Asia: Equity markets end week on a mixed note, as worries over China persist

Asian stocks ended the week on a mixed note, as investors remained jittery ahead of the US non-farm payrolls report that might shed light over the timing of the first interest rates hike by the Federal Reserve.

Hong Kong’s Hang Seng Index reopened after a bank holiday on Thursday to close 3.17% higher after data released on Thursday showed the Chinese manufacturing performed slightly better-than-expected than in September.

“This [Hang Seng’s gain] was in response to bolstered China stimulus measures including reduced mortgage requirements and a lower car sales tax which serve to counter some of the fears of a China slowdown and buoy commodity prices,” said Michael Van Dulken, head of research at Accendo Markets.

With mainland Chinese markets still closed for a national holiday, investors in the Asia-Pacific region remained cautious amid concerns of a slowdown in the world’s second-largest economy.

"Our global economists believe that near-term global recession risks are higher than usual, with a 25% chance of a recession-like slump this year," said analysts at Bank of America Merrill Lynch.

Japan’s Nikkei 225 Stock Average reversed earlier losses to edge 0.02% higher. Among individual stocks, Sharp and Suzuki Motor decline 2.86% and 2.37% respectively, while Aeron climbed 2.11% after posting a better-than-expected operating profit.

A survey from the Bank of Japan showed that companies’ inflation expectations declined broadly over the third quarter, indicating the Japanese central bank’s efforts to reach its 2% inflation target might not have had the desired effect.

Elsewhere, South Korea’s Kospi fell 0.49%, while Singapore’s FTSE Straits Times Index shed 0.31% and Australia’s S&P/ASX 200 slid 1.18%, dragged lower by a 1.71% drop in Rio Tinto shares.

On the currency front, the yen lost 0.24% against the dollar, while the Australian dollar lost 0.03% against its American counterpart and the Malaysian ringgit fell 0.56% against the greenback.

With investors monitoring economic indicators as they look for clues over the timing of a first interest rate hike, Friday’s job report could have serious implications for the Federal Reserve.

A better-than-expected reading could offer the US central bank enough reasons to go ahead with an October lift-off, though it is unlikely to have an effect on the dollar.

“It’s difficult to see the dollar reacting massively to the jobs data today, because the markets beta to a potential hike from the Fed has fallen, with the chances of a move this year having diminished and the pricing for October at less than 20%,” said Simon Smith, chief economist at FxPro.