Asia’s stock markets endured a mixed day on Thursday as traders struggled to capitalise on the previous day’s upward momentum, though figures hinting that US inflation may be stabilising provided a welcome lift.
The US Labor Department said consumer prices rose 7% on-year in December, the fastest rate since 1982, as supply snarls and energy costs were compounded by surging demand from Americans returning to normal life.
However, the reading was in line with expectations and analysts pointed out that the increase from the previous month had slowed and was below forecasts, indicating that the rally may have peaked or was close to topping out.
Producer price figures due out later on Thursday will be closely followed for further clues.
US investors welcomed the news, with all three main indexes extending Tuesday’s gains that were fanned by Federal Reserve boss Jerome Powell pledging to rein in prices without impacting the economic recovery.
Markets had endured a torrid start to the year, particularly after Fed minutes last week showed a much more hawkish tilt by policymakers that many feared could see the bank remove financial support too quickly.
But Powell’s remarks and the latest data have soothed nerves considerably this week.
Still, there remains much debate on how many times the bank will hike interest rates and when it will begin to cut back on the vast bond holdings it has, which have helped keep borrowing costs in check.
After Wednesday’s rally, Asian equity markets fluctuated on Thursday. Hong Kong, Sydney, Wellington, Taipei, Jakarta and Manila rose, while Singapore, Bangkok and Mumbai were flat.
Tokyo ended down as a stronger yen weighed on exporters, with Shanghai and Seoul also off. London, Paris and Frankfurt all fell at the open.
Oil Prices Slip
The Hang Seng Index edged up 0.11%, or 27.60 points, to 24,429.77. The Shanghai Composite Index shed 1.17%, or 42.17 points, to 3,555.26, while the Shenzhen Composite Index on China’s second exchange sank 1.65%, or 40.91 points, to 2,434.92.
The benchmark Nikkei index fell 0.96%, or 276.53 points, to 28,489.13, while the broader Topix index dropped 0.68%, or 13.78 points, to 2,005.58.
But while the mood has improved on trading floors, there remain concerns that markets will not have an easy ride this year as the Fed removes the massive support that has helped drive a two-year rally and saw the economy through the pandemic.
Oil prices edged down slightly but held most of Wednesday’s advances that came on the back of data showing US stockpiles last week fell to their lowest level since 2018, lifting hopes for demand in the world’s top economy.
Warren Patterson, of ING Groep NV, said: “Supply disruptions, uncertainty over OPEC spare capacity and waning concerns over Omicron have all proved bullish for prices. [The stockpile] numbers provided a further boost.”
Key figures around 0820 GMT
Tokyo > Nikkei 225: DOWN 1.0% at 28,517.94 (close)
Hong Kong > Hang Seng Index: UP 0.1% at 24,429.77 (close)
Shanghai > Composite: DOWN 1.2% at 3,555.26 (close)
London > FTSE 100: DOWN 0.2% at 7,538.62
New York > DOW: UP 0.1% at 36,290.32 (close)
- AFP with additional editing by Sean O’Meara