Asia report: Stocks rise ahead of US inflation print

Stock markets were in the green in Asia on Thursday, as investors awaited the latest consumer inflation print out of the United States, due later in the global day.

In Japan, the Nikkei 225 eked out gains of 0.01% to 26,449.82, as the yen strengthened 1.05% on the dollar to last trade at JPY 131.06.

Uniqlo owner Fast Retailing was down 1.98%, while robotics specialist Fanuc added 1.94%, and tech investing giant SoftBank Group advanced 0.92%.

The broader Topix index was 0.36% firmer by the end of trading in Tokyo, settling at 1,908.18.

On the mainland, the Shanghai Composite managed to rise 0.05% to 3,163.45, and the technology-centric Shenzhen Component was 0.23% higher at 11,465.73.

Fresh data out of Beijing showed consumer inflation in China hastening to 1.8% year-on-year in December.

That was in line with what economists polled by Reuters had pencilled in, and was up from the 1.6% print in November.

The producer price index, meanwhile, fell 0.7% year-on-year in December, which was a bigger drop than the 0.1% market watchers were expecting.

“Nothing in the inflation data is likely to worry the People’s Bank of China, or tie its hands when it comes to monetary policy,” said Duncan Wrigley at Pantheon Macroeconomics.

“Both producer and consumer prices have been relatively stable given the turbulent economic situation, and supply chain issues appear more limited than during the wrenching second quarter 2022 lockdown.

“We think China will cut the one-year and five-year loan prime rates to boost private sector demand, as China enters a reopening phase starting as early as March and in the second quarter onwards.”

Wrigley said domestic demand was likely to pick up, led by consumption and private investment, adding that the rebound in domestic demand was unlikely to be strong enough to generate significant inflationary pressure, considering the “gloomy outlook” for exports, and that the property sector recovery would be gradual and regionally uneven.

“Another restraint on inflation is the industrial capacity increase that should result from rapid manufacturing fixed asset investment growth, averaging almost 14% year-on-year, since November 2020.

“Large investments have gone into general and special equipment manufacturing, power equipment including renewables, electronics, electric vehicles and batteries.

“We think that this industrial capacity increase means that China will export disinflation to the world this year, despite domestic demand expansion.”

South Korea’s Kospi was 0.24% firmer at 2,365.10, while the Hang Seng Index in Hong Kong was ahead 0.36% at 21,541.10.

The blue-chip technology stocks were mixed in Seoul, with Samsung Electronics flat, while SK Hynix lost 0.57%.

Oil prices were in the green as the region went to bed, with Brent crude futures last up 1% on ICE at $83.50 per barrel, while the NYMEX quote for West Texas Intermediate gained 0.98% to $78.17.

In Australia, the S&P/ASX 200 jumped 1.18% to 7,280.40, after the country’s trade surplus beat expectations for November.

The country reported a surplus of AUD 13.2bn (£7.48bn) for the month, beating Reuters-polled expectations for a reading of AUD 10.4bn.

It was also higher than the AUD 12.74bn trade surplus recorded for October.

The data came on the back of a 1.5% fall in imports to Australia month-on-month, and a 0.4% reduction in exports from the sunburnt country.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 rose 0.24% to 11,664.88, with property plays in focus after data on the sector surprised to the upside.

According to Wellington’s official statistics office, Stats NZ, apartments, townhouses and retirement developments helped to keep construction consent numbers buoyant in late 2022.

Those three property types made up 56% of all consent approvals issued in the year through November, with multi-unit property consent approvals rising by almost a quarter year-on-year.

Standalone residential dwellings, meanwhile, fell 15% over the period, with overall building consents jumping 3.2% for the year.

The data saw construction conglomerate Fletcher Building rising 1.8% and investor Goodman Property Trust gaining 0.5%, while retirement property developer Ryman Healthcare lost 0.4%.

It was a mixed day for the down under dollars against the greenback, with the Aussie last 0.06% stronger at AUD 1.4475, while the Kiwi weakened 0.17% to NZD 1.5738.

Reporting by Josh White for Sharecast.com.