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Nikkei, Hang Seng Sink Ahead of US Inflation Data, Fed Policy

Losses in Japan and Hong Kong were offset by markets rallying in Taiwan and South Korea — both of which were buoyed by overnight gains on Wall Street and positive tech news.


A passerby walks past an electric screen displaying Japan's Nikkei share average and the Dow Jones Industrial Average outside a brokerage in Tokyo, Japan, on March 11, 2024. Photo: Reuters
A passerby walks past an electric screen displaying Japan's Nikkei share average and the Dow Jones Industrial Average outside a brokerage in Tokyo, Japan, on March 11, 2024. Photo: Reuters

 

Major Asian indices made mixed moves on Wednesday as investors held their breath ahead of US inflation numbers and the Federal Reserve’s crucial policy meet that will set the path for rate cuts in the near-term.

Losses in Japan’s Nikkei and Hong Kong’s Hang Seng index were offset by rallying markets in Taiwan and South Korea — both of which were buoyed by overnight gains on Wall Street.

Overnight, the Nasdaq and the S&P 500 rose ended trade at all-time highs, as investors prepared for upcoming inflation data and the Fed’s Reserve’s policy meeting.

 

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But both US futures remained flat in Asian trading. “The countdown is on, with the market going into full risk management mode,” Chris Weston, head of research at Pepperstone, said.

Still, Korea’s Kospi and Taiwan’s TSEC weighted index both saw strong gains on the back of a tech rally led by chipmakers. Korea-listed shares of chipmakers Samsung Electronics and SK Hynix booked gains more than 1%.

Meanwhile, in Taiwan, reports that chip design giant MediaTek was developing an Arm-based personal computer chip to run Microsoft’s Windows operating system, bolstered chip giants.

Taipei-listed shares of MediaTek ended the day with gains of 2.36%. TSMC, the world’s largest contract chipmaker, rallied nearly 2.94%.

The tech-backed euphoria, however, missed other major markets in the region.

Japan’s Nikkei share average ended 0.66% lower at 38,876.71, dragged down by losses in some market heavyweights including Fast Retailing.

The slump came as investors remained cautious ahead key events of the day, with the Nikkei seeing two straight sessions of gains. The index had closed above the important 39,000-mark on Tuesday but slipped below it today.

The broader Topix also slipped 0.73% to 2,756.44.

“Only a handful of large technology stocks led overnight gains of two main indexes in the United States. So, market players were not actively buying large varieties of Japanese stocks today,” Shuutarou Yasuda, a market analyst at Tokai Tokyo Intelligence Laboratory, said.

Investors will also remain cautious ahead of the Bank of Japan two-day policy meeting, which will conclude on Friday. The BoJ is widely expected to keep interest rates steady and consider whether to offer clearer guidance on how it plans to reduce its huge balance sheet.

 

Hang Seng leads losses

In China, consumer inflation held steady, rising 0.3%, in May while producer price declines eased. The underlying trend, however, suggests Beijing would need to do more to prop up feeble domestic demand and an uneven economic recovery.

That mixed sentiment reflected in the country’s markets which closed largely flat after paring initial losses.

The blue-chip CSI300 index wobbled between gains and losses before ending 0.04% higher at 3,544.12. The Shanghai Composite index also closed 0.31% up at 3,037.47.

Leading losses for the region, however, was Hong Kong’s Hang Seng which slumped 238 points, or 1.3%, to close at 17,937.84.

Weighing on the index was a 20% plunge in China Evergrande New Energy Vehicle Group, after the unit of developer China Evergrande warned of losing assets. Carmakers also fell late in the day, after the European Commission announced it would raise tariffs by a further 38% on electric vehicles imported from China.

 

Rupee saved from record low

In currency markets, the dollar index has maintained all of its post-payrolls gains since Friday, standing tall at 105.10 against its major peers.

The Indian rupee was nearly flat on Wednesday after likely intervention from the Reserve Bank of India helped the currency avert a fall to an all-time low, traders said.

The rupee was at 83.56 against the US dollar as of 10am IST, barely changed from its close of 83.5650 in the previous session.

Dollar bids from local oil companies are present but the currency is likely to stay in a narrow range now that the RBI has “signalled to the market” that it will prevent further weakness, a foreign exchange trader at a state-run bank said.

Indian markets, meanwhile, surged to record closing high on Wednesday, boosted by state-owned companies and news on Tuesday that key ministers in the Modi cabinet would remain in their portfolios.

 

Key figures:

Tokyo – Nikkei 225 < DOWN 0.66% at 38,876.71 (close)

Hong Kong – Hang Seng Index < DOWN 1.31% at 17,937.84 (close)

Shanghai – Composite > UP 0.31% at 3,037.47 (close)

London – FTSE 100 > UP 1.02% at 8,230.90 (1314 GMT)

New York – Dow < DOWN 0.31% at 38,747.42 (Monday close)

 

  • Reuters, with additional editing by Vishakha Saxena

 

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Vishakha Saxena

Vishakha Saxena is the Multimedia and Social Media Editor at Asia Financial. She has worked as a digital journalist since 2013, and is an experienced writer and multimedia producer. As a trader and investor, she is keenly interested in new economy, emerging markets and the intersections of finance and society. You can write to her at [email protected]

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