Asia report: Markets mixed as investors digest regional inflation data

Markets across the Asia-Pacific region showed mixed performances on Wednesday, reflecting investor responses to varying inflation data from around the continent.

Market participants were also looking ahead to the US. Federal Reserve’s rate decision later in the global day, following the latest US inflation report for May.

“During the Asian session, China experienced a 0.1% decrease in its consumer price index in May compared to the previous month, which was below expectations,” said TickMill market analyst Patrick Munnelly.

“This decline is attributed to price competition intensifying deflationary pressures in the world's second-largest economy.

“Meanwhile, Japan saw a significant increase in wholesale inflation in May, marking the fastest annual growth in nine months, partly due to the weakening yen putting upward pressure on prices.”

Munnelly said that data added complexity to the Bank of Japan's upcoming decision on when to raise interest rates.

“The overnight implied volatility for the USD-JPY pair surged to its highest level in six weeks, indicating that traders are preparing for a potentially turbulent market.”

Markets mixed across the Asia-Pacific region

In Japan, the Nikkei 225 fell by 0.66% to close at 38,876.71, while the Topix index declined by 0.73% to 2,756.44.

Significant losses were observed in Toho, which dropped by 8.18%, Japan Steel Works, down by 4.29%, and West Japan Railway Co, which fell by 3.05%.

China’s markets ended the day on a positive note - the Shanghai Composite rose by 0.31% to 3,037.47, and the Shenzhen Component edged up by 0.08% to 9,269.94.

Leading gains were Beijing Vantone Real Estate, surging by 10.05%, Guangdong Champion Asia Electronics, up by 10.01%, and AA Industrial Belting Shanghai, which gained 10%.

Hong Kong’s Hang Seng Index dropped by 1.38%, closing at 17,937.84.

Major decliners included Li Ning Co, which plummeted by 7.31%, Alibaba Health Information Technology, down by 6.58%, and Geely Automobile Holdings, which decreased by 4.81%.

South Korea’s Kospi index performed strongly, rising by 0.84% to 2,728.17.

Among the top performers were LG Innotek, which surged by 9.37%, Amorepacific, up by 7.64%, and Hanjinkal, gaining 5.34%.

Australia’s S&P/ASX 200 index fell by 0.51% to 7,715.50.

Nickel Industries experienced a significant drop of 7.61%, followed by Boss Energy, down by 5.16%, and Atlas Arteria, which decreased by 4.35%.

In New Zealand, the S&P/NZX 50 index fell by 0.37% to 11,741.88.

The A2 Milk Company declined by 4.43%, Synlait Milk dropped by 4.29%, and KMD Brands fell by 3.49%.

In currency markets, the dollar was last 0.15% stronger on the yen to trade at JPY 157.36.

The greenback meanwhile dropped slightly against the Aussie, falling 0.09% to AUD 1.5123, while it edged up 0.02% on the Kiwi to change hands at NZD 1.6278.

Oil prices saw an uptick, with Brent crude futures last rising 0.98% on ICE to $82.72 per barrel, and the NYMEX quote for West Texas Intermediate increasing 1.16% to $78.80 per barrel.

Consumer prices rise minimally in China, wholesale prices jump in Japan

In economic news, China's consumer prices in May rose by a modest 0.3% year-on-year, according to the National Bureau of Statistics.

That increase was slightly below the 0.4% forecasted by economists in a Bloomberg survey, and marked the fourth consecutive month of minimal growth, just above zero.

At the same time, factory prices continued their deflationary trend for the 20th straight month, indicating ongoing weak demand within the economy.

Elsewhere, Japan experienced a notable increase in wholesale prices in May, with a 2.4% rise from the previous year, as reported by central bank data.

That rise in the corporate goods price index (CGPI), which tracks the prices companies charge each other for goods and services, surpassed the anticipated 2% increase and marked the fastest annual growth in nine months.

The increase accelerated significantly from April’s 1.1% gain.

Additionally, the yen-based import goods price index saw a 6.9% rise in May, up from April's 6.6%, reflecting the impact of the yen’s depreciation on the cost of raw material imports.

Reporting by Josh White for Sharecast.com.