Asia: Stocks outside of Japan gain after Chinese inflation data

Asian stocks outside of Japan advanced as Chinese inflation unexpectedly fell, boosting hopes for further stimulus measures.

China’s consumer price index (CPI) dropped to 1.4% in November from 1.6% the previous month, surprising analysts who had expected it to remain unchanged.

“It is further evidence of China’s slowdown but does give the People’s Bank of China some flexibility to loosen monetary policy further,” said CMC Markets analyst Jasper Lawler.

“The likelihood of another rate cut to follow the first may depend on industrial production and retail sales data on Friday.”

Hong Kong’s Hang Seng index rose 0.16% while the Shanghai composite jumped 2.93%. The yuan also strengthened 0.1% to 6.1773 per dollar as the People’s Bank of China raised its daily fixing for the fourth straight day, setting it 0.06 percent stronger at 6.1195 per dollar.

Separately, producer prices in China declined 2.7% in November following a -2.2% print in October. Analysts had predicted a 2.4% slide.

In other news, China injected money into the interbank market through the nation’s development bank, Cai Feng, a strategist at Guoyuan Securities Co., told Bloomberg.

In Japan, the Nikkei 225 fell 2.25% as the yen edged higher for a third day to hurt exporters. Auto and tire manufacturing exporters led the decline in Tokyo.