Asia report: Markets mixed amid fresh data from China, Japan

(Sharecast News) - Asia-Pacific markets ended the day with mixed performances on Friday, as investors digested economic data from the region, including China's industrial profit figures and Tokyo's inflation numbers. Markets in Australia and New Zealand joined the fray, resuming trading after the Boxing Day holiday.

"Those glued to their screens, hoping for Santa's arrival, were left disappointed," said Swissquote Bank senior analyst Ipek Ozkardeskaya.

"The major US indices weren't in good shape yesterday even after a mixed bag of US jobs data showed that the continuing jobless claims in the US advanced to the highest levels in more than three years - a sign that it takes longer for people in the US to find a new job.

"But alas, the bad news did little to boost the Federal Reserve doves and support the equity rally."

Ozkardeskaya noted that in China, equities were better bid since authorities in Beijing pledged on Tuesday to sell a record amount of CNY 3trn worth of special treasury bonds next year to support to the economy.

"The money would be used to boost consumption and investment, but China's path to recovery will be bumpy.

"The data released a few hours earlier showed that the industrial profits continue to plunge. - they have been almost 5% lower year-on-year last month.

"And the workforce in finance and property shrank over the past years for the first time on record; the number of people working for developers dived by 27% since the end of 2023."

Markets finish the week in a mixed state

Japan's Nikkei 225 rose sharply by 1.8% to close at 40,281.16, with the Topix gaining 1.26% to 2,801.68.

Strong performances from companies like DeNA, which surged 15.58%, and Nidec Corporation, up 4.14%, drove the rally.

In China, the Shanghai Composite edged up 0.06% to 3,400.14, while the Shenzhen Component slipped 0.13% to 10,659.98.

Among the top gainers in Shanghai were Fujian Dongbai Group and Anyuan Coal Industry Group, which both rose over 10%.

Hong Kong's Hang Seng Index dipped slightly by 0.04% to 20,090.46.

Declines in Zhongsheng Group Holdings, Nongfu Spring, and JD.com, which fell 4.38%, 4.11%, and 3.55%, respectively, contributed to the subdued performance.

South Korea's Kospi 100 dropped 0.61% to 2,405.66, weighed down by sharp losses in Korea Zinc, which plunged 15.75%, and Samsung Securities, which declined 8.13%.

Australia's S&P/ASX 200 rose 0.5% to 8,261.80, led by strong performances from Mesoblast and Iperionx, which gained 10.98% and 9.84%, respectively.

New Zealand's S&P/NZX 50 outperformed, gaining 1% to close at 13,205.10, with Pacific Edge and Ryman Healthcare advancing 8.13% and 4.27%.

In currency markets, the dollar was last down 0.16% on the yen to trade at JPY 157.74, while it gained 0.14% against the Aussie to AUD 1.6097, but slipped 0.1% on the Kiwi, changing hands at NZD 1.7765.

Oil prices showed gains, with Brent crude futures last up 0.76% on ICE to $73.82 per barrel, and the NYMEX quote for West Texas Intermediate increasing 0.8% to $70.18.

China industrial profits fall at reduced rate, Tokyo core inflation accelerates

In economic news, China's industrial profits fell at a reduced rate in November, declining 7.3% year-on-year compared to October's 10% drop, according to fresh data from the National Bureau of Statistics.

Despite the moderation, annual industrial profits were on track for their steepest decline in over two decades.

Persistent weakness in domestic consumption, a prolonged housing market slump, and heightened trade risks under the incoming US administration were hampering economic recovery.

The producer price index - a key measure of factory-gate prices - also showed improvement, falling 2.5% in November versus a 2.9% decline in October.

This week, the World Bank slightly revised its 2024 growth forecast for China upward to 4.9%, reflecting some optimism for the coming year.

However, for the first 11 months of 2024, industrial profits dropped 4.7%, exacerbating a 4.3% decline through October, signaling continued sluggish demand in the world's second-largest economy.

In Japan, economic signals were mixed.

Core inflation in Tokyo accelerated to 2.4% in December, up from 2.2% in November, driven by steady services inflation.

Meanwhile, factory output fell in November for the first time in three months, reflecting weak external demand.

The data points were expected to weigh on discussions at the Bank of Japan's January policy meeting, where some analysts anticipated a potential interest rate hike.

Labour market conditions remained stable in November, with Japan's jobless rate holding steady at 2.5% and the jobs-to-applicants ratio unchanged at 1.25.

However, broader economic policy took center stage as the government unveiled a record budget for the financial year beginning in April.

The JPY 115.5trn package, a 2.6% increase from the current year, was focussed on debt-servicing and social security costs.

Record tax revenues were expected to reduce new bond issuance to the lowest level since 2008, with a debt dependence ratio falling below 30% for the first time since 1998.

The budget faced political hurdles, however, as prime minister Shigeru Ishiba's government lacked a parliamentary majority and needed opposition support to pass the legislation.

Some opposition demands for higher income tax thresholds could challenge the balance and complicate the government's plans to maintain record tax revenue levels.

Reporting by Josh White for Sharecast.com.