Early Friday Momentum Across Asia

Asian equities started Friday, September 5, on a mixed note, with most major indices advancing in early morning trade while Chinese markets lagged behind. Investor sentiment across the region was supported by optimism in Japan and Australia, though caution prevailed in Hong Kong and Shanghai. Currency markets also reflected divergence, with both the Japanese yen and Australian dollar edging lower.

Japan’s Nikkei 225 Surges Above 42,500

Japan’s Nikkei 225 index opened strongly, advancing +1.53% to 42,580.27, making it the standout performer in Asia this morning. Robust corporate earnings expectations and continued support from a weaker yen boosted exporter shares. Traders noted that investors are increasingly positioning for further momentum in Japan’s equity market, which has been one of the strongest globally in 2024.

The Japanese Yen Index slipped -0.32% to 67.33, adding to the positive momentum for exporters. A softer yen typically enhances profit outlooks for Japan’s global manufacturing giants, providing tailwinds for the Nikkei.

Australia Follows With Broad-Based Gains

The S&P/ASX 200 [XJO] rose +1.00% to 8,826.50, supported by strength in mining and banking shares. Australia’s equity market benefited from renewed investor appetite for commodities, alongside signs of steady domestic growth.

Meanwhile, the Australian Dollar Index declined -0.36% to 65.17, reflecting global demand for the U.S. dollar and mild concerns over Australia’s external trade environment. The weaker currency could further support export-oriented sectors in the medium term.

South Korea and India Post Modest Increases

• KOSPI Composite Index added +0.52% to 3,200.83, buoyed by chipmakers and technology shares that tracked gains in global semiconductor demand.
• S&P BSE SENSEX in India edged up +0.19% to 80,718.01, extending its record-setting run but showing signs of investor caution ahead of upcoming inflation data releases.

Both indices reflected steady regional participation but lacked the sharp upside momentum seen in Japan and Australia.

Hong Kong and Shanghai Weigh on Regional Outlook

The picture was less optimistic in China:

• Hang Seng Index fell -1.12% to 25,058.51, pressured by weakness in property developers and consumer stocks. Investors remain cautious on Beijing’s policy effectiveness in reviving growth.
• Shanghai Composite Index [000001.SS] slipped -1.25% to 3,765.88, as foreign capital outflows continued and confidence in the domestic economy stayed muted.

Persistent concerns over China’s real estate sector and sluggish consumption are dampening broader market sentiment, creating a drag on regional indices despite strength elsewhere in Asia.

Regional Trends and Investor Takeaways

This morning’s session highlights clear divergence across Asia’s financial landscape:

• Strong momentum in Japan and Australia, supported by weaker currencies.
• Steady but moderate gains in South Korea and India, driven by technology and resilient domestic demand.
• Downside pressure in Hong Kong and Shanghai, reflecting lingering concerns over China’s structural growth challenges.

Currency moves further underlined this contrast, with declines in both the yen and Australian dollar proving supportive for equity markets, while Chinese markets continue to struggle against macroeconomic headwinds.

Outlook for the Rest of Friday’s Session

Investors will monitor U.S. futures and European pre-market activity for additional cues later in the day. Global risk appetite remains sensitive to economic data releases, particularly around inflation and central bank policy expectations.

While Asia’s trading day began with optimism in Tokyo and Sydney, the performance of Chinese markets remains a key determinant for regional sentiment. If Hong Kong and Shanghai extend losses, it may cap overall Asian market enthusiasm heading into the weekend.