Asia report: China data, NZ rate cut arrives to mixed markets

Markets in Asia were mixed on Thursday, as investors were faced with more economic data from China, as well as interest rate decisions from central banks in South Korea and New Zealand.

The Shanghai Composite slipped 2.03% to finish at 2,804.35, while the smaller tech-heavy Shenzhen Composite was down 1.42% to 1,688.97.

Data released from Beijing earlier in the day showed consumer prices in the People's Republic accelerated to a six-month high in February, with seasonal effects causing food prices to spike.

Consumer inflation was up 2.3% from a year earlier, well above Reuters' expectation for a 1.9% rise and larger than the 1.8% figure in January. It was the fastest annual growth in prices since July 2014.

HSBC greater China economist Julie Wang said sharp surges in food prices had been notably absent in recent years, with many food items now at their highest points since the National Bureau of Statistics started collecting data in 2009.

"Better supply side management may mean prices ease faster, but it appears likely that the year-on-year headline CPI consumer price index inflation would remain strong in March," she added.

And while stronger inflation usually makes stimulus a more difficult prospect for central banks, Wang said the reading was unlikely to reduce room for further easing from the People's Bank.

"Against the backdrop of sluggish economic activities, we think the PBOC will likely persist with an accommodative monetary policy in order to support growth," she said.

Renminbi remained flat against the dollar, trading at CNY 6.5144 per USD in the trading afternoon. Early in the day, the People's Bank had set the onshore loose peg at CNY 6.5127, compared with Wednesday's ZNY 6.5106.

South Korea's Kospi added 0.84% to 1,969.33, Hong Kong's Hang Seng Index was flat at 19,984.42, and the Nikkei 225 closed up 1.26% at 16,852.35.

Japan's major exporters were mostly up, with Honda advancing 1.61%, Nissan up 2.14% and Toyota adding 2.98%. That came after the yen retreated from the greenback, climbing above the 113 mark. It was last 0.12% weaker at JPY 113.49.

The Nikkei also reported that Taiwan's Hon Hai Precision Industry - owner of iPhone assembler Foxconn - was now conducting an extensive assessment of the books at beleaguered electronics maker Sharp. It said Foxconn wanted to complete the planned acquisition before Sharp's bank loans expire at the end of March.

Sharp was reported to hold around JPY 500bn in loans from Mizuho Financial Group and Mitsubishi UFJ, due to expire on March 31. Its shares closed down 2.5%, while Hon Hai was up 0.24%.

After settling up overnight, oil was trending down again in late Asian trading. Brent crude was last down 1.41% to $40.51 per barrel, and West Texas Intermediate was down 1.01% to $37.89.

Those losses came after the US Energy Information Administration revealed crude stockpiles had risen by 3.9m barrels last week, to reach 522m barrels. Gasoline inventories fell by 4.5m barrels, however.

In Australia, the S&P/ASX 200 finished down 0.14% at 5,150.07. Energy stocks in the country were mixed, with Santos gaining 1.06% and Woodside Petroleum losing 0.56%.

New Zealand's S&P/NZX 50 closed up 0.79% to reach a fresh record high of 6,508.28, after the country's central bank made a surprise cut to interest rates.

The Reserve Bank of New Zealand reduced its official cash rate by 25 basis points to 2.25% - the lowest the rate has ever been. A majority of economists polled by Reuters had expected the bank to stand pat on its rates.

In a statement, RBNZ governor Graeme Wheeler said the outlook for global growth had weakened since its December statement, citing weaker growth in China, Europe and emerging markets. Lower fuel prices and deflated costs of other imports were also keeping headline inflation in the exposed economy low.

IG market strategist Evan Lucas said "the market will clearly start pricing in at least one more 25 point cut and possibly two. Rates could be sub-two per cent in December."

The move had an immediate negative effect on the New Zealand dollar, with the Kiwi tumbling more than a cent against the greenback. It picked up again after New Zealand closed, however, and was last 0.18% stronger to NZD 1.5002 per dollar.

In South Korea, the central bank kept interest rates unchanged at 1.5% for the ninth month running, in line with expectations. The won strengthened against the dollar in afternoon trading, and was last 1.05% stronger at KRW 1,203.41.

Finally, the Aussie dollar was last 0.1% off against the greenback, at AUD 1.3373.