Asia report: Most markets rise as Korean inflation edged higher

Asia-Pacific markets broadly advanced on Tuesday, buoyed by record highs on Wall Street overnight, as the S&P 500 and Nasdaq Composite set new peaks.

Investors in the region were further encouraged by mixed but stable economic indicators, including South Korea's November inflation rate, which rose compared to October but remained below economists’ expectations.

“Since the recent US limitations on Chinese access to critical semiconductor and AI components weren’t as harsh as anticipated, most Asian markets witnessed gains overnight, especially in the technology sector,” said Patrick Munnelly at TickMill.

“While stock indexes rose in a number of nations, such as Australia and Japan, Chinese equities initially dipped after the yuan renminbi fell to its lowest level versus the dollar in a year because of worries about a faltering economy and rising tensions with the US.

“After the tech-focused Nasdaq 100 rose more than 1% on Monday and the S&P 500 set its 54th closing record of the year, US futures stayed steady overnight, leading to net gains across Asian markets heading into the close.”

Munnelly noted that overall, investors were relieved that the Biden administration's new tech export restrictions on China were less severe than initially proposed, which could have had a more substantial effect on major Chinese companies.

“This helped to boost confidence for Asian markets.

“However, after disappointment over Chinese authorities' decision to withhold the results of a crucial conference that many expected would yield fresh policy insights, investor attitudes towards China's economy remained subdued.”

Most markets follow Wall Street higher

In Japan, the Nikkei 225 surged 1.91% to 39,248.86, with the Topix climbing 1.43% to 2,753.58.

Industrial and technology names led the gains on Tokyo’s benchmark index, with Furukawa Electric up 7.04%, Kawasaki Heavy Industries rising 6.62%, and Fujikura adding 6.18%.

Chinese markets delivered a mixed performance - the Shanghai Composite edged up 0.44% to 3,378.81, while the Shenzhen Component fell 0.4% to 10,713.58.

Notable gainers in Shanghai included Beijing Worldia Diamond Tools, which soared 15.06%, alongside Quzhou XinAn Development and China Fortune Land Development, both gaining over 10%.

Hong Kong’s Hang Seng Index climbed 1% to close at 19,746.32, driven by strong performances from healthcare and technology stocks.

WuXi Biologics jumped 7.87%, WuXi AppTec rose 6.32%, and Lenovo Group gained 4.06%.

South Korea's Kospi 100 gained 1.65% to finish at 2,499.88.

Samsung Fire & Marine Insurance and Korea Zinc both surged over 9%, while Doosan Bobcat rose 8.1%.

Australia's S&P/ASX 200 rose 0.56% to 8,495.20, supported by consumer staples and technology stocks.

Metcash led the pack with a 7.52% gain, followed by Block and Neuren Pharmaceuticals, which added 5.82% and 5.52%, respectively.

New Zealand’s S&P/NZX 50 bucked the regional trend, slipping 0.16% to 13,093.18.

Losses were led by Oceania Healthcare, down 4%, and Restaurant Brands New Zealand, which fell 2.58%.

In currency markets, the dollar was last up 0.15% on the yen, trading at JPY 149.83, while it weakened 0.31% against the Aussie to AUD 1.5396, and retreated 0.14% from the Kiwi, changing hands at NZD 1.6961.

Oil prices also strengthened, with Brent crude futures last up 1.14% on ICE at $72.65 per barrel, while the NYMEX quote for West Texas Intermediate climbed 1.2% to $68.92.

Inflation edges higher in Korea, remains below central bank target

In economic headlines, South Korea's annual inflation rate edged up to 1.5% in November, a modest increase from October’s 45-month low of 1.3%.

The rise, though notable, fell short of the 1.7% forecast by economists surveyed by Reuters.

It came as the Korean economy faced pressure from a depreciating won and weakening export performance.

Despite the increase, inflation remained well below the central bank’s target of around 2% over the medium term.

Last week, the Bank of Korea responded to the challenges with an unexpected 25-basis-point rate cut, bringing its policy rate to 3%.

It was the first instance of consecutive rate cuts by the central bank since 2009.

Reporting by Josh White for Sharecast.com.