Asia report: Stocks mixed as Japan inflation meets forecasts

Markets in Asia closed in a mixed state on Friday, as the latest inflation data from Japan came in as expected by analysts.

In Japan, the Nikkei 225 was up 0.4% at 27,914.66, as the yen weakened 0.06% against the dollar to last trade at JPY 137.44.

Fashion firm Fast Retailing gained 0.24%, while automation specialist Fanuc slipped 0.04% and technology conglomerate SoftBank Group was off 0.45%.

The broader Topix index was ahead 0.28% by the end of trading in Tokyo, settling at 1,955.97.

Fresh data out of Japan showed consumer prices in the country rising 2.2% year-on-year in June, which was in line with what analysts had expected.

“Japanese headline inflation slowed on the back of cooling fresh food inflation in June, which dropped to 6.6% year-on-year from 12.3%,” said Craig Botham at Pantheon Macroeconomics, adding that energy inflation also slowed marginally.

“But rising processed food inflation, rising to 3.2% from 2.6%, pushed core measures higher.

“Demand-pull inflation continues to be conspicuous by its absence, with services inflation, and that of most consumer goods, flat to lower.

“The Bank of Japan will feel no pressure to change course on the back of today’s data, which still looks like ‘unsustainable’ inflation.”

Botham said inflation looked set to edge higher over the next couple of months, but should be back below 2% in the first quarter of 2023.

“We expect energy inflation to cool further, while food inflation should peak in the fourth quarter.

“Headline inflation is set to receive one last boost from base effects in communications inflation, linked to earlier cuts to mobile phone tariffs, but the BoJ can be expected to look through this.”

The Bank of Japan had stuck to its guns on Thursday, keeping monetary policy on hold, which was also widely anticipated by markets.

On the mainland, the Shanghai Composite was down 0.06% at 3,269.97, and the technology-heavy Shenzhen Component was 0.49% weaker at 12,394.02.

South Korea’s Kospi was 0.66% lower at 2,393.14, while the Hang Seng Index in Hong Kong added 0.17% to 20,609.14.

The blue-chip technology stocks were on the back foot in Seoul, with Samsung Electronics down 0.81% and SK Hynix behind by 2.44%.

Oil prices were lower as the region entered the weekend, with Brent crude futures last down 0.42% on ICE at $103.42 per barrel, and the NYMEX quote for West Texas Intermediate falling 0.51% to $95.86.

In Australia, the S&P/ASX 200 slipped 0.04% to 6,791.50, while across the Tasman Sea, New Zealand’s S&P/NZX 50 was off 0.06% at 11,263.19.

The down under dollars were both weaker against the greenback, with the Aussie last off 0.19% at AUD 1.4449, and the Kiwi retreating 0.24% to NZD 1.6032.

Reporting by Josh White at Sharecast.com.