Friday 03:30 BST. Equities across Asia Pacific were ending the week on a downbeat note, with Japanese stocks in particular wilting under a stronger yen and the release of lacklustre economic data.
The Nikkei and the broader Topix were both down 0.9 per cent, while the yen edged up 0.1 per cent to ¥105.80 per dollar, holding onto gains made late on Thursday.
The Japanese currency strengthened as much as 1.4 per cent to ¥105.42 on Thursday after Haruhiko Kuroda, Bank of Japan governor, said there was “no need and no possibility” for the central bank to embark on a policy of “helicopter money” — during a BBC interview that was recorded in mid-June.
The release of Japanese economic data further depressed sentiment on the stock market. July’s Nikkei-Markit “flash” purchasing managers’ index for the manufacturing sector came in at 49, below the 50-mark that separates contraction from expansion and indicating the sector is on track to shrink for a fifth consecutive month.
“The beginning of the third quarter signalled worsening operating conditions in the Japanese manufacturing sector,” said Amy Brownbill, economist at Markit, the financial data company. “International demand fell at the sharpest rate in more than three-and-a-half years, with many [survey] panellists blaming the appreciation of the yen leading to a reduction in global competitiveness.”
There were some brights spots. Both the Nikkei and Topix are still on track to record a second consecutive week of gains, and shares in Nintendo continued their surge, rising as much as 6.9 per cent to ¥29,920 after the Pokémon Go mobile game was released in Japan. Nintendo shares have more than doubled since the game was launched a fortnight ago in selected countries.
Elsewhere in the region, the Hang Seng was down 0.4 per cent, and the ASX 200 fell 0.2 per cent, the Shanghai Composite slipped 0.2 per cent and the Shenzhen Composite contracted 0.1 per cent.
Gold was down 0.1 per cent at $ 1,330.48 an ounce, having closed 1.2 per cent higher at $ 1,331.43 on Thursday after the European Central Bank kept the door open to further monetary easing, but left policy unchanged at its July meeting.
Some analysts believe the ECB could act as soon as its September meeting, when it will have more information on the impact of the UK’s decision to leave the EU.
“We think the most likely option for the ECB is to extend quantative easing beyond March 2017, possibly by 6-9 months. We do not rule out further deposit rate cuts either, although we think these are less likely,” analysts at Barclays said. “Should the negative shock from Brexit be eventually larger than we expect, the ECB may be forced to ease policy further in 2017.”
The euro was flat at $ 1.1024, while the Australian dollar was down 0.2 per cent at A$ 0.7475.
Oil prices, which had ended Thursday more than 2 per cent lower, ticked up slightly on Friday. Brent crude, the global oil marker, was up 0.3 per cent at $ 46.35 a barrel while West Texas Intermediate, the US marker, rose 0.1 per cent to $ 44.81 a barrel.
Overnight on Wall Street, the benchmark S&P 500 closed down 0.4 per cent, the Dow Jones fell 0.4 per cent and the Nasdaq lost 0.3 per cent.
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