite down by 0.59% to 3,268.83, and the Shenzhen Component dropping 0.83% to 11,145.03.

Hua Yuan Property and Arcplus Group saw significant drops of 10.08% and 7.71%, respectively.

Hong Kong's Hang Seng Index showed a marginal decrease, falling 0.01% to 19,537.92.

Notable declines in the special administrative region included Hansoh Pharmaceutical Group at 10.02%, while both Country Garden entities saw drops of over 7%.

In South Korea, the Kospi slipped 0.85% to end at 2,580.71, with major contributors to the decline being Posco International and POSCO Future M, decreasing by 10.22% and 8.64%, respectively.

Australia's S&P/ASX 200 was down by 0.22% to 7,309.20, as Block Inc and Resmed saw considerable dips of 10.14% and 4.24%, respectively.

In New Zealand, the S&P/NZX 50 edged down 0.08% to 11,934.24, as Restaurant Brands NZ plummeted 12.23%, while Westpac Banking Corporation's Wellington-traded shares dipped 2.08%.

On the currency front, the dollar strengthened against the yen by 0.34% to last trade at JPY 142.24, while it rose 0.06% on the Aussie to AUD 1.5229.

The greenback did, however, slip slightly from the Kiwi, by 0.02% to change hands at NZD 1.6406.

In oil markets, Brent crude futures were last down 0.57% on ICE at $85.75 per barrel, while the NYMEX quote for West Texas Intermediate dropped 0.65% to $82.28.

Bank of Japan maintains stance; Indonesia's GDP beats forecasts

In economic news, China's foreign reserves rose by $11.3bn to $3.204trn in July, after a $16.5bn increase in June.

The figure was broadly in line with consensus expectations for $3.203trn.

Currency valuation effects accounted for an estimated $12.0bn, or slightly more than the $11.3bn reported increase in reserves, due to dollar depreciation against other major currencies.

That meant the remaining balance of payments items plus asset appreciation effects amounted to just -$0.7bn in July, according to Duncan Wrigley at Pantheon Macroeconomics.

"We believe that China's policymakers will likely tolerate - and even applaud - a gradual, controlled yuan depreciation over time, as it should boost exports in due course," Wrigley noted.

"But the People's Bank of China - or state banks - is unlikely to allow a sharp, persistent depreciation and will act to prevent the sense of a one-way bet forming in the market.

"To this end, they can deploy an array of tools, including substantial state bank foreign asset holdings, thanks to China's sustained large trade surpluses during the pandemic."

Elsewhere, the Bank of Japan (BoJ) emphasised in a statement earlier that changes to its negative interest rate policy were not imminent, noting a "substantial journey ahead" before any potential revisions.

The bank said it remained committed to its yield curve control framework.

At its July gathering, the BoJ held its benchmark rate steady at -0.1%, but indicated a more flexible approach to its yield curve control, clarifying that the boundaries should be viewed as guidelines rather than strict limits.

Meanwhile, Thailand reported a lower-than-expected rise in its headline consumer price index (CPI).

Year-on-year, inflation came in at 0.38%, falling short of the 0.64% increase anticipated by analysts polled by Reuters.

The figure, while slightly higher than June's 0.23% uptick, marked the third consecutive month that inflation was below the central bank's target range of 1% to 3%.

Finally on data, Indonesia reported a 5.17% annual upswing in gross domestic product for its second quarter, surpassing Refinitiv-compiled predictions for 4.93% growth.

When assessed on a quarterly scale, the country recorded a GDP increase of 3.86%.

Reporting by Josh White for Sharecast.com.