Asia report: Markets mixed ahead of Jackson Hole outcome

Markets in Asia closed in a mixed state on Friday, as investors closed their wallets ahead of the outcome of the US Federal Reserve’s Jackson Hole summit later in the global day.

In Japan, the Nikkei 225 was down 0.36% at 27,641.14, as the yen weakened 0.02% against the dollar to last trade at JPY 110.11.

It was a negative day for the benchmark’s major components, with automation specialist Fanuc down 0.94%, fashion firm Fast Retailing losing 1.13%, and technology conglomerate SoftBank Group 0.42% weaker.

The broader Topix index was off 0.34% at the end of the session in Tokyo, closing at 1,928.77.

In fresh data out of Japan, Tokyo consumer price index (CPI) deflation was unchanged at -0.4% in August, slightly deeper than consensus expectations for -0.3%.

“Energy was part of the story, but we still think inflation has further to rise here - the lag from oil price developments is long,” said Pantheon Macroeconomics chief Asia economist Freya Beamish.

“Housing inflation also picked up again to 1.5% in August, from 1.2% in July, though the national gauge probably will continue to move sideways, as our chart below shows.

“Education inflation also ticked back up, but this was partially offset by further capitulation in private transportation inflation, which has run ahead of fundamentals.”

On the mainland, the Shanghai Composite was up 0.59% at 3,522.16, and the smaller, technology-heavy Shenzhen Composite managed gains of 0.1% to 2,439.69.

Industrial profit growth in China slowed to 16.4% year-on-year in July, from 20.0% in June, according to data released from Beijing.

Pantheon’s Freya Beamish said the levels and the official year-on-year figures did not match up, however, due to the authorities’ adjustment of the latter for sample changes, but at the moment they were “close enough” to set some store by the developments in the levels data.

“This suggests that profits rose by only a disappointing 1.3% in July, seasonally adjusted, after a 1.4% drop in June.

“This makes profits look decidedly toppish, alongside industrial production and exports, which are also moving sideways.”

Beamish said the slowdown appeared to be caused by manufacturing, which heightened fears that goods demand was saturated.

“Industrial profits will soon enter a period of margin squeeze, as PPI inflation is near its peak, and we now expect it to come down more substantially by the end of the year.

“We think China will soon move into macro-tightness, however, putting underlying upward pressure on wage growth, though the Delta limbo could put that all on hold.”

South Korea’s Kospi was up 0.17% at 3,133.90, while the Hang Seng Index in Hong Kong slipped 0.03% to 25,407.89.

The blue-chip technology stocks were on the back foot in Seoul, with Samsung Electronics down 0.4% and SK Hynix off 0.48%.

Oil prices were higher as the region entered the weekend, with Brent crude last up 1.2% at $71.92 per barrel, and West Texas Intermediate rising 1.38% at $68.35.

Looking ahead to the outcome of the US Federal Reserve symposium in Wyoming, Interactive Investor head of markets Richard Hunter said investors had succumbed to a “bout of nervousness” after a week of several record highs across markets.

“The jury remains out on whether Fed chair Jerome Powell will specifically address the taper timetable, especially ahead of next week’s non-farm payroll numbers.

“However, hawkish comments from other Fed members ahead of the event suggested that the time had come for a wind down of stimulus, which would be announced at the September meeting if not at the symposium.”

In Australia, the S&P/ASX 200 was off 0.04% at 7,488.30, with the country’s major industries a mixed bag.

The hefty financials subindex was up 0.25%, while the energy sector managed a 0.05% rise and materials plays were down 0.45%.

Sydney’s big four banks were split in terms of direction, with Australia and New Zealand Banking Group down 0.46% and Westpac Banking Corporation off 0.08%, while Commonwealth Bank of Australia rose 0.54% and National Australia Bank advanced 0.4%.

Across the Tasman Sea in New Zealand, the S&P/NZX 50 managed to rise 0.06% to 13,059.79, led higher by cinema technology company Vista Group, which jumped 8.4%.

The company reported a seriously smaller loss for its half-year, coming in at NZD 2.6m for the six months to 30 June, compared to the NZD 43.2m it recorded a year earlier.

Both of the down under dollars were stronger on the greenback, with the Aussie last ahead 0.28% at AUD 1.3781, and the Kiwi advancing 0.16% to NZD 1.4372.