Most Asian indexes advance, but China markets ease

  • Most Asian indexes advanced on Thursday, but China markets underperformed.
  • China Caixin manufacturing PMI topped expectations.
  • The Federal Reserve kept rates unchanged, but said it expected inflation to pick up this year.
  • The dollar edged up against a basket of rivals.

Asian indexes closed mostly higher on Thursday after stocks in the region sold off earlier this week. Stocks in greater China, however, underperformed, their regional peers.

The benchmark Nikkei 225 index surged 1.68 percent, or 387.82 points, to close at 23,486.11, snapping a six-day losing streak. The move came as the dollar firmed against the yen. Energy-related stocks were higher as oil prices recovered: Inpex rose 2.71 percent and JXTG Holdings gained 3.12 percent by the end of the day.

Nintendo shares closed higher by 0.52 percent after the company on Wednesday announced third-quarter profit rose 261 percent to 116.5 billion yen ($1.07 billion), beating forecasts. The company said earlier Thursday it would partner with U.S. studio Illumination to produce a film about Nintendo character Mario.

Other technology sector names were mixed, with SoftBank up 0.52 percent. Automakers, financials and retailers traded in positive territory. Index heavyweight Fast Retailing rose 1.85 percent.

Symbol
Name
Price
 
Change
%Change
NIKKEI
---
HSI
---
ASX 200
---
SHANGHAI
---
KOSPI
---
CNBC 100
---

In South Korea, the Kospi edged up 0.08 percent to end at 2,568.54. Technology stocks were mixed, with Samsung Electronics erasing early gains to close lower by 0.16 percent and SK Hynix adding 1.22 percent. The manufacturing space mostly recorded gains, with steelmaker Posco trading higher by 3.81 percent by the end of the session.

Over in Sydney, the S&P/ASX 200 gained 0.87 percent to finish the session at 6,090.1 on broad based strength across most sectors. The heavily weighted financials and materials sectors were up 1.15 percent and 1.05 percent, respectively. Oil stocks were also higher after crude continued its recovery.

China markets retreat

Meanwhile, the Hang Seng Index gave up early gains to ease 0.4 percent by 3:48 p.m. HK/SIN. Property developers, which traded mostly higher in the morning, were mixed in afternoon trade: Country Garden fell 1.78 percent and China Overseas rose 3.96 percent by 3:51 p.m. HK/SIN. Financials, technology and energy stocks were mostly lower, with Tencent declining 0.39 percent ahead of the market close.

PC maker Lenovo fell 2.66 percent, underperforming the broader market, after it booked a loss in the third quarter. The company reported a loss of $289 million in the quarter, highlighting a one-off charge of $400 million due to U.S. tax reform.

Mainland indexes also showed declines: The Shanghai composite fell 0.99 percent to close at 3,446.24, despite gains seen in major banks: Industrial and Commercial Bank of China closed up 2.67 percent. The Shenzhen composite tumbled 3 percent by the end of the day and the blue chip CSI 300 was lower by 0.71 percent. Defense stocks ended the session in negative territory, while automakers and energy-related names closed mixed.

PMIs in expansion territory

The fall in Chinese stocks came despite the release of China Caixin manufacturing purchasing managers' index, which topped expectations. That followed the release of official data on Wednesday, which indicated that January factory activity in the country expanded less than expected in January.

Earlier in the day, the Nikkei/Markit PMI showed that factory activity in South Korea moved into expansion territory in January after coming in below the 50 mark the month prior. Meanwhile, manufacturing activity in Japan grew at its quickest in nearly four years in January, Reuters said.

Investors also focused on India after the country's annual budget was presented on Thursday.

Markets in Malaysia will be closed for Federal Territory Day.

U.S. stocks closed slightly higher in the last session: The Dow Jones industrial average tacked on 0.28 percent, or 72.5 points, to close at 26,149.39. Other indexes stateside also finished the day with slight gains.

Fed holds rates steady

The Federal Reserve announced Wednesday it was holding rates steady, a move that was widely expected. The Federal Open Market Committee also said it expected inflation pressure to pick up as the year progressed.

"To be sure, there were hawkish hints in Yellen's swan song, with allusion to solid (rather than merely improving) jobs, household spending and business investment," Mizuho Bank economist Vishnu Varathan wrote in a note.

Still, he added that dollar bulls were not convincingly stirred, partly because "inflation references did not drop the shortfall from [the Fed's] 2 percent target."

The dollar index, which tracks the U.S. currency against six rivals, firmed to trade at 89.276 by 3:42 p.m. HK/SIN. That was firmly above a low of 88.780 touched overnight.

Against the yen, the greenback extended overnight gains to trade at 109.57.

Corporate news

Japan's Fujifilm will be taking over Xerox in a deal amounting to $6.1 billion, Reuters said. Xerox will be folded into Fujifilm's existing joint venture with the U.S. company while 10,000 jobs will be cut from Fujifilm's Fuji Xerox subsidiary. Fujifilm jumped 12.12 percent by the end of the day.

Meanwhile, Fujitsu saw its stock plunge 12.84 percent a day after reporting earnings declined 29.3 percent for the period between April and December. The company also said Wednesday that it would be selling a majority stake in its mobile device business to Polaris Capital Group, Reuters reported.