Wednesday saw a decline in Asian stocks as traders analysed Chinese inflation data and anticipated the release of the CPI report in the United States.
The most since July 2020, China’s consumer prices rose 2.7% in July compared to the same time in 2021.
According to Dow Jones, economists anticipate that consumer inflation in the U.S. will be 8.7%, down from 9.1% in June.
SINGAPORE — As investors analysed China’s inflation data and anticipated the U.S. CPI report, Asia-Pacific shares declined on Wednesday.
With the Hang Seng Tech index down 2.83%, Hong Kong’s Hang Seng index down 1.96% to settle at 19,610.84. Meituan and JD.com, two industry giants, both experienced declines of 3.64% and 4.46%.
According to Eikon statistics, the Hang Seng also suffered losses due to companies in the healthcare, consumer, and real estate sectors.
After the company revealed that contracted sales for the first seven months of the year fell about 58% from the same time last year, shares of property developer Longfor fell 16.4%.
The Shanghai Composite fell by 0.54% to 3,230.02 and the Shenzhen Component fell by 0.87% to 12,223.51 on the mainland Chinese stock market.
Compared to a year ago, China’s producer price index increased 4.2% in July, which was less than the 4.8% increase projected by a Reuters poll.
The most since July 2020, consumer prices rose 2.7% in July when compared to the same time in 2021. Analysts anticipated that the print would be 2.9%.
In a note published on Wednesday before the release of the data, Carol Kong, a senior associate for international economics and currency strategy at Commonwealth Bank, stated that “underlying inflation pressures remain limited in China as sporadic lockdowns have weighed on consumer spending and overall economic activity.
The relatively muted inflation impulse in China contrasts with the consistently high inflation in the United States, the note stated.
The United States will also release inflation numbers later on Wednesday. According to Dow Jones, economists forecast that consumer inflation will be 8.7%, down from 9.1% in June.
Asia-Pacific markets dip
The Nikkei 225 in Japan fell 0.65% to close at 27,819.33, while the Topix index slipped 0.17% to 1,933.65.
In South Korea, the Kospi dipped 0.9% to close at 2,480.88 and the Kosdaq dropped 1.6% to 820.27.
Australia’s S&P/ASX 200 lost 0.53% to 6,992.7.
The largest Asia-Pacific share index outside of Japan, according to MSCI, fell 1.24%.
Toyota Motor reported that it would halt certain manufacturing due to positive Covid instances at work sites in company news.
Among the businesses reporting earnings on Wednesday are Cathay Pacific and Honda Motor.
After the airline announced a lower loss for the first half of 2022 compared to the same time in 2021, shares of Hong Kong’s Cathay Pacific increased by about 1%. To 18.6 billion Hong Kong dollars ($2.36 billion), revenue increased by 17%.
The Nasdaq Composite dropped more than 1% overnight to 12,493.93 domestically. The S&P 500 fell 0.42% to 4,122.47, while the Dow Jones Industrial Average dropped 58.13 points or 0.18% to 32,774.41.
Currency and crude oil
The U.S. dollar index, which compares the value of the dollar to a basket of its counterparts, was at 106.329 and was still below the 106.5 mark.
According to Kong of Commonwealth Bank, a high inflation reading would likely confirm that the Fed is still in the midst of its tightening cycle and cause markets to reassess their expectations for American interest rates.
“A rebound in FOMC rate expectations can aid the USD’s recovery, particularly when compared to the JPY, which is highly susceptible to fluctuations in U.S. Treasuries.”
Since the positive U.S. payrolls news, the Japanese yen has continued to decline, trading around 135.00 to the dollar. At $0.6970, the Australian dollar was trading.
At $89.83, U.S. crude futures were down 0.74%.
What is inflation?
How it can help some economies
How it hurts other economies
Reasoning behind this relationship
How China’s economy fits into this analysis
What may happen in the future
