Asian markets started the new quarter on the back foot Friday, trading lower despite better-than-expected China manufacturing surveys, as a reading on Japan's economy disappointed and traders awaited U.S. nonfarm payrolls data later.
"Markets look to be lacking any major stimulus to drive significantly higher," Angus Nicholson, market analyst at spread-bettor IG, said in a note Friday. He said the selloff in European and U.S. markets overnight, coupled with an "awful" Japanese Tankan survey, spurred selling in Asian markets.
"The main concern in the markets appears to be with the U.S. The nonfarm payrolls tonight are important, although few expect the headline jobs numbers to disappoint," he said. "The bigger U.S.-related concern for equities is what is shaping up to be another negative earnings season, a scenario that is likely to weigh on markets globally," he added.
The Nikkei 225 took a tumble in Friday's session and closed down 3.55 percent, or 594.51 points, at 16,164.16, as markets digested the Bank of Japan's Tankan survey. The survey saw big manufacturers' business sentiment at its lowest in nearly three years, and it's set to weaken in the second-quarter, reported Reuters.
The Tankan "does nothing but highlight the deteriorating economic fundamentals in Japan. This report came in below even the most pessimistic report," Stephen Innes, senior trader at OANDA Asia Pacific, said in a note Friday. "Predictably, the Nikkei has reacted poorly to the print and is dragging the dollar-yen lower in its wake. It signals a disturbingly large drop in business confidence."
The greenback weakened against the yen, with the pair trading at 112.20 at 1:26 p.m. at HK/SIN time, compared with levels as high as 112.59 overnight. A stronger yen is generally bad for Japanese exporters as it makes exports more expensive and reduces the value of repatriated earnings.
South Korea's Kospi closed lower by 1.12 percent, or 22.28 points, at 1,973.57. The export-oriented economy released its March trade data earlier today, with exports and imports showing declines of 8.2 percent and 13.8 percent, respectively.
Chinese markets were mixed, with the Shanghai composite closed up 0.17 percent, or 5.0645, at 3,008.979 and the Shenzhen composite closed down 0.56 percent, or 10.694 points, at 1,901.515. Hong Kong's Hang Seng index closed down 1.34 percent, or 277.78 points, at 20,498.92.
The declines came despite better-than-expected manufacturing data from the mainland. China's official manufacturing Purchasing Managers' Index (PMI) came in at 50.2 for March, above a forecast of 49.3 from a Reuters poll, returning to growth for the first time since July.
A similar improvement was seen in the Caixin manufacturing PMI for March, which rose to 49.7 from 48.0 in February, marking the first increase from the previous month in a year. Levels above 50 indicate expansion.
The Caixin survey focuses on smaller and medium-sized enterprises, while the official data target larger companies.