Asia Shares Mixed as US Inflation Sparks Fear and Hope

 

Asian stocks were mixed on Friday with traders taking contrasting views on US inflation with some buoyed by its slowdown while others worried over the Fed’s rate hike path.

Japan’s benchmark stock index ended at a seven-month high as signs of cooling US inflation raised hopes for smaller Federal Reserve rate hikes and boosted risk appetite.

That was in contrast to China and Hong Kong, where stocks slipped as domestic Covid-19 cases rose sharply, while uncertainty over the Federal Reserve’s monetary tightening trajectory also dented sentiment.

 

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Tokyo’s benchmark stock index’s surge was led by SoftBank Group and other tech heavyweights. The Nikkei share average jumped 2.6% to 28,546.98, its highest close since January 12.

The index, which posted the sharpest daily gain in three weeks, rose 1.3% for the week in its second straight weekly gain. The broader Topix advanced 2% to 1,973.18 and rose 1.3% for the week.

Data released on Wednesday showed that US consumer prices were unchanged in July compared with June, prompting bets that the Fed could slow down its rate hikes.

“The Japanese market is stronger today than I had expected,” said Jun Morita, general manager of the research department at Chibagin Asset Management. “One reason for not buying stocks has been eliminated after investors confirmed the slower pace of US inflation.”

SoftBank Group jumped 5.6% and was the biggest boost for the Nikkei after the technology investor said it would book a $34.1 billion gain by trimming its stake in Alibaba Group Holding.

 

China Property Developers Suffer

Meanwhile, China stocks fell as Covid flare-ups and Fed tightening woes weighed. The daily caseload for Covid-19 has risen to more than 2,000 in two days from around 1,000 previously.

The Shanghai Composite Index dipped 0.2%, or 4.78 points, to 3,276.89, while the Shenzhen Composite Index on China’s second exchange dropped 0.5%, or 9.91 points, to 2,207.06.

The CSI300 index lost 0.1% but rose 0.8% for the week, after posting five consecutive weekly losses.

Mainland property developers traded in Hong Kong lost 1.4% amid debt woes, with Longfor Group down 3.4%. The Chinese developer rose in the previous session after it denied rumours that it had missed payment on commercial paper.

Hong Kong-listed tech companies edged up 0.5%, with index heavyweights Alibaba and Meituan up more than 1% each. The Hang Seng Index gained 0.5%, or 93.19 points, to 20,175.62.

Elsewhere across the region, markets were mixed with stocks in Singapore and Indonesia falling between 0.1% and 1%, while equities in the Philippines and Malaysia were both up 0.3%.

Indian stocks advanced with Mumbai’s signature Nifty 50 index up 0.2%, or 35.30 points, at 17,694.30.

 

MSCI’s World Stock Index Up

Globally, world stocks headed for a fourth straight week of gains as investors scaled back views on how far US interest rates and inflation can climb, while oil recouped some of the previous week’s losses.

MSCI’s world stock index was up 0.1% and was showing a 1.8% rise on the week. S&P futures gained 0.53% after the S&P index closed down 0.07%.

European stocks rose 0.35% and were heading for weekly gains of more than 1%. Britain’s FTSE climbed 0.56% and was eyeing a near 1% rise on the week.

The dollar gained 0.24% against a basket of currencies while the euro lost 0.26% to $1.0289.

US 10-year Treasury yields were trading at 2.9% after hitting a near-three-week high.

Brent crude was headed for a weekly climb of more than 3%, recouping part of last week’s 14% tumble, as recession fears eased, though an uncertain demand outlook capped gains.

 

Key figures

Tokyo – Nikkei 225 > UP 2.6% at 28,546.98 (close)
Hong Kong – Hang Seng Index > UP 0.5% at 20,175.62 (close)
Shanghai – Composite
New York – Dow > UP 0.1% at 33,336.67 (close)

 

  • Reuters with additional editing by Sean O’Meara

 

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Sean O’Meara

Sean O’Meara is an Editor at Asia Financial. He has been a newspaper man for more than 30 years, working at local, regional and national titles in the UK as a writer, sub-editor, page designer and print editor. A football, cricket and rugby fan, he has a particular interest in sports finance.