Asia report: Stocks mixed as Japan's service sector rebounds

Stock markets in Asia finished Friday’s trading in a mixed state, as investors mulled the possibility of even higher interest rates from the US Federal Reserve across the Pacific.

In Japan, the Nikkei 225 was up 0.59% at 25,973.85, as the yen weakened 0.19% against the dollar to last trade at JPY 133.67.

Technology conglomerate SoftBank Group was up 1.24%, while automation specialist Fanuc slipped 0.1% and fashion firm Fast Retailing was 0.15% lower.

The broader Topix index was 0.37% firmer by the end of trading in Tokyo, settling at 1,875.76.

Fresh data out of Tokyo showed the country’s services sector expanding for the fourth month in a row, with the au Jibun services purchasing managers’ index coming in at 51.1 for December.

That was up from the 50.3 reading in November, which itself was a sharp fall from October’s print of 53.2.

PMI readings above 50 signal expansion in a sector, while those below 50 denote contraction.

“Moderate growth in Japan's service sector provides a welcome economic offset to the decline in the manufacturing sector, as exports are lashed by the global downturn and China’s Covid exit wave,” said Duncan Wrigley at Pantheon Macroeconomics.

“But Japan is still a long way from a robust self-sustaining recovery that would lead the Bank of Japan to reassess its outlook for growth and sustained inflation prospects.

“The Bank will be carefully monitoring inflationary expectations, but is unlikely to change its basic policy settings this year in view of current global and domestic economic prospects.”

On the mainland, the Shanghai Composite eked out gains of 0.08% to 3,157.64, and the technology-heavy Shenzhen Component was 0.315 firmer at 11,367.73.

Earlier in the day, the People’s Bank of China and the China Banking and Insurance Regulatory Commission gave the go-ahead for lower first-home buyer mortgage rates.

There was a caveat, however, that the lower rates would only kick in if prices of new new-build houses fell for three months in a row.

The move was the latest signal of support from Beijing for a struggling property sector, after housing sales fell more than 20% year-on-year every month in 2022 through November.

South Korea’s Kospi jumped 1.12% to 2,289.97, while the Hang Seng Index in Hong Kong was off 0.29% at 20,991.64.

Chinese property plays were on the front foot in Hong Kong after the mortgage rate announcement from Beijing, with CIFI Holdings up 2.36%, Country Garden jumping 5.94%, and Longfor Group 1.85% firmer.

The blue-chip technology stocks were in the green in Seoul, meanwhile, with Samsung Electronics up 1.37% and SK Hynix rising 2.09%.

The move for Samsung came after the company flagged its worst quarterly profit in over seven years.

It estimated its fourth quarter profit for the three months through December was down around 70% to KRW 4.3trn, compared to a profit of KRW 13.87trn in the prior period.

Oil prices were in the green as the region entered the weekend, with Brent crude futures last up 2.02% on ICE at $80.26 per barrel, and the NYMEX quote for West Texas Intermediate rising 1.98% to $75.10.

In Australia, the S&P/ASX 200 gained 0.65% to 7,109.60, while across the Tasman Sea, New Zealand’s S&P/NZX 50 was 0.22% weaker at 11,625.97.

Both of the down under dollars were stronger on the greenback, with the Aussie last ahead 0.34% at AUD 1.4761, and the Kiwi advancing 0.24% to NZD 1.6004.

Reporting by Josh White for Sharecast.com.