Asia report: China, Hong Kong rise on mixed day for region
Asia-Pacific markets showed a mixed performance on Friday as investors reacted to India’s interest rate decision and Japan’s latest household spending data.
While Chinese and Hong Kong equities advanced, declines in Japan, South Korea, and Australia weighed on broader regional sentiment.
“European and US stock futures remain range bound as investors exercise caution ahead of the US jobs report, which is expected to provide insights into the direction of interest rates in the US,” said TickMill market strategy partner Patrick Munnelly.
“Outperformance in mainland China supported Asian stocks on Friday, with the Hong Kong technology stock index poised to enter a technical bull market.
“Treasuries remained stable following slight declines across the curve on Thursday; the dollar index remains under pressure.”
Munnelly noted that the mixed signals from markets were reflecting a “lack of clear direction” before the upcoming US nonfarm payroll data, set for release later on Friday, which he said could shift focus from the tariff concerns that rattled financial markets earlier in the week.
“The yen weakened against the dollar, poised for its first decline in five sessions.
“Japan's prime minister Ishiba is scheduled to meet with Trump on Friday, markets are wary of the next Trump media or Truth Social storm after his announcement this week regarding the Middle East Riviera ambitions.”
China, Hong Kong stocks lead gains on mixed day for region
Japan’s Nikkei 225 fell 0.72% to 38,787.02, with losses led by Nikon, IHI, and Konica Minolta.
The broader Topix index declined 0.54% to 2,737.23.
Chinese stocks gained, with the Shanghai Composite rising 1.01% to 3,303.67 and the Shenzhen Component climbing 1.75% to 10,576.00.
JiShi Media, Zhejiang Orient, and Routon Electronic all surged over 10% in Shanghai.
In Hong Kong, the Hang Seng Index added 1.16% to 21,133.54, lifted by strong performances from Geely Automobile, Xinyi Solar, and Li Auto.
South Korea’s Kospi 100 dropped 0.78% to 2,518.06, dragged down by Kogas, Hyundai Heavy Industries, and Hanwha Solutions.
In Australia, the S&P/ASX 200 edged down 0.11% to 8,511.40 as losses in Yancoal Australia, Beach Energy, and Contact Energy dragged on the index.
Across the Tasman Sea, New Zealand’s S&P/NZX 50 gained 0.45% to 12,902.19, led by ANZ Group, Fletcher Building, and Infratil.
In currency markets, the dollar was last 0.22% stronger on the yen, trading at JPY 151.74.
The greenback was meanwhile weaker against its Aussie and Kiwi counterparts, falling 0.19% against the former to AUD 1.5884, and slipping 0.22% on the latter, changing hands at NZD 1.7583.
Oil prices moved higher, with Brent crude futures last up 0.89% on ICE to $74.95 per barrel, and the NYMEX quote for West Texas Intermediate rising 0.86% to $71.22.
India central bank cuts interest rates, Japan household spending picks up
India’s central bank was at the top of the regional agenda, after it reduced its benchmark interest rate for the first time in nearly five years, signaling a shift toward economic stimulus as inflation eased.
The Reserve Bank of India’s Monetary Policy Committee cut the repo rate by 25 basis points to 6.25%, governor Sanjay Malhotra announced earlier.
It was a widely-anticipated move that came as the economy faced slowing growth, marking the first rate reduction since May 2020, when policymakers acted to counter the pandemic-induced downturn.
In Japan, household spending rose 2.7% year-on-year in December, according to data from the Statistics Bureau.
The increase, far exceeding economists' expectations of a 0.2% rise, marked the first expansion since July 2024 and added to speculation that the Bank of Japan could raise interest rates again.
The BoJ lifted its policy rate to 0.5% in January, its highest level since 2008, and signalled that further hikes would depend on sustained wage growth and inflation trends.
Indeed, the International Monetary Fund said it saw the potential for additional BoJ rate hikes in 2025, projecting that Japan’s borrowing costs could reach a neutral level by 2027.
According to Nada Choueiri, the IMF’s deputy director for the Asia-Pacific Department, Japan’s neutral interest rate was expected to fall between 1% and 2%, with a midpoint of 1.5%.
The IMF also warned of financial risks, emphasising the need for a strong debt management strategy as rising rates were expected to double Japan’s debt servicing costs by 2030.
Additionally, the agency cautioned that global market volatility could create economic spillovers that Japan should monitor closely.
Reporting by Josh White for Sharecast.com.