Japanese markets slumped Friday after the country's central bank lowered interest rates for the first time in seven years but the reduction fell short of market expectations.
The benchmark Nikkei 225 Stock Average plunged 5.0% or 452.8 points to 8,577 while the Hang Seng Index finished 361.18 points, or 2.5% lower at 13,716.99.
The Bank of Japan trimmed its key interest rate to 0.3% from a decade-high 0.5%, though the cut was by a split vote and was smaller than the market had expected. The move came under government pressure to join the global response to the worst financial crisis in 80 years.
Among a raft of economic data released today, the Ministry of Internal Affairs and Communications said that core consumer prices in Japan rose 2.3% on year in September, moving higher for the twelfth consecutive month. Core CPI, excluding volatile fresh food prices, was in line with analyst expectations and follows a 2.4% annual expansion in August. Overall inflation was unchanged in September at 2.1%, in line with forecasts.
Tokyo core CPI for October, considered a leading indicator for the nationwide trend, climbed 1.5% on year after a 1.7% annual increase in the previous month. Overall Tokyo inflation was up an annual 1.2% versus expectations for a 1.3% climb and following a 1.4% gain a month earlier. Minus food and energy costs, Tokyo CPI was up 0.4% after a 0.5% annual gain a month earlier.
Activity in Japan's manufacturing sector contracted in October for the eighth straight month, according to the latest survey from Nomura Holdings and the JMMA. The group's Purchasing Managers Index dropped to a seven year low of 42.2 in October, lower than the 50.0 reading that separates contraction in the sector from expansion. The accompanying PMI industrial production index fell in October to 39.7, also the lowest since December 2001.
Meanwhile, unemployment in Japan decreased slightly in September, according to data from the government released on Friday. The nation's seasonally adjusted jobless rate hit 4.0%, down from 4.2% in August. Most economists had forecast the jobless rate to stay at 4.2%.
Banks closed mixed. Mitsubishi UFJ Financial Group plunged 5.4% and Mizuho Financial Group tumbled 5.2%, while Sumitomo Mitsui Financial group advanced 4.7%. Top brokerage Nomura Holdings plummeted 6.1%.
Among exporters, Canon surged 9.9% and machinery maker Komatsu jumped 10.5%, but Honda Motor plunged 13.0%, Sony fell 2.8%, Toyota Motor shed 4.4%. Mazda slumped 13.8% after it lowered its profit outlook on Thursday.
In the tech space, Advantest gained 1.3%, but Fanuc sank 11.4%, Fujitsu dropped 6.9%, and Kyocera slid 4.9%.
Among commodity-related stocks, Inpex Holdings rose 1.3%, while Nippon Oil tumbled 11.7% and Nippon Mining Holding fell 6.8%. Trading house Mitsubishi Corp plummeted 11.1% and Mitsui & Co slipped 1.0%.
CHINA
The Chinese stock market closed sharply lower, reversing most of Thursday's gains, as concerns about a domestic economic slowdown deepened after more companies posted weak third-quarter earnings. The benchmark Shanghai Composite Index fell 34.8 points or 2.0% to close at 1,728.8.
The official Shanghai Securities News reported Friday that the net profit of 1,624 listed companies in the first nine months rose 7.1% from a year earlier to 782 billion yuan, slowing from about 16% for the first half.
Bank of Communications said that its third-quarter net profit rose nearly 22% to 7.21 billion yuan compared to an increase of 60 % in the second quarter and 108% in the first quarter. China CITIC Bank reported a third-quarter net profit growth of 97% year-over-year to 4.034 billion yuan under Chinese accounting standards.
Hainan Airlines booked a loss of 260.8 million yuan in the third quarter, while Shanghai Airlines reported a loss of 437.4 million yuan.
The transportation sector led the losers. Daqin Railway Co. and Shenzhen Airport plunged 10.0% each, Air China dropped 4.4%, China Eastern Airlines lost 5.8%, and China Southern Airlines slid 3.4%. Hainan Airlines fell 5.0% and Shanghai Airlines plummeted 6.2%.
Energy stocks closed mixed, with Kailuan Clean Coal plunging 7.2% and China Shenhua Energy advancing 1.6%.
Among banks, Bank of Communications plunged 4.2%, China CITIC Bank lost 1.0%, Industrial Bank fell 2.7%, China Merchants Bank shed 3.9%, China Minsheng Banking Corp declined 1.7%, and Bank of China slipped 0.3%.
Elsewhere in the financial sector, China Life Insurance gave away 4.2% and Ping An Insurance slid 2.9%.
Among refiners, market heavyweight PetroChina declined 2.1% and Sinopec plummeted 4.3%.
Elsewhere:
Taiwan's Taiex closed up 4.0% at 4,870.
Singapore's STI closed down 0.4% at 1,794.
Indonesia's Jakarta Composite Index closed up 7.1% at 1,256.
Malaysia's KLCI closed up 10 points at 863.
India's Sensex closed up 8.2% at 9,788.
South Korea's Kospi index climbed 2.6% to 1,113.06.
New Zealand's NZX closed 2.1% up at 2,820.86.
The S&P/ASX 200 added 0.4% to 4,018 in Sydney.
with files from other wire services
