Asian equity markets largely drifted lower on Friday, mirroring the prevalent negativity from the prior session in the U.S. markets. Investor apprehension is growing regarding the pace at which the U.S. Federal Reserve might taper interest rates in the coming year, prompted by a report indicating a higher-than-anticipated rise in U.S. producer prices for November. On Thursday, Asian markets exhibited mixed results.
In Australia, the stock market experienced a marked decline on Friday, continuing its downward trend from the previous three sessions and aligning with the negative signals from Wall Street. The S&P/ASX 200 index fell below the 8,300 mark, with notable weaknesses observed in the mining and technology sectors.
The release of stronger-than-expected Australian employment data also led investors to reassess their expectations for an interest rate cut in February.
The S&P/ASX 200 Index saw a drop of 53.40 points, or 0.64%, settling at 8,276.90, after hitting an earlier low of 8,263.50. Similarly, the broader All Ordinaries Index decreased by 53.40 points, or 0.62%, to 8,533.50. Australian markets had closed with slight losses on Thursday.
In the mining sector, BHP Group fell over 1%, while Mineral Resources edged down by 0.2%, and both Rio Tinto and Fortescue Metals saw declines exceeding 2%.
Oil stocks posted mixed outcomes, with Woodside Energy edging up by 0.5% and Beach Energy gaining 1.5%, whereas Origin Energy fell nearly 1%, and Santos remained unchanged.
In the technology sector, both Zip and WiseTech Global slipped close to 1%, with Block (Afterpay's parent) dropping over 4%, and Xero declining more than 1%. Conversely, Appen gained almost 2%.
Among the major banks, Commonwealth Bank, ANZ Banking, Westpac, and National Australia Bank saw slight losses ranging from 0.1% to 0.4%. Gold miners predominantly suffered losses with Evolution Mining down nearly 4%, Northern Star Resources declining more than 2%, Gold Road Resources dropping almost 3%, Newmont losing over 1%, and Resolute Mining falling over 4% following a final settlement announcement with the government of Mali.
In other developments, Insignia Financial shares surged over 6% after confirming a $2.68 billion non-binding takeover proposal from Bain Capital, a private equity firm. Iress shares climbed nearly 6% post reaffirmation of its earnings outlook for fiscal 2024.
In currency exchange, the Australian dollar was trading at $0.636 on Friday.
Meanwhile, the Japanese stock market witnessed a considerable decline on Friday, breaking a four-session winning streak, under pressure from negative cues out of Wall Street. The Nikkei 225 Index fell below the 39,500 threshold, weighed down by key sectors, including technology and finance.
The Nikkei 225 Index concluded the morning session at 39,360.43, a decrease of 488.71 points, or 1.23%, after reaching a low of 39,247.41. On Thursday, Japanese stocks had closed significantly higher.
Major player, SoftBank Group, rose nearly 1%, while Fast Retailing (Uniqlo's operator) dropped over 2%. Among automakers, Honda slipped 0.5%, and Toyota over 1%.
In technology, Screen Holdings and Tokyo Electron each fell close to 3%, whereas Advantest gained approximately 3%.
The banking sector saw Mitsubishi UFJ Financial and Mizuho Financial edge down by 0.2% to 0.5%, with Sumitomo Mitsui Financial losing nearly 1%.
Among top exporters, Mitsubishi Electric and Canon fell roughly 1%, Sony dropped 2.5%, and Panasonic edged down 0.2%.
Significant decliners included IHI (down over 4%), Kawasaki Heavy Industries (almost 4% down), and Mitsubishi Heavy Industries (over 3% down). Omron, Daiichi Sankyo, Recruit Holdings, and Japan Exchange Group each slipped nearly 3%.
Conversely, Oji Holdings soared almost 11%, and Sharp gained over 3%, with DeNA and Konica Minolta each rising nearly 3%.
On the economic front, the Bank of Japan's quarterly Tankan Survey revealed a slight improvement in large manufacturing sentiment during the third quarter of 2024, with a diffusion index score of +14, surpassing the forecast of +13. The future outlook slightly eased to +13 from a previous +14.The latest survey results show that the large non-manufacturers index has reached +33, surpassing forecasts of +28, though slightly down from the previous +34. The future outlook stands at +28, a decrease from +33 recorded three months ago. Meanwhile, the medium manufacturing index is at +11, with an anticipated drop to +8, and the medium non-manufacturing index is currently at +22, expected to decrease to +15. In the small-scale sector, the manufacturing index is at +1 and the non-manufacturing index at +16.
Investment in large-scale industries is projected to rise by 11.3 percent, outperforming predictions of 9.6 percent and improving from 10.6 percent in the third quarter. Similarly, small industry capital expenditure has increased by 4.0 percent, up from 2.6 percent in the previous quarter.
On the currency exchange front, the U.S. dollar traded in the upper range of 152 yen on Friday.
In broader Asian markets, both Hong Kong and China faced declines of 1.8 and 1.5 percent, respectively. South Korea, Indonesia, and Taiwan experienced smaller declines, ranging from 0.1 to 0.3 percent. Conversely, New Zealand, Singapore, and Malaysia posted modest gains, ranging from 0.2 to 0.4 percent.
On Wall Street, stocks managed to recover briefly from an early dip on Thursday but continued to trend lower as the session progressed. Consequently, the Dow marked its sixth consecutive session downturn.
The major indices hit new session lows by the closing bell. The Dow dropped 234.44 points, or 0.5 percent, concluding at 43,914.12. The Nasdaq decreased by 132.05 points, or 0.7 percent, to 19,902.84, and the S&P 500 declined by 32.94 points, or 0.5 percent, settling at 6,051.25.
In Europe, the trading day ended with little change following the European Central Bank's decision to reduce interest rates by a quarter-point. The French CAC 40 Index closed marginally below unchanged, while the U.K.'s FTSE 100 Index and Germany's DAX Index both edged up by 0.1 percent.
Crude oil prices dropped on Thursday, following a profitable streak of three days, as the International Energy Agency projected an oversupply in the market for the coming year. West Texas Intermediate Crude oil futures for January slipped by $0.27, or 0.4 percent, closing at $70.02 per barrel.
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