Japan Economic Data Drags Down Asian Stocks

Asian stock markets mostly declined Monday as weaker-than-expected economic reports from China and Japan weighed on the sentiment.

Japan’s benchmark Nikkei plunged 1.01 percent or 124.83 points to 12,273.83 and Chinese Shanghai Composite declined 0.16 percent or 3.49 points to 2,233.13 while India’s BSE Sensex gained 0.47 percent and South Korean KOSPI slipped 0.45 percent. Trading in Asia was relatively quiet as European and some Asian markets including Hong Kong remained closed for the Easter holiday, Monday.

Investor sentiment turned negative after the Bank of Japan (BOJ) indicated that confidence among big Japanese manufacturers improved modestly in the quarter ending March in comparison to the previous quarter. The Tankan survey released by BOJ showed that large manufacturers' business sentiment improved to -8 in March from -12 recorded in the October-December Tankan survey, while non-manufacturers’ business conditions also improved to +6 from +4 in the last survey.

However, both the readings came in weaker than economists’ estimate of -7 for large manufacturers and +8 for the non-manufacturers. Automobile was almost only industry that showed significant improvement among exporters as the yen has depreciated significantly against major counterparts since November.

Sentiment was also weighed down as manufacturing reports from China failed to meet expectations. Data released by the China Federation of Logistics and Purchasing showed that the official Purchasing Managers' Index (PMI) surged to a 11-month-high of 50.9 in March from 50.1 in February but missed Reuters' estimate for a solid uptick of 52.0.

Meanwhile, investors are awaiting announcements from BOJ's two-day policy meeting scheduled Apr. 3 and 4. The BOJ is widely expected to introduce fresh monetary easing measures this week at the first meeting to be chaired by the new governor Haruhiko Kuroda and his deputies.

“Speculators will be looking to build long dollar/ yen positions leading up to the BOJ meeting. They will likely boost the dollar/ yen up to around 96 yen level before selling on the fact, regardless of what the BOJ does at this week's meeting, to book profits,” Yuji Saito, director of foreign exchange at Credit Agricole in Tokyo, told Reuters.

In Japan, Nomura Holdings Inc. plunged 3.47 percent and Bridgestone Corp. declined 2.52 percent, while Softbank Corp. slipped 1.15 percent.

Poly Real Estate Group Co Ltd., gained 2.44 percent and China Vanke Co. Ltd., declined 1.27 percent in Shanghai, while Samsung Electronics declined 0.72 percent in Seoul.