Asia: Japanese and Chinese stocks slide on disappointing data

Asian equity markets closed mostly lower on Thursday, as the volatility that has characterised China over the last couple of weeks spread to Japan.

The Nikkei Stock Average fell 2.51%, reversing the 7.7% surge it enjoyed on Wednesday, which was its biggest daily gain in percentage terms in seven years.

The yen suffered sharp losses against the dollar and the pound, declining 0.69% and 0.93% respectively against the two currencies, and lost 0.47% against the euro.

Losses in Japan came despite encouraging comments from Bank of Japan governor Haruhiko Kuroda, who reiterated the government would continue its current easing programme until inflation reached the 2% mark.

There was negative news on the data front, with the country’s producer price index declining 3.6% in August against expectations for a 3.3% drop, while machine orders slumped 16.5% year-on-year in August.

“With central bank’s policy’s diverging and economic data equally conflicting, traders remain clueless as to which way the markets are going to go as volatility and uncertainty continue to pervade,” said Jonathan Sudaria, analyst at London Capital Group.

Over in China, stocks came off the morning lows but ended in the red, with the Shanghai Composite sliding 1.39% and Hong Kong’s Hang Seng Index losing 2.57%, as investors remained jittery about economic growth.

Official data showed the country’s consumer inflation rose 2% year-on-year in August, marginally above the 1.9% analysts had expected and up from the 1.6% increase registered in July, while the country’s producer price index saw its worst drop in 6 years as it fell by 5.9%,

On Thursday, Chinese Premier Li Keqiang said China could still deliver a strong performance this year.

The Chinese economy will not have a hard landing,” he said in a speech at the World Economic Forum.

Elsewhere, South Korea’s Kospi gained 1.44%, while Australia’s S&P ASX 200 lost 2.42%, although the Australian dollar gained 0.65% against its US counterpart on the back of better-than-expected unemployment figures for August.

The Malaysian ringgit and Indonesian rupiah, hit fresh 17-year lows against the US dollar, as emerging markets currencies remained under severe pressure.