Traders are awaiting the release of data from the U.S. Labor Department on the country’s consumer price movements last month, which are considered key to the Federal Reserve’s (Fed) decision on the future direction of monetary policy.
“All markets are clearly focused on the extremely important U.S. inflation data,” notes SPI Asset Management managing partner Stephen Innes, quoted by Market Watch. – Traders are trying to figure out whether the Fed will change course after this data and what the implications for the U.S. economy will be.”
Experts polled by Trading Economics on average expect U.S. inflation in March slowed to 5.2% on an annualized basis from 6% in February.
Higher-than-expected inflation would raise the likelihood of another Fed rate hike by at least another 25 basis points. The U.S. central bank rate hike has already slowed inflation, but it is also holding back the economy. A further rate hike would increase the threat of recession, which would have a negative impact on stock markets, notes Market Watch.
Japan’s Nikkei 225 stock index gained 0.6% in trading.
SoftBank Group shares gained 1.4 percent, Nippon Yusen rose 2.4 percent, Mitsubishi Corp. – by 2.3%, Nippon Steel by 1.8% and Nintendo by 1%.
Bank of Japan data released Wednesday showed the country’s producer price growth slowed to an annualized 7.2% in March from February’s 8.3%. The rate of increase in producer prices last month was the slowest since September 2021.
China’s Shanghai Composite stock index added 0.3 percent in trading, while Hong Kong’s Hang Seng lost 0.8 percent.
The leaders in mainland China are commodities stocks – Petrochina Co. (SPB: 857) gained 3.4 percent, China Petroleum & Chemical Corp. (Sinopec) gained 1.7 percent and Zijin Mining Group Co. – by 0.7%.
Shares of technology giants are becoming cheaper in Hong Kong. Alibaba Group Holding (SPB: BABA) was down 2.4%. On Tuesday, the company unveiled its own artificial intelligence model, a ChatGPT counterpart that works with Chinese and English. The model will be integrated into all business applications in Alibaba’s ecosystem in the near future, the company said.
According to Bloomberg, Chinese authorities are planning to introduce the requirement of safety checks of technologies similar to the popular chatbot ChatGPT.
Shares of Tencent (SPB: 700) Holdings Ltd. fell 4.4% in trading and JD.Com Inc. (SPB: JD) fell 3.4%.
South Korea’s KOSPI stock index is stable in the course of trading, the Australian S&P/ASX 200 added 0.4%.
BHP Group shares rose 2.1%, Rio Tinto – 2.5%, Fortescue Metals – 1.5%.
Asia-Pacific stock indices rebounded positively on Monday after the U.S. stock market rallied at the end of last week.
Australian and Hong Kong stock exchanges as well as U.S. and most European countries are closed because of the Christmas holiday.
The Bank of Japan is not going to abandon its ultra-soft monetary policy any time soon, Central Bank Governor Haruhiko Kuroda said.
Last week, the Japanese central bank unexpectedly widened the range within which the yield on ten-year government bonds can fluctuate to plus/minus 0.5% per annum from plus/minus 0.25% previously. Investors took that as a signal that the Bank of Japan was preparing to abandon the ultra-soft monetary policy that it had been pursuing for years.
But Kuroda on Monday rebutted that view, saying that the corridor widening was aimed at boosting the effect of monetary policy and was not the first step in abandoning a major stimulus program. He also noted that the country’s consumer inflation rate could slow below the Bank of Japan’s 2% target in the next fiscal year, which begins in March 2023.
The value of Japan’s Nikkei 225 index rose by 0.65% in trading.
Shares of electronic components maker Sharp Corp. (+3.6%) and commodity companies including JGC Holdings Corp. (+3.5%), Inpex Corp. (+2.5%) and Nippon Steel Corp. (+2.3%) were among the leaders.
In addition, chip maker Advantest Corp. (+1.2%), clothing retailer Fast Retailing (+2%), consumer electronics maker Sony Group (+0.3%), automakers Nissan Motor (+1.9%) and Toyota Motor (+0.3%) went up.
Mitsubishi Electric Corp. and Mitsubishi Heavy Industries Ltd. announced Monday that they intend to merge their generator businesses to become more competitive in the market. The companies plan to sign a definitive agreement at the end of May 2023 and complete the merger of the units by April 1, 2024. Mitsubishi Electric is expected to become the majority shareholder of the new merged company, while Mitsubishi Heavy Industries will become a minority shareholder.
Mitsubishi Electric’s share price rose 1.3 percent and Mitsubishi Heavy Industries rose 2.7 percent.
China’s Shanghai Composite index gained 0.65% over the day.
Technology and consumer companies, including Huizhou China Eagle, up 1.5%; Shenzhen Infinova, Zhejiang Netsun and Xi’an Catering, up about 10%; and automaker BYD, up 4.1%.
