Asia report: Markets mixed as Japan inflation tops expectations
Markets in Asia were mixed but broadly flat at the close on Friday, again taking their cues from a muted session on Wall Street overnight.
In Japan, the Nikkei 225 was down 0.04% at 28,930.33, as the yen weakened 0.49% against the dollar to last trade at JPY 136.55.
Automation specialist Fanuc slipped 0.04%, fashion firm Fast Retailing lost 11.25%, and technology conglomerate SoftBank Group was down 0.88%.
The broader Topix index was up 0.2% by the end of trading in Tokyo, settling at 1,994.52.
Headline inflation came in above expectations in Japan in July, according to the latest data, with prices rising 2.6% year-on-year.
That was an acceleration from 2.4% in June, above the 2.4% economists had pencilled in, and well above the 2% target set by the Bank of Japan.
“As should be apparent from the rise in core measures of inflation, Japanese CPI is no longer being driven by energy - the contribution of which has been high, but declining since March,” said Craig Botham at Pantheon Macroeconomics.
“Neither processed food nor communications provide examples of the kind of inflation the Bank of Japan is looking for.
“Processed food may be included in core, but it is clearly being driven by global food prices rather than pulled higher by domestic demand.”
Communications inflation, meanwhile, was still about base effects more than anything else, as the BoJ had signalled for some time, Botham explained.
“The July CPI data provide little evidence that demand pressures are building in Japan, so there is no need to tighten policy.
“Inflation should peak by October, and fall back below target in early 2023, so we still expect no change from the BoJ in the next 12 months.”
On the mainland, the Shanghai Composite lost 0.59% to 3,258.09, and the technology-heavy Shenzhen Component was 1.27% lower at 12,358.55.
South Korea’s Kospi was off 0.61% at 2,492.69, while the Hang Seng Index in Hong Kong managed gains of 0.05% to 19,773.03.
Among the Chinese technology behemoths in the special administrative region, Tencent Holdings was up 0.77%, while e-commerce and food delivery giant Meituan was 0.7% weaker.
Earlier in the week reports emerged that Tencent was preparing to sell down its stake in Meituan - news which the company later denied.
The blue-chip technology stocks in Seoul were also mixed, with Samsung Electronics down 0.98%, while SK Hynix added 0.73%.
Oil prices were lower as the region entered the weekend, with Brent crude futures last down 1.18% on ICE at $95.45 per barrel, and West Texas Intermediate off 1.13% at $89.48 on NYMEX.
In Australia, the S&P/ASX 200 eked out gains of 0.02% to 7,114.50, while across the Tasman Sea, New Zealand’s S&P/NZX 50 was down 1.11% at 11,684.81.
The down under dollars were both weaker against the greenback, with the Aussie last off 0.14% at AUD 1.4477, and the Kiwi retreating 0.64% at NZD 1.6077.
Reporting by Josh White at Sharecast.com.