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Asia-Pacific Markets React to Fed Decision, China PMI, and Australia CPI: A Mixed Bag of Highs and Lows

Asia-Pacific Markets React to Fed Decision, China PMI, and Australia CPI: A Mixed Bag of Highs and Lows

On January 31, 2024, Asia-Pacific markets experienced a mix of highs and lows as investors reacted to key events and economic data. The Federal Reserve’s decision, China’s Purchasing Managers’ Index (PMI), and Australia’s Consumer Price Index (CPI) played significant roles in shaping market sentiments. Let’s dive into the highlights of these developments.


China Stocks Tumble, Australia Shares Reach All-Time High


Mainland Chinese stocks faced a significant downturn, reaching a five-year low, while Australian stocks surged to an all-time high. The S&P/ASX 200 index gained 1.06%, closing at 7,680.7, surpassing its previous record set in August 2021. This surge came despite Australia’s fourth-quarter inflation rate coming in lower than expected at 4.1%, marking its lowest level since December 2021. Conversely, China’s CSI 300 slid to a five-year low, dropping 0.91% to close at 3,215.35 after China’s manufacturing activity contracted for the fourth consecutive month in January, with the official PMI at 49.2.


Mixed Performance in Other Asia-Pacific Markets


Japan’s Nikkei 225 closed 0.6% higher at 36,286.71, while the broad-based Topix also ended nearly 1% higher at 2,551.10. South Korea’s Kospi experienced a slight decline of 0.07% at 2,497.09, while the small-cap Kosdaq saw a larger loss of 2.4%, closing at 799.24. Hong Kong’s Hang Seng index dropped 1.78%. These market movements were influenced by various factors, including Samsung Electronics’ disappointing operating profit results and the anticipation of the Federal Reserve’s decision on interest rates.


Awaiting the Fed’s Decision


Investors worldwide eagerly awaited the Federal Reserve’s decision on interest rates. The Fed funds futures market had priced in a 97% probability of rates remaining unchanged, according to the CME FedWatch tool. While the three major U.S. indexes closed mixed, with the S&P 500 slipping 0.06% and the Nasdaq Composite pulling back 0.76%, the Dow Jones Industrial Average added 0.35% to reach a record close of 38,467.31. Investors were keen to analyze any potential shifts in the policy statement that would conclude the meeting.


Singapore Unemployment Holds Steady, China’s Manufacturing PMI


Singapore’s unemployment rate remained stable at 2% during the fourth quarter of 2023. This figure remained unchanged from the previous quarter and the same period in 2022. Additionally, China’s factory activity contracted for the fourth consecutive month in January, although the official PMI rebounded to 49.2 from December’s six-month low of 49. Non-manufacturing PMI also rose to 50.7, indicating strength in the services industry.


Samsung’s Operating Profit Decline


Shares of Samsung Electronics fell 1.21% following the company’s announcement of a 34.57% drop in operating profit for the fourth quarter of 2023 compared to the previous year. The company reported an operating profit of 2.82 trillion Korean won ($2.13 billion), in line with its earlier guidance. Samsung’s results reflected the challenges faced by the global tech giant in a highly competitive market.

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