Nikkei Drops 1%, China Life, Haier, and ICBC Earnings Lift China Indexes

Arjun Pandit
28 Mar, 2024
Mumbai

Asian markets traded in a tight range, and market indexes in Japan eased, but they gained in China and India. 

 

Profit Booking Drives Tokyo Stocks Lower 

In Asia, the Nikkei 225 Stock Average fell more than 1% on profit-taking and the worries of an intervention to support the falling yen, which is hovering near a 34-year low. 

Stocks in Tokyo closed lower on the final day of the holiday-shortened week as investors booked profits in tech and financial stocks. 

The yen traded at 151.43 against the U.S. dollar after finance ministry officials stepped up their verbal intervention efforts in support of the yen, despite the Bank of Japan ending its negative rate regime last week. 

Investors are looking forward to the release of industrial output, retail sales, and unemployment data on Friday. 

The Nikkei 2225 Stock Average dropped 1.5% to 40,162.65, and the Topix index dropped 1.7% to 2,751.92. 

SoftBank, Tokyo Electron, Screen Holdings, and Advantest declined between 0.2% and 1%, but FANUC advanced 0.5%. 

Among vehicle markers, Honda Motor, Toyota Motor, Nissan Motor, Suzuki Motor, and Subaru Corp. traded between 0.5% gain and 1.6% fall. 

Mitsubishi UFJ, Mizuho Financial Group, and Sumitomo Mitsui declined between 0.3% and 1.2%. 

 

The Chinese President Assures Foreign Leaders of Additional Reforms 

Stocks in Shanghai and Hong Kong advanced following better-than-expected earnings from China Life, Haier Smart Home, and ICBC. 

Investors have shifted their attention to corporate earnings and economic data flow after the market intervention by government-controlled funds lifted broader indexes by more than 10% in February. 

President Xi Jinping met with a with a delegation of U.S. business leaders and pledged to create a more market-friendly business environment for foreign investors. 

The meeting between President Xi and the U.S. business leaders, including senior executives from Pfizer, FedEx, Blackstone, Qualcomm, and Bloomberg, was held at the end of the China Development Forum in Beijing on Wednesday. 

Xi proposed deepening economic reform that is "market-oriented" and "law-based" to create more room for foreign businesses and rejected the narrative that China's economic growth has peaked. 

However, Chinese policymakers have stepped up efforts to support state-controlled large enterprises at the expense of the private sector and curtail the activities of foreign businesses. 

Moreover, small and medium-sized foreign businesses have started leaving China in droves and shifting their business activities to neighboring Vietnam, Mexico, or other markets in India and ASEAN countries. 

The Chinese government's support of widespread intellectual property theft and recent stringent controls on profit repatriation have also accelerated the sharp decline in foreign direct investment in the last four years. 

Financial markets are closed on Friday and Monday for public holidays in Hong Kong, but markets will remain open for business in mainland China. 

The CSI 300 index increased 1.1% to 3,542.0, and the Hang Seng index added 1.6% to 16,660.76. 

Haier Smart Home rose 7.5% to HK$24.20 after the maker of consumer appliances reported better-than-expected 2023 financial results. 

China Life Insurance rose 5.4% to HK$9.41 after the largest insurance company in China reported a smaller-than-expected 31% decline in earnings in 2023. 

ICBC Bank declined 3.4% to HK$3.94 after the financial services company reported weaker-than-expected 2023 financial results. 

 

India Indexes Extend Weekly Gains 

Benchmark indexes in Mumbai advanced ahead of a 3-day weekend in light trading. 

The Sensex and the Nifty indexes gained a fraction and inched into record territory as investors debated the global interest rate outlook. 

Investors are hoping that interest rate cuts in the U.S. and the eurozone may encourage the Reserve Bank of India to lower domestic rates. 

However, persistently high inflation may delay a rate cut, and the Federal Reserve may decide to keep higher rates for longer. 

The Sensex index increased 0.5% to 73,360.05, and the Nifty index edged up 0.5% to 22,225.40. 

Two popular indexes extended holiday-shortened weekly gains to 1.3%. 

On the Mumbai stock exchange, 47 stocks traded at their 52-week highs and 56 stocks traded at their 52-week lows.

The yield on the 10-year Indian government bonds decreased to 7.04%, and the Indian rupee edged lower to ₹83.35 against the U.S. dollar.

 

Cooler Inflation Lifts Australian Index to a New Record High

Australian stock market indexes traded at a new record high after consumer price inflation in February was weaker than expected at 3.4%. 

Australian indexes advanced in the hopes that the two-year low inflation rate for the third month in a row in February may spur the central bank to lower the policy rate. 

The ASX 200 index gained 1% to close at 7,896.90, a new record high. 

The benchmark index advanced 3% in March and jumped 3.6% in the first quarter of 2024.