Asia stocks advanced on Tuesday lifted by the positive mood ahead of what is hoped will be an undramatic US inflation report.
An air of caution remained with the global outlook still gloomy but there was also some catch-up trading after Monday’s holiday in China, Hong Kong and South Korea.
Asia data out on Tuesday backed up that cloudy picture of regional economies. A 9% year-on-year jump in Japanese wholesale prices points to pressure on corporate margins, yet a slowdown in gains for August holds some hope of relief.
Japan’s Nikkei share average closed higher, tracking Wall Street and led by gains in video-game maker Nintendo.
The Nikkei finished 0.25% higher at 28,614.63 after rising to 28,659.76, its highest since August 26, earlier in the day. The broader Topix rose 0.32% to 1,986.57.
The US S&P 500 had rallied more than 1% overnight leading up to Tuesday’s consumer price index report, which will be scrutinised for clues on how aggressive the Federal Reserve’s policy tightening campaign will be going forward.
Energy was the Nikkei’s best performing sector, gaining 0.85% as crude continued its rebound from multi-month lows amid supply concerns heading into the northern hemisphere winter.
Nintendo was the Nikkei’s top performer, climbing 5.5% after it reported record domestic launch sales for its shooter Splatoon 3 on the Switch console.
Travel-related shares gained after a report said on Monday that Japan was planning to waive tourist visa requirements from some countries as part of a further easing of border controls.
The yen continued its rise from last week’s 24-year low close to 145 per dollar, last trading near 142.
Automakers took a hit from the strengthening yen, which cuts into revenue from overseas sales. Mazda was the Nikkei’s worst performer, down 3.8%. Subaru lost 2.7% and Mitsubishi Motors sank 1.9%.
China Blue-Chip Gains
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.8% and China stocks closed up, catching up on global gains following a long holiday weekend, after Premier Li Keqiang vowed China will continue to roll out phased policies to stabilise its Covid-ravaged economy.
“China will promote the recovery of consumption as the main pulling force and make greater efforts to boost effective investment,” state media quoted Premier Li as saying on Monday.
The blue-chip CSI 300 Index gained 0.4% at close, while the Shanghai Composite Index was up 0.05%, or 1.74 points, to 3,263.80.
The Biden administration plans next month to broaden curbs on US shipments to China of semiconductors used for artificial intelligence and chipmaking tools, several people familiar with the matter said.
Shares of Chinese semiconductor companies rose as much as 2% before closing 0.1% higher.
The Hang Seng Index dropped 0.18%, or 35.39 points, to 19,326.86 but the Shenzhen Composite Index on China’s second exchange advanced 0.38%, or 45.68 points, to 11,923.47.
Other Asian markets also rose ahead of US inflation data that is expected to offer clues to the Federal Reserve’s rate-hike path.
Seoul’s KOSPI index settled 2.7% higher after an extended weekend in its best session since February 2021. Stocks in Jakarta and Taipei added between 0.6% and 1%.
Shares in India were up with Mumbai’s signature Nifty 50 index rising 0.77%, or 138.20 points, at 18,074.55.
US Inflation Warning
Globally, S&P 500 futures and Nasdaq futures held firm, while European stock futures dipped, setting the stage for a subdued start for European markets.
Analysts, however, warned that US core inflation is likely to march on and that the near-term rate implications are unclear.
“It’s too early to be celebrating the end of inflation, as some market participants seem already to be doing,” ING economist Rob Carnell said.
US crude was hovering below $90 a barrel, down nearly 30% since the middle of June and roughly where it traded before Russia’s invasion of Ukraine.
US inflation figures are due at 1230 GMT and the consensus is for the core inflation rate last month to have risen 0.3% month-on-month, the same as in July.
In New Zealand, rate hikes which began a year ago are starting to bite, sending home prices down 6% since last August.
Tokyo – Nikkei 225 > UP 0.25% at 28,614.63 (close)
Hong Kong – Hang Seng Index < DOWN 0.18% at 19,326.86 (close)
Shanghai – Composite > UP 0.05% at 3,263.80 (close)
New York – Dow > UP 0.71% at 32,381.34 (Monday close)
- Reuters with additional editing by Sean O’Meara