Asia report: Markets mixed as Japan inflation falls to zero

(Sharecast News) - Markets in Asia finished in a mixed state on Friday, as investors digested the last presidential debate in the US before the election, and continued monitoring developments in the ongoing Covid-19 pandemic.
In Japan, the Nikkei 225 was up 0.18% at 23,516.59, as the yen strengthened 0.22% against the dollar to last trade at JPY 104.63.

Technology conglomerate SoftBank Group was down 0.09%, while among the benchmark's other major components, automation specialist Fanuc was up 1.34%, and fashion firm Fast Retailing was ahead 0.39%.

Chipmakers in Japan were lower after US silicon giant Intel posted mixed quarterly results overnight, with Advantest down 1.08% and Tokyo Electron down 2.74%.

The broader Topix index gained 0.34% by the end of trading in Tokyo, closing the session at 1,625.32.

In fresh data out of Japan, CPI inflation dropped to nil in September, from 0.2% in August, in line with consensus forecasts.

Core deflation, which strips out fresh food prices, eased to -0.3% from -0.4%, which surprised the consensus for no change.

The headline drop was driven largely by food inflation, which dropped to 1.9% from 2.9% month-on-month, as supplies started to recover from recent poor weather.

"The onset of outright CPI deflation is inevitable," said Pantheon Macroeconomics senior Asia economist Miguel Chanco.

"Last October's consumption tax hike will drop out of the picture this month, resulting in a step-shift down in most non-food components.

"Meanwhile, the normalisation in food price inflation from the August peak still has room to run."

Chanco said the recent softness in global oil prices also meant that energy price deflation, as well as private transportation costs, were likely to remain "sticky" in the next six to nine months, before favourable base effects take hold.

"On the services front, some relief will arrive early next year, once the 'Go To Travel' scheme expires in January.

"But a substantial increase in inflation is unlikely nonetheless, with wage growth expected to remain non-existent for the foreseeable future."

On the mainland, the Shanghai Composite lost 1.04% to 3,278.00, and the smaller, technology-heavy Shenzhen Composite was off 1.9% at 2,200.56.

South Korea's Kospi was 0.24% firmer at 2,360.81, while the Hang Seng Index in Hong Kong gained 0.54% to 24,918.78.

The blue-chip technology stocks were both higher in Seoul after Intel's results overnight, with Samsung Electronics up 0.17% and SK Hynix 0.72% firmer.

On the coronavirus front, the US Food and Drug Administration (FDA) approved Gilead Sciences' 'remdesivir' as a therapy for Covid-19.

The drug has shortened the time it takes some hospitalised patients to recover from the novel coronavirus.

Investors were also keeping an ear to the ground when it comes to the prospect of federal stimulus in the US, as House speaker Nancy Pelosi said a deal was "just about there".

She did warn that passing a deal would still take some time, however, as there were still some differences between the House Democrats and the Trump administration.

Investors also kept an eye on the last debate between Donald Trump and Joe Biden ahead of the US presidential election on 3 November, which offered little in the way of fresh sentiment.

"The final US presidential debate was less chaotic than the first but has not caused much of a stir as it offered little in the way of new information that could shift the results of the election in the market's view," said Axi chief global market strategist Stephen Innes.

Oil prices were higher as the region entered the weekend, with Brent crude last up 0.42% at $42.64 per barrel, and West Texas Intermediate rising 0.34% to $40.78.

In Australia, the S&P/ASX 200 slipped 0.11% to 6,167.00, although the country's big four banks led the hefty financials subindex 0.51% higher.

Australia and New Zealand Banking Group was up 1.44%, Commonwealth Bank of Australia added 0.82%, National Australia Bank was ahead 0.62%, and Westpac Banking Corporation was 0.97% firmer.

Across the Tasman Sea, New Zealand's S&P/NZX 50 was 0.51% firmer after a turbulent session, closing at 12,470.34.

The benchmark's major importers were mixed, with specialist dairy firm A2 Milk down 0.52% and medical devices manufacturer Fisher & Paykel Healthcare up 0.17%.

The down under dollars were both stronger on the greenback, with the Aussie last ahead 0.43% at AUD 1.3989, and the Kiwi advancing 0.36% to NZD 1.4926.