Markets

Asia Stocks Slip as Investors Wait on US Inflation Data

 

Asia’s major markets slipped back on Tuesday on a largely flat day of trading ahead of the release of key US inflation data this week.

Tokyo and Hong Kong snapped recent rallies with investors’ eyes on Wednesday’s July US consumer prices report, which will signal how far the Federal Reserve might jump next with its rate hikes. China shares were an outlier, boosted by Beijing infrastructure pledges.

Japan’s Nikkei share average ended a four-day rally as weak quarterly earnings by heavyweights weighed on the market. 

 

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The Nikkei closed down 0.9% at 27,999.96. It had bounced above and below 28,000 all day, finally settling just below the psychological barrier. The broader Topix fell 0.74%.

Technology was the worst performing sector, down 2.3% overall. The only sector to gain was energy, up 1.4%.

SoftBank Group Corp fell 7% on its earnings, having announced job cuts at its Vision Fund investing arm after a record quarterly loss.

“There was a sense in the market that corporate earnings weren’t as bad as expected, but that mood changed after Tokyo Electron and SoftBank Group’s results,” a market participant at a domestic securities firm said.

China shares edged up led by energy and renewable energy stocks, but gains were capped as Covid-19 outbreaks and tensions with the United States weighed on sentiment.

China reported Covid outbreaks across the country, from growing clusters in tropical Hainan, to Xinjiang in the west and new cases in far-flung Tibet.

The Shanghai Composite Index rose 0.3%, or 10.50 points, to 3,247.43, while the Shenzhen Composite Index on China’s second exchange was up 0.2%, or 5.27 points, to 2,188.49.

The Hang Seng Index dropped 0.2%, or 42.33 points, to 20,003.44.

 

US Prices Signal Key to Markets

Elsewhere across the region, equities were mixed, with the Philippine benchmark losing 0.3%, while shares in Indonesia, Malaysia, South Korea advanced between 0.2% and 0.7%. Markets in India and Singapore were closed for a holiday.

Globally, shares edged lower and the dollar hung off recent highs as investors waited on tomorrow’s US inflation data release.

“The focus is on tomorrow’s US inflation numbers and whether or not they are likely to show any indication of a softening of inflationary pressures,” Michael Hewson, chief market analyst at CMC Markets. said. “Are we near the peak, and will tomorrow’s CPI numbers reflect that?”

On Monday, Wall Street closed mostly flat after blockbuster jobs data last week reinforced expectations the Federal Reserve will crack down on inflation, while a revenue warning from chipmaker Nvidia reminded investors of a slowing US economy.

Investors are now awaiting the consumer price data to gauge whether the Fed might ease slightly in its inflation fight and provide a better footing for the economy to grow.

Wall Street futures pointed to slim gains. The dollar also held just below its recent top, with traders wary of a surprise that could heap more upward pressure on interest rates. Against a basket of currencies the greenback was flat at 106.30.

The MSCI world equity index, which tracks shares in 47 countries, fell 0.1%.  

Oil prices continued their recent retreat after suffering their biggest weekly drop since April 2020 on worries about stalling global demand as central banks keep tightening.

US crude was down $1 a barrel, or 0.7%, at $90.07 a barrel. Brent crude fell 0.8% to $95.91 per barrel. 

 

Key figures

Tokyo – Nikkei 225 < DOWN 0.9% at 27,999.96 (close)

Hong Kong – Hang Seng Index < DOWN 0.2% at 20,003.44 (close)

Shanghai – Composite > UP 0.3% at 3,247.43 (close)

New York – Dow > UP 0.1% at 32,832.54 (Monday close)

 

  • Reuters with additional editing by Sean O’Meara

 

 

Read more:

China Locks Down Tibet, Hainan for Mass Covid Testing

SoftBank’s Vision Fund Posts $23bn Quarterly Loss

 

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.

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