Japan household spending falls, Hong Kong markets close due to typhoon

On Friday, Asia-Pacific markets experienced a downturn as investors reacted to Japan's household spending data and awaited a significant jobs report from the U.S. Japan's household spending for July showed a modest increase of 0.1% in real terms compared to the previous year, falling short of the 1.2% rise anticipated by economists. This data comes after a 1.4% decline in June, indicating a potential shift in consumer behavior. The average monthly expenditure for July was reported at 290,931 yen, reflecting a nominal increase of 3.3%. In contrast, average household income rose significantly, with a nominal increase of 8.9% to 694,483 yen, suggesting that while spending growth is weak, wage growth remains strong. This disparity may limit the Bank of Japan's ability to raise interest rates, as the weak spending figures could influence monetary policy decisions. The Nikkei 225 index fell by 0.72%, marking its fourth consecutive day of losses, while the broader Topix index decreased by 0.89%. In South Korea, the Kospi index also declined by 1.21%, continuing a trend of losses in the region. However, Australia's S&P/ASX 200 bucked the trend, gaining 0.39%. Meanwhile, Hong Kong's markets were closed due to Super Typhoon Yagi, with the observatory issuing a typhoon signal and expecting to downgrade it later in the day. The closure of Hong Kong's markets adds to the uncertainty in the region, as trading will be halted if the storm signal is downgraded after noon. Overall, the combination of weak consumer spending in Japan and adverse weather conditions in Hong Kong contributed to a cautious atmosphere in the Asia-Pacific markets.