Asia report: Most markets close lower, Tokyo inflation hastens

Most markets in Asia closed lower on Friday, as stocks struggled for direction on a globally-quiet day given Wall Street was closed for the Thanksgiving holiday overnight.

In Japan, the Nikkei 225 was down 0.35% at 28,283.03, as the yen weakened 0.53% against the dollar to last trade at JPY 139.28.

Technology conglomerate SoftBank Group was up 0.25%, while automation specialist Fanuc was down 1.28% and fashion firm Fast Retailing slipped 0.84%.

The broader Topix index was off 0.04% by the end of trading in Tokyo, ending the session at 2,018.00.

Fresh data out of the country’s capital showed consumer inflation in the metropolitan region reaching its highest level in four decades.

The core consumer price index rose 3.6% year-on-year for Tokyo in November, beating the 3.5% analysts polled by Reuters had pencilled in.

“Inflation is gaining momentum in Japan as the higher cost of imported goods filter into the domestic market, on the back of the weak yen,” said Duncan Wrigley at Pantheon Macroeconomics.

“Higher inflationary pressure sharpens the Bank of Japan’s policy dilemma between curbing inflation and supporting growth, after yesterday’s dismal PMI data indicated weakening demand, at home and abroad.

“Nonetheless, nothing in today’s Tokyo inflation data is likely to make the Bank change its basic assessment that inflation is imported, cost-push and not sustainable.”

Wrigley said subdued non-tourism consumer service prices would confirm the picture of weak domestic demand.

“We do not expect any change in the BoJ’s monetary policy settings as the global economy enters a downturn this winter.”

On the mainland, the Shanghai Composite was up 0.4% at 3,101.69, and the technology-heavy Shenzhen Component was 0.48% weaker at 10,904.27.

South Korea’s Kospi was 0.14% lower at 2,437.86, while the Hang Seng Index in Hong Kong slipped 0.49% to 17,573.58.

Leisure and technology plays were among the losers in the special administrative region, as fears of a growing surge in Covid-19 infections hampered sentiment around China.

Among casino operators, MGM China was down 4.54%, Sands China lost 3.88%, SJM Holdings slid 3.66%, and Wynn Macau was 2.68% weaker.

The leading losses in the tech sector included Bilibili, Meituan and Tencent Holdings, which were in the red by 4.98%, 1.66% and 2.64%, respectively.

Seoul’s blue-chip technology stocks were on the back foot as well, with Samsung Electronics down 0.65% and SK Hynix losing 2.07%.

Oil prices were higher as the region entered the weekend, with Brent crude futures last up 1.43% on ICE at $86.56 per barrel, and the NYMEX quote for West Texas Intermediate ahead 2.04% at $79.53.

“Oil is catching some bid with Iraq and Saudi Arabia promising additional measures if necessary to sooth the oil market,” said Markets.com chief market analyst Neil Wilson.

“This kind of plays into the idea that with prices down still, the OPEC meeting next week is more likely to look at cuts and not increasing production.”

Wilson noted that reports earlier in the week suggesting the cartel could raise production by 500,000 barrels per day were “quickly dismissed” by members, and seemed “far-fetched” by now.

“Prices would need to recover a lot more. Indeed, with crude prices falling, the reverse - more cuts - could be on the table.

“Either way it will be a live meeting.”

In Australia, the S&P/ASX 200 managed gains of 0.24% to 7,259.50, while across the Tasman Sea, New Zealand’s S&P/NZX 50 rose 0.54% to 11,382.56.

The down under dollars were both weaker against the greenback, with the Aussie last off 0.23% at AUD 1.4817, and the Kiwi retreating 0.3% to NZD 1.6013.

Reporting by Josh White for Sharecast.com.