Asia report: China jumps on softer inflation data

Shares in China jumped amid mixed Asian markets on Monday thanks to softer inflation data out of the People’s Republic, but a still-rallying yen dragged Tokyo down.

In Japan, the Nikkei 225 pared back earlier losses of more than 1.3% to close down 0.44% at 15,751.13.

The yen continued its dizzying rise and broke the 108 level to trade as strong as JPY 107.76 against the greenback in the afternoon. It was last trading 0.05% weaker at JPY 108.12 per USD.

Exporters were mostly down on the stronger currency, with Nissan down 1.69%, Honda off 2.08% and Toyota dropping 3.46%. Sony once again bucked the trend, adding 3.73%.

The yen’s sustained strength had many analysts speculating whether authorities would intervene, though some were questioning whether that would help much at all.

"For dollar/yen to see any sustained support, U.S. yields would need to stabilize and begin to rise again and Bank of Japan may be waiting with its teeth clenched for the Fed to act," said BK Asset Management managing director of foreign exchange strategy Boris Schlossberg.

Markets in China remained in the black, with the Shanghai Composite Index adding 1.64% to 3,033.96 and the Shenzhen Composite rising 1.99% to 1,952.48.

Early in the day Beijing released its inflation data for March, with the consumer price index rising 2.3% year-on-year to the end of the month. A Reuters-polled forecast was anticipating a 2.5% rise.

Month-on-month, consumer inflation was down 0.4%. The country’s producer price index declined 4.3% year-on-year in March - a slower rate of decline than in February, but still the 49th month in a row of declines.

Before market open, the People’s Bank of China set renminbi at CNY 6.4649 to the dollar. The onshore yuan can trade 2% either side of the loose peg set by the central bank.

In Hong Kong, the Hang Seng Index finished up 0.35% at 20,440.81, while in Korea, the Kospi finished down 0.09% at 1,970.37.

Shares of Samsung Electronics rose 6.36% after Nomura issued a note upgrading the stock to ‘buy’ from ‘reduce’ on Monday.

Nomura’s analysts said they expected the company to stage a turnaround given its “efforts to normalise operations, with [vice-chairman] JY Lee taking a stake of potentially up to 5%.

“We believe the worst is over after Samsung Engineering’s restructuring and capital-raising, and we expect value accretion to rise,” the analysts added.

Oil prices retreated during afternoon trading in Asia. Brent crude was last down 0.36% at $41.80, while West Texas Intermediate was down 0.38% at $39.57 per barrel.

Date released late last week showed a decline in US crude inventories, which added some “positive fundamental developments to the deal-induced oil price speculation,” according to IG market analyst Angus Nicholson.

"The oil price is clearly in a very volatile state in the lead up to the oil producers meeting on 17 April. Optimism about a potential deal [is] adding buoyancy to the spot price."

Down under, the S&P/ASX 200 closed down 0.12% at 4,931.50. Energy plays were up in Australia, however, with Santos gaining 3.13% and Woodside Petroleum up 0.44%.

Further east, the S&P/NZX 50 fell 0.1% to finish at 6.725. Previous star performer, The A2 Milk Company, shed 2.6% after it highlighted a number of regulatory changes signalled by the government in its core market of China in an investor presentation.

In currencies, the Aussie moved ever closer to the USD, and was last 0.07% stronger at AUD 1.3233. The Kiwi also edged on its transpacific counterpart, last 0.16% stronger at NZD 1.4662 per US dollar.