Asia report: Stocks mixed as Tokyo inflation comes in slightly hot
Stock markets were in a mixed state as they closed in Asia on Friday, as investors closed out their positions ahead of US Fed chair Jerome Powell’s speech at the Jackson Hole symposium later in the global day.
In Japan, the Nikkei 225 was up 0.57% at 28,641.38, as the yen weakened 0.31% against the dollar to last trade at JPY 136.91.
Automation specialist Fanuc was up 0.69%, fashion firm Fast Retailing added 1.11%, and technology conglomerate SoftBank Group was 1.19% higher.
The broader Topix index was 0.15% firmer by the end of trading in Tokyo, settling at 1,979.59.
Fresh data out of the country’s capital showed inflation in the megalopolis rising more than expected in August, to reach its quickest cadence in almost eight years.
Tokyo’s core consumer price index rose 2.6% year-on-year, just above the 2.5% rise pencilled in by economists polled by Reuters, and reaching the highest level since October 2014.
The headline CPI reading, meanwhile, hit 2.9%, while inflation excluding energy and fresh food was up 1.4% year-on-year, in an economy notorious for its usual lack of inflationary pressures.
Craig Botham at Pantheon Macroeconomics said the data would likely leave the Bank of Japan unmoved, but assuming the national CPI measure followed suit, governor Kuroda would be “at greater pains than usual” at his next press conference to defend a continued dovish stance.
“Energy, food, and communications were the main drivers of the increase in headline inflation, with each adding 10 basis points, and the bulk of the remainder - seven basis points - coming from recreation and culture,” Botham explained,
“Food ex-fresh food, communications, and recreation all sit in the core measures of inflation, so explain the broad rise across all key measures.
“The increase in recreation and culture inflation is the main surprise, we think, given the recent Covid outbreak which should be weighing on demand for the sector.”
Botham said Pantheon also expected energy inflation to ease slightly in August, while the food and communication inflation increases were in line with its forecast.
“We can readily anticipate the BoJ’s response to today’s release - energy and food inflation are related to global prices, and constitute cost-push inflation.
“They are therefore unsustainable and do not warrant monetary tightening.”
Communications inflation, meanwhile, was the result of ongoing base effects issues, and would be resolved by year-end, Botham said.
“Again, unsustainable as a source of inflation.
“The increase in recreation inflation - particularly recreation services inflation - might give them more pause if it persists, but not yet.”
On the mainland, the Shanghai Composite was down 0.31% at 3,236.22, and the technology-heavy Shenzhen Component was 0.37% weaker at 12,059.71.
South Korea’s Kospi managed gains of 0.15% to 2,481.03, while the Hang Seng Index in Hong Kong 1.01% firmer at 20,170.04.
Chinese technology plays were in the green in the special administrative region, with Alibaba Group up 2.13%, JD.com ahead 0.89%, Meituan rising 2.59%, and NetEase eking out gains of 0.07%.
Those rises came on the back of a Wall Street Journal report overnight, suggesting that Beijing and Washington were close to striking a deal for US regulators to inspect the audits of dual-listed firms in Hong Kong.
The blue-chip technology stocks were on the front foot in Seoul, with Samsung Electronics up 0.5%, and SK Hynix rising 1.06%.
Oil prices were higher as the region entered the weekend, with Brent crude futures last up 1.47% on ICE at $100.80 per barrel, and the NYMEX quote for West Texas Intermediate rising 1.26% to $93.69.
In Australia, the S&P/ASX 200 added 0.79% to 7,104.10, while across the Tasman Sea, New Zealand’s S&P/NZX 50 slipped 0.16% to 11,608.29.
The down under dollars were both weaker against the greenback, with the Aussie last off 0.06% at AUD 1.4333, and the Kiwi retreating 0.35% to NZD 1.6106.
Reporting by Josh White at Sharecast.com.