Asia-Pacific markets mixed ahead of Japan elections; Tokyo inflation slows

Asia-Pacific markets were mixed Friday, with investors awaiting Japan's general election over the weekend.

 

Japan also released its October inflation numbers for the capital city of Tokyo on Friday, its last key economic data before the election. The Bank of Japan's 2-day monetary policy meeting will start on Oct. 30.

 

Tokyo's headline inflation rate fell to 1.8% in October from 2.2% the month before, with core inflation - which strips out prices of fresh food - also coming in at 1.8%, down from 2%.

 

Economists polled by Reuters had forecast the core inflation rate in Tokyo to slow to 1.7% in October.

 

Tokyo's inflation is widely considered a leading indicator of nationwide trends.

 

Separately, Singapore's manufacturing output rose 9.8% year on year in September, beating Reuters poll estimates of a 3.5% growth. But this was sharply lower than the revised 22% jump in August.

 

The benchmark Nikkei 225 fell 0.60% after the inflation report to close at 37,913.92, while the Topix fell 0.65% to 2,618.32, marking a fifth straight day of losses.

 

Hong Kong's Hang Seng index was up 0.52% as of its final hour of trading after falling in the previous session, while mainland China's CSI 300 rose 0.70% to close at 3,956.42.

 

South Korea's Kospi gained marginally, ending at 2,583.27, but the small-cap Kosdaq reversed gains to drop 0.98% and end at 727.41.

 

Australia's S&P/ASX 200 climbed in early trade but gave up most of its gains, ending 0.06% higher at 8,211.3.

 

Overnight in the U.S., the S&P 500 bounced back on Thursday, powered by shares of Tesla rising almost 22% and snapping a three-day losing streak.

 

The electric vehicle manufacturer surged nearly 22% after posting third-quarter results that beat analysts' expectations, registering its best day since 2013.

 

The Nasdaq Composite jumped 0.76%, but the Dow Jones Industrial Average lost 0.33%, to record its first four-day losing streak since June.

 

China's central bank kept the interest rate on medium-term loans to banks unchanged at 2%, according to the bank's statement on Friday.

 

The People's Bank of China issued 700 billion yuan ($98.36 billion) worth of one-year medium-term lending facility (MLF) loans to financial institutions at 2%, to "maintain a sufficient amount of liquidity in the banking system."

 

Japan's finance minister Katsunobu Kato met with U.S. Treasury Secretary Janet Yellen and discussed recent exchange-rate moves, Reuters reported Friday.

 

Atsushi Mimura, Japan's vice finance minister for international affairs, told reporters that the two sides "confirmed the need for the United States and Japan to communicate closely [on FX moves]."

 

Mimura also said that Japan has seen "one-sided, sharp moves in currency rates," adding that it will be "increasingly vigilant to currency moves, including those driven by speculation," the two sides said.

 

Inflation in Japan's capital city of Tokyo has slowed to 1.8% in October, down from 2.2% the month before.

 

Core inflation in Tokyo - which strips out prices of fresh food - also came in at 1.8%, down from 2% in September, but beating the 1.7% forecast by economists.

 

As corporate giants report their quarterly finances in the coming days, one investment bank has suggested that investors bet against two Big Tech stocks.

 

The electricity industry is transforming, according to Morgan Stanley, and multiple power producers, grid operators and utilities are set to benefit.

 

"Power demand is booming, prices are inflecting, and the cost to produce clean power has fallen by a third around the world since 2023, and more so in Asia," the investment bank's analysts outlined in an Oct. 23 note.

 

"Global power markets have surprised on multiple fronts, and investors are navigating a new normal in the power value chain," they added.

 

Morgan Stanley's analysts named three overweight-rated global stocks in the electricity sector which they give more than 40% potential upside.

 

The path forward for equities is still higher even with recent weakness, according to UBS.

 

The S&P 500 fell for a third straight day on Wednesday, after a move higher in Treasury yields put pressure in equities. Nevertheless, UBS' Solita Marcelli remains bullish on equities.

 

Citi's head of global wealth Andy Sieg is bullish on U.S. equities, saying he expects stocks can rally after the uncertainty from the election is lifted.

 

"There's going to be a relief rally that is most likely to happen. We saw it in 2016, we saw it in 2020," Sieg told CNBC's "Money Movers." "And when you think about the possibility for that relief rally, it's uncertainty leaving the market, being replaced by some certainty in terms of the path forward, it's rates coming down. And again, it's getting refocused on the fundamentals in the U.S., which are strong."

 

Initial filings for unemployment benefits receded last week as impacts faded from the recent hurricanes and the Boeing strike.

 

Jobless claims for the week ending Oct. 19 totaled a seasonally adjusted 227,000, down 15,000 from the previous week's upwardly revised level but well below the Dow Jones estimate for 245,000, the Labor Department reported Thursday.

 

However, continuing claims, which ran a week behind, rose to just shy of 1.9 million, the highest since Nov. 13, 2021.