Asia report: Most markets fall after China's inflation surprise

Asian stock markets presented a mixed bag of results on Wednesday, with equities in and around China being influenced by fresh inflation data.

The latest official figures showed a dip in consumer prices in the People’s Republic, entering negative territory for the first time in over two years.

“Asian equity markets are predominantly trading lower against the backdrop of a flurry of earnings releases,” said TickMill Group market analyst Patrick Munnelly.

“Participants are also processing the latest inflation data from China, which presented a mixed picture by indicating consumer prices in deflationary territory for the first time in over two years.”

Japan, South Korea sparkle in sea of red

Japan saw a moderate decline in its indices, with the Nikkei 225 closing down 0.53% at 32,204.33 and the Topix index dipping 0.4% to settle at 2,282.57.

Major losses on Tokyo’s benchmark were noted for Daikin Industries, which dropped a substantial 11.39%, followed closely by Nikon Corporation with a decline of 11.16%.

Trend Micro also ended the trading session with a loss, down 7.79%.

In China, both the Shanghai Composite and the Shenzhen Component indices recorded losses, of 0.49% to 3,244.49, and of 0.53% to 11,039.45, respectively.

BEH Property was amongst the largest decliners in Shanghai, shedding 9.91%, accompanied by China Science Publishing, which fell 8.77%.

Hong Kong, however, swam against the current, with the Hang Seng Index ticking up by 0.32% to close at 19,246.03.

Leading the gainers were Hansoh Pharmaceutical Group, which rose by 3.76%, Sino Biopharmaceutical, up by 2.9%, and Shenzhou International, gaining 2.59%.

South Korea's Kospi showed resilience, registering a healthy gain of 1.21%, ending the day at 2,605.12.

The spotlight was on Hanmi Science, which soared an impressive 23.57%, and its counterpart Hanmi Pharm Co, which also celebrated a 14.61% rise.

Australia's S&P/ASX 200 index displayed a modest rise of 0.37% to finish at 7,338.00.

Among the top performers were Invocare, climbing 5.94%, and Coronado Global Resources, up by 4.81%.

Contrastingly, New Zealand's S&P/NZX 50 faced a minor setback, declining 0.26% to 11,838.26.

Wellington’s notable losers were EBOS and Skellerup, which saw decreases of 2.19% and 1.61%, respectively.

On the currencies front, the dollar experienced slight depreciations against its major regional counterparts, sliding0.01% against the yen to trade at JPY 143.36, 0.17% against the Aussie to AUD 1.5255, and 0.18% against the Kiwi to change hands at NZD 1.6455.

On the oil front, both Brent crude and West Texas Intermediate futures saw positive traction, gaining 0.74% to $86.81 per barrel, and 0.86% to $83.63, respectively.

China's consumer prices surprise, overshadow South Korea's employment data

In economic news, China's consumer price index (CPI) registered its first decline in over two years, with the July figures showing a 0.3% drop compared to the same month the prior year.

However, when contrasted with June, the index noted a 0.2% uptick.

Economic analysts surveyed by Reuters had projected a sharper 0.4% fall in the July CPI on a year-on-year basis.

China's producer price index (PPI) further underscored the economic shift, plummeting 4.4% year-on-year, surpassing the Reuters forecast which stood at a decline of 4.1%.

The downturn made for a follow-up from June's steeper fall of 5.4%.

“Large cities are likely to incrementally ease local property policies, such as mortgage downpayment terms and interest rates, and the People’s Bank of China is leaning on banks to cut interest rates on existing mortgages,” said Duncan Wrigley at Pantheon Macroeconomics.

“The outcome of this piecemeal approach is likely to be a gradual improvement of business and household sentiment, leading to a drawn-out demand upturn, and year-over-year producer price declines extending into the second half of 2024, at a gradually moderating rate.”

Turning to South Korea, the job market there showed signs of tension as nation's unemployment rate ticked higher in July, reaching 2.7%, up from 2.6% in June.

Encouragingly, the rate reflected a decrease of 0.2 percentage points year-on-year, however.

The latest government data indicated that the total number of unemployed individuals in July was about 807,000, marking a 3.5% decrease when compared to the same month in the preceding year.

Reporting by Josh White for Sharecast.com.