Asia report: Markets mixed on RBNZ rate cut, Japan trade deficit

(Sharecast News) - Asia-Pacific markets traded mixed on Wednesday as investors reacted to US president Donald Trump's proposal of 25% tariffs on automotive, semiconductor, and pharmaceutical imports, while New Zealand's central bank cut interest rates as expected. Japanese and Australian stocks fell, while Chinese and South Korean indices gained.

Patrick Munnelly, market strategy partner at TickMill, noted that focus in the region had shifted to Chinese technology companies, which recently showed strong performances fuelled by the rise of AI startup DeepSeek and a promising dialogue between Xi Jinping and industry leaders that bolstered optimism.

"Signs of economic recovery are emerging in China, with DeepSeek providing a significant boost to the tech sector," he said.

"Despite persistent trade risks, confidence in the technology industry remains robust, as the potential for affordable AI applications inspires a reassessment of growth prospects.

"Meanwhile, Hong Kong's Hang Seng Index dipped due to profit-taking, though it has surged 14% in 2025, vying with Germany's DAX index for the title of the world's best-performing market."

Markets in mixed state across the region

In Japan, the Nikkei 225 declined 0.27% to 39,164.61, while the broader Topix slipped 0.3% to 2,767.25.

Losses on Tokyo's benchmark were led by Fujifilm Holdings, which dropped 4.64%, Toppan Printing, down 4.54%, and Keisei Electric Railway, which fell 3.67%.

China's markets advanced, with the Shanghai Composite rising 0.81% to 3,351.54 and the Shenzhen Component gaining 1.46% to 10,772.65.

Leading gainers included Suzhou TZTEK Technology and Hainan Airlines, both up nearly 12%.

Hong Kong's Hang Seng Index edged down 0.14% to 22,944.24, pressured by declines in Hang Seng Bank, China Shenhua Energy, and Meituan.

South Korea's Kospi 100 surged 2.05% to 2,672.41, driven by strong performances from Posco ICT, which jumped 25.44%, and Samsung Heavy Industries, up 13.92%.

In contrast, Australia's S&P/ASX 200 fell 0.73% to 8,419.20, weighed down by a sharp 20.72% drop in Mineral Resources and an 8.13% decline in National Australia Bank following weak first-quarter earnings.

The bank reported cash earnings of AUD 1.74bn (£0.88bn) amid lower margins and rising credit impairments.

Across the Tasman Sea, New Zealand's S&P/NZX 50 slipped 0.14% to 13,033.36, with losses led by EBOS Group and Synlait Milk, both down nearly 5%.

In currency markets, the dollar was last down 0.13% on the yen to trade at JPY 151.86, as it lost 0.15% against the Kiwi to NZD 1.7508.

The greenback did, however, strengthen on the Aussie, rising 0.08% to last change hands at AUD 1.5754.

Oil prices were in the green, with Brent crude futures last up 0.74% on ICE to $76.40 per barrel, and the NYMEX quote for West Texas Intermediate rising 0.85% to $72.46.

RBNZ cuts rates as expected, Japan swings back to trade deficit in January

New Zealand's central bank lowered its benchmark interest rate by 50 basis points to 3.75% on Wednesday, marking its fourth consecutive cut.

The move, which aligned with economists' expectations, took rates to their lowest level since November 2022.

It followed a steady decline in inflation, with the country's headline inflation rate falling to 2.2% in the fourth quarter of 2024.

Price growth had eased in seven of the last eight quarters, providing policymakers with room to support the slowing economy.

In China, new house prices declined 5% year-over-year in January, slightly less than the 5.3% drop recorded in December, according to official data.

Prices remained unchanged from the prior month, underscoring ongoing challenges in the property sector despite government measures to stabilise the market.

Japan posted a trade deficit of JPY 2.76trn (£14bn) for January, its largest in two years and well above analysts' forecasts.

The shortfall reversed a surplus of JPY 132bn from the prior month.

Imports surged 16.7%, driven by higher demand for communication equipment and computers, while exports rose 7.2%, falling short of expectations.

Japanese manufacturers' business sentiment improved for the second consecutive month, with the Reuters Tankan index rising to three in February, its highest reading since November.

Meanwhile, Bank of Japan board member Hajime Takata signalled the need for further interest rate hikes, warning that keeping rates low for too long could encourage excessive risk-taking and fuel inflation.

Takata emphasised the importance of a gradual shift in monetary policy, following the BoJ's recent 25-basis-point hike to 0.5% in January, the highest level since 2008.

Reporting by Josh White for Sharecast.com.