Asian markets mostly lower as dealers digest China rate hike

Asian markets mostly lower as dealers digest China rate hike

Hong Kong: Asian stock markets were mostly lower on Tuesday as traders returned to the Hong Kong bourse for the first time since China raised interest rates on Christmas Day.

Tokyo ended lower on the back of a strengthening yen but investors were broadly ignoring a batch of economic data showing Japanese consumer prices have been slipping every month for almost two years.

Hong Kong shed 0.93%, or 212.07 points, to end at 22,621.73 as the market digested Beijing’s decision on Saturday to raise rates for the second time since October and its hints that further rises could come.

The central People’s Bank of China hiked its one-year lending and deposit rates by 25 basis points each as it struggles to curb borrowing, rein in property prices and tame inflation.

Investors are concerned that a tighter monetary policy by Beijing will restrict growth, which could have a knock-on effect for many other countries that rely on China’s huge appetite to boost their own economies.

Shanghai dropped 1.74%, or 48.41 points, to 2,732.99 after giving up 1.90% on Monday.

“The PBoC’s emphasis again on controlling prices will intensify tightening concerns and are hitting the already-weak market sentiment, especially following the weekend interest rate hike," said Guotai Junan Securities analyst Zhang Xin.

Tokyo closed 0.61%, or 63.36 points, lower at 10,292.63 as the stronger yen led investors to take profits after the previous day’s 0.75% gain.

Exporters led the decline as the dollar edged down to to ¥82.44 from ¥82.78 in late New York trade on Monday.

“The selling pressure is not that strong, but there is a lack of buyers," Okasan Securities strategist Hideyuki Ishiguro told Dow Jones Newswires.

However, Japan’s finance minister Yoshihiko Noda warned the government was ready to step into the forex markets for a second time in three months to halt the yen’s rise, which he described as one-sided.

The government intervened in the market in September as the yen surged to a 15-year high against the greenback.

Market-watchers said dealers were not taking too much from mixed macro-economic data released in the morning showing the core consumer price index dropped 0.5% in November from a year ago.

The figure represents the 21st straight month of falls, as deflation continues to plague the Asian economic giant.

However other data showed industrial output rose 1.0% in November from the previous month, rebounding after five straight months of declines.

And unemployment was unchanged at 5.1% last month. Most investors were looking to the release of the US consumer confidence index later in the day.

Seoul gained 0.55%, or 11.13 points, to 2,033.32. Sydney and Wellington were closed for bank holidays.

The euro rose to $1.3235 in Tokyo morning trade from $1.3161 in New York late Monday. The European single currency was also up at ¥109.13 from ¥109.00.

On oil markets New York’s main contract, light sweet crude for delivery in February, dropped 4 cents to $90.96 per barrel and Brent North Sea crude for February was down 11 cents at $93.74.

Gold closed at $1,390.00-1,391.00 an ounce in Hong Kong, up from Friday’s close of $1,383.50-1,384.50.