Asia report: Stocks mixed as Australian inflation falls less than expected

Equity markets in the Asia-Pacific region saw gains and losses on Wednesday as investors closely examined Australia’s third-quarter inflation figures.

While the data showed a decrease compared to the prior quarter, it still exceeded expectations, drawing significant attention as it could offer insights into the Reserve Bank of Australia’s upcoming monetary policy decision on 3 November.

“Asian stocks displayed mixed trading patterns, influenced by a positive lead from Wall Street, [where] market focus shifted to the earnings reports of major companies like Microsoft and Alphabet,” said TickMill market analyst Patrick Munnelly.

“Microsoft’s shares rose by 3.9%, while Alphabet experienced a 5.9% decline, with particular attention on their cloud business performance.

“The Nikkei 225 benefitted from the recent weakening of the Japanese yen, with export-related sectors performing well.”

Munnelly noted that there were also potential tailwinds following reports that the Bank of Japan was not considering changes to its forward guidance regarding monetary easing measures, although the index ceded gains into the close.

“The Hang Seng Index and Shanghai Composite surged at the opening bell, with positive sentiment in the region attributed to Chinese president Xi Jinping’s unprecedented visit to the People’s Bank of China (PBoC), signalling a focus on the economy.

“Hong Kong markets outperformed, with large-cap stocks posting gains of 4-6%, and the technology sector received some momentum from Microsoft’s earnings and guidance, as with the Nikkei both the onshore and offshore indices have started to rollover.”

Most markets rise, but Australia slips back

In Japan, the Nikkei 225 rose by 0.67% to reach 31,269.92 points, while the Topix index gained 0.61%, settling at 2,254.40 points.

Notable performers on Tokyo’s benchmark included IHI Corporation, up 4.61%, Dainippon Screen Manufacturing, up 3.43%, and Kawasaki Heavy Industries, which advanced by 2.94%.

Moving to China, the Shanghai Composite recorded a modest increase of 0.4%, closing at 2,974.11 points, while the Shenzhen Component rose by 0.47% to 9,528.31 points.

Anhui Water Resources and Black Peony saw substantial gains of 10.07% in Shanghai.

The Hang Seng Index climbed by 0.55% in Hong Kong to reach 17,085.33 points.

Strong performers in the special administrative region included Lenovo Group, with a notable gain of 7.33%, and China Hongqiao, which rose by 4.74%.

On the other hand, South Korea experienced a decline in its Kospi index, which fell by 0.85% to settle at 2,363.17 points.

POSCO Future M and Posco International faced significant declines, down by 10.16% and 9.05%, respectively.

In Australia, the S&P/ASX 200 index showed a marginal decrease of 0.04%, closing at 6,854.30 points.

Notable decliners in Sydney included Bellevue Gold, down 6.36%, and Ramelius Resources, which fell by 5.63%.

New Zealand’s S&P/NZX 50 index also experienced a downturn, declining by 0.7% to reach 10,884.04 points.

Companies such as Synlait Milk and Scales Corporation faced some of the most significant declines, down by 5.26% and 4.76%, respectively.

In the currency market, the dollar was last down 0.01% on the yen, trading at JPY 149.89, while it lost 0.08% against the Aussie to AUD 1.5722 and decreased 0.05% on the Kiwi to change hands at NZD 1.7102.

Finally, in oil markets, Brent crude futures were last down 0.35% on ICE at $87.76 per barrel, while the NYMEX quote for West Texas Intermediate decreased 0.43% to $83.38.

Inflation eases in Australia, but by less than expected

In economic news, Australia’s latest consumer price index (CPI) data revealed a year-on-year price increase of 5.4% for the third quarter.

While the figure was ahead of consensus expectations for 5.3% as set by Reuters polling, it represented a decline from the 6% recorded in the second quarter.

That marked the third consecutive quarter of diminishing inflation, setting the stage for the Reserve Bank of Australia’s next monetary policy decision, scheduled for 3 November.

According to the country’s statistics bureau, the third-quarter inflation uptick was primarily driven by a substantial 7.2% increase in the price of automotive fuel.

Other significant contributors to inflationary pressure included the prices of electricity, which registered a 4.2% year-on-year climb, and rents, which saw a 2.2% increase.

Reporting by Josh White for Sharecast.com.