Asia report: Stocks mixed as China inflation data falls short

Asia-Pacific stock markets exhibited mixed trends on Monday, as investor sentiment was marred by China's inflation data that fell short of expectations.

Patrick Munnelly, market analyst at TickMill Group, said Asian equity markets showed a broadly positive start to the week, although gains were limited as investors digested the softer-than-expected inflation data from China.

“The Nikkei 225 initially extended last week's slump but managed to rebound in late trade, ending with a marginal decrease.

“On the other hand, the Hang Seng and Shanghai Composite traded higher, with the Hang Seng also in the green supported by the tech sector, as hopes grew that China's tech crackdown might be easing.

“However, gains in mainland China were constrained by disappointing Chinese inflation figures, which revealed zero consumer inflation and a deeper contraction in factory gate prices.”

Stock markets mixed across the region

The Nikkei 225 in Japan concluded the day's trading session down 0.61% at 32,189.73 points, while the Topix also fell 0.51% to end at 2,243.33.

Yaskawa Electric Corporation, Daiichi Sankyo, and Nippon Yusen led the downturn on Tokyo’s benchmark, with declines of 3.44%, 3.1%, and 2.74% respectively.

Chinese markets moved in the opposite direction, as the Shanghai Composite increased 0.22% to close at 3,203.70, while the Shenzhen Component gained 0.5% to end at 10,942.83.

Dalian Thermal Power and Harbin VITI Electronics shone in Shanghai, with respective surges of 10.06% and 10.04%.

The Hang Seng Index in Hong Kong ascended 0.62% to end the trading day at 18,479.72, with the leading performers including ENN Energy, WH Group, and Alibaba Health Information Tech, each posting gains of 6.43%, 4.52%, and 4.07% respectively.

South Korea's Kospi index closed the day off by 0.24%, ending at 2,520.70.

Despite the overall market dip, Samsung Life and DB Insurance posted robust gains of 6.17% and 5.12% respectively.

The Australian S&P/ASX 200 index fell 0.54% to 7,004.00, with Nuren Pharmaceuticals and Tabcorp Holdings facing significant drops of 4.33% and 3.13% respectively.

Similarly, the S&P/NZX 50 in New Zealand concluded the session 0.56% lower at 11,912.73, led by Pacific Edge and Fletcher Building which fell by 2.33% and 2.19% respectively.

On the currency front, the dollar registered a gain of 0.15% against the yen to JPY 142.43, while it added 0.74% against the Aussie to AUD 1.5058, and advanced 0.43% on the Kiwi to NZD 1.6171.

Chinese consumer and producer prices dip below expectations

According to the National Bureau of Statistics, the annual growth in China’s consumer price index (CPI) flattened in June, down from the 0.2% rise observed in May.

Contrary to the expectations of economists, who had predicted a steady figure, the CPI saw no change in a year-over-year comparison for the month of June.

Moreover, the producer price index (PPI) fell more than economists had anticipated.

A decrease of 5.4% year-on-year was recorded, which was sharper than the predicted decline of 5%.

“Weak consumer demand is likely to weigh on consumer inflation in the second half - household expectations for income and jobs deteriorated in the People’s Bank of China second quarter survey compared with the first quarter,” said Duncan Wrigley at Pantheon Macroeconomics.

“Youth unemployment is bound to see a short-term bump as this year’s college graduates enter the labour force.

“But we see sluggish demand for hiring from traditional sectors to employ graduates such as finance, real estate, online education and IT services.”

Reporting by Josh White for Sharecast.com.