Asia report: Markets finish turbulent week in mixed state
By Josh White
Date: Friday 16 May 2025
(Sharecast News) - Asia-Pacific markets traded mixed on Friday as investors reacted to disappointing economic data from Japan and key earnings reports from the region.
Japan's economy contracted more than expected in the March quarter, adding to caution as the country remains in unresolved trade talks with the United States.
"The week kicked off strongly, but by Friday, the risk-on rally - boosted by a trade truce between China and the US - was losing momentum as traders became concerned that the recovery had exceeded expectations and that more developments in the trade situation were forthcoming," said TickMill market strategy partner Patrick Munnelly.
"Wall Street and European stock futures remain steady, while Asian markets show a mixed performance.
"The dollar declined for the second consecutive session while stock prices fell, following significant market fluctuations earlier in the week due to the US-China tariff agreement easing."
Munnelly noted that the dollar's depreciation notably benefitted the yen and Swiss franc.
"The yield on the 10-year Treasury dipped slightly after a 10 basis point drop on Thursday, as investors factored in the likelihood of two Federal Reserve interest rate cuts this year.
"This subdued trading indicated a more cautious approach after a strong week for risk assets stemming from US-China trade discussions.
"As Friday approached, a measure of global stocks had risen for seven straight days, reaching a level not observed since February when it hit a record high."
Markets mixed at end of volatile week
In Japan, the Nikkei 225 edged down by 0.01% to close at 37,753.72, pulled lower by a 4.29% drop in Dainippon Screen Manufacturing, a 4.25% decline in Recruit Holdings, and a 3.84% loss in Japan Post.
The broader Topix index managed a modest gain of 0.05%, finishing at 2,740.45.
In mainland China, the Shanghai Composite fell 0.4% to 3,367.46, as several mid-cap names tumbled sharply.
Anhui Genuine New Materials dropped 10%, Suzhou Longjie Special Fiber fell 7.03%, and Cosco Shipping Development lost 6.62%.
The Shenzhen Component also slipped, declining 0.07% to 10,179.60.
Hong Kong's Hang Seng Index declined 0.46% to 23,345.05, dragged down by a 4.27% fall in Alibaba Group.
The Chinese e-commerce giant missed both revenue and profit expectations in its fiscal fourth quarter, reporting revenue of CNY 236.5bn (£24.7bn), compared to analyst forecasts of CNY 237.2bn, and net income of CNY 12.4bn versus an expected CNY 24.7bn.
Still, revenue grew 7% year-on-year and net income rose 279% from a low base.
The company cited losses from subsidiary disposals, partially offset by stronger income from operations and gains on equity valuations.
Hang Seng Bank also declined 3.25% and Zhongsheng Group fell 3.13%.
South Korea's Kospi 100 rose 0.28% to 2,620.78, supported by strength in Hanmi Semiconductor, which surged 11.72%.
Doosan Heavy gained 7.36% and Korea Electric Power advanced 5.66%.
Australia's S&P/ASX 200 added 0.56% to reach 8,343.70, led by a strong 18.7% rally in Appen.
Resolute Mining and St Barbara each rose 5.45%.
By contrast, New Zealand's S&P/NZX 50 dropped 0.73% to 12,786.79, weighed down by a 3.06% decline in Skellerup Holdings, a 2.99% fall in Oceania Healthcare, and a 2.6% loss in Fletcher Building.
In currency markets, the dollar was last down 0.12% on the yen, trading at JPY 145.49, as it slipped 0.2% against the Aussie at AUD 1.5578, and retreated 0.45% from the Kiwi, changing hands at NZD 1.6938.
Oil prices were little changed, with Brent crude futures last down 0.11% on ICE at $64.46 per barrel, and the NYMEX quote for West Texas Intermediate slipping 0.05% to $61.59.
Japanese economy contracts more than expected in first quarter
On the data front, Japan's economy contracted more than expected in the first quarter of 2025, highlighting persistent weakness amid global trade uncertainty.
Preliminary government data released Friday showed gross domestic product (GDP) shrank 0.2% quarter-on-quarter for the three months ended March, double the 0.1% decline forecast by economists in a Reuters poll.
On an annualised basis, GDP fell 0.7%, well below expectations for a 0.2% drop.
Despite the slowdown, Japanese markets attracted record levels of foreign investment in April.
Overseas investors purchased JPY 8.21trn in equities and long-term bonds, the highest monthly total since the finance ministry began tracking the data in 1996.
The inflows followed heightened trade tensions led by US president Donald Trump, which prompted a shift away from American assets.
Meanwhile, Goldman Sachs raised its 12-month price target for Asian stocks, citing improved regional growth prospects and easing US-China trade tensions.
The investment bank increased its forecast for the MSCI Asia-Pacific ex-Japan index from 620 to 660.
While the outlook over the next three months remained flat due to lingering tariff uncertainty, the firm upgraded its global equity stance to neutral, reversing its prior underweight recommendation.
Reporting by Josh White for Sharecast.com.
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