The People’s Bank of China on Monday provided banks with 216 billion yuan ($30.9 billion) in reverse repurchase transactions to ensure sufficient liquidity in the financial system at the end of the year. Last week the net inflow of funds into the country’s financial system amounted to 704 billion yuan, the highest weekly infusion since October.
The value of the South Korean Kospi index increased by 0.15%.
Stocks of one of the world’s largest chip and electronics maker Samsung Electronics Co. fell 0.3% and automaker Hyundai Motor rose 0.6%.
A strong rise in quotations showed securities of pharmaceutical companies Kyongbo Pharmaceutical and Samil Pharmaceutical – by 16.3% and 4.5%, respectively.
Asian stock indices started the working week without any dynamics, while the stock markets of mainland China and Hong Kong went negative on the statistics.
China’s economy expanded 3.9% in the third quarter compared to the same period last year, the State Bureau of Statistics (GSO) said. Thus, the growth rate accelerated significantly compared to 0.4% in April-June. Analysts on average expected an increase of 3.4-3.5%.
China’s GDP in January-September increased by 3%. This is significantly below the target set by the authorities of the country as a whole for 2022 at the level of about 5.5%, experts say.
Retail sales in the country in September increased by 2.5% compared to the same month a year earlier, the CSO also reported. This is the minimum rate of recovery over the past four months. The consensus forecast assumed growth of 3.3%.
China’s foreign trade surplus widened unexpectedly in September, as import growth was significantly weaker than exports. Imports increased by only 0.3% in annual terms, exports grew by 5.7%. Analysts polled by The Wall Street Journal, on average, predicted the growth of the first indicator by 1%, the second – by 4%.
The Chinese Shanghai Composite index decreased by 1.2% by 08:37 Moscow time. Hong Kong’s Hang Seng plunged 5.4% to its lowest in more than thirteen years.
Shares of Internet companies Meituan (SPB: 3690) (-12.4%), Baidu Inc. (SPB: BIDU) (-10.7%) and Tencent (SPB: 700) Holdings Ltd. (-9.2%), as well as the developer Longfor Group Holdings Ltd. (-12.2%).
Retailers Alibaba Group (SPB: BABA) and JD.com Inc. (SPB: JD) lost 10.4% and 11%, respectively.
Among the components of Hang Seng, only six stocks show an increase in value, including HSBC bank (+0.5%), developer CK Infrastructure Holdings Ltd. (+3.4%) and electrical equipment manufacturer Techtronic Industries Co. (+1.1%).
The value of the Japanese Nikkei 225 increased by 0.5% by 08:33 Moscow time.
The stocks of the transport companies Kawasaki Kisen Kaisha Ltd. have risen most significantly. (+4.4%), Mitsui O.S.K. lines ltd. (+4.2%) and Nippon Yusen K.K. (+3.7%), as well as non-ferrous metal producer Sumitomo Metal Mining Co. (+4.1%).
The South Korean Kospi index added 0.9% by 08:30 Moscow time.
Quotes of securities of one of the world’s largest manufacturers of chips and electronics Samsung Electronics Co. rise by 2.7%, while the cost of automaker Hyundai Motor fell by a similar amount.
The Australian S&P/ASX 200 rose 1.5%.
The capitalization of the world’s largest mining companies BHP and Rio Tinto increased by 2.6% and 1.2%, respectively.
In addition, shares of all four largest banks in the country fell in price: Commonwealth Bank – by 1.2%, ANZ Bank – by 0.2%, Westpac Banking – by 0.6% and National Australia Bank – by 0.7%.
Stock indices of Japan and Australia rose at the auctions on Monday, following the US stock market, which confidently strengthened at the end of last week.
At the same time, the exchanges of China, Hong Kong and South Korea were closed. China celebrates the autumnal equinox, while Korea celebrates Chuseok.
American stock indexes closed trading on Friday with active growth, ending the first week of the last four in positive territory. Investors followed the statements of the world’s central banks and signals about global inflation.
This week, market participants are waiting for data from the US Department of Labor on the dynamics of consumer prices in August, which will be published on Tuesday, as well as data on industrial production, retail sales and capital investment in China in August, which will be released on Friday.
Meanwhile, outbreaks of coronavirus in China and the restrictive measures introduced in connection with them remain a cause for concern, writes MarketWatch.
The Japanese Nikkei 225 closed up 1.16%. The indicator reached its maximum value in two weeks.
The growth leaders among the components of the index are the shares of retailer Isetan Mitsukoshi Holdings Ltd (+4.7%), providing online medical services M3 Inc. (+3.9%) and rail and bus operator Keisei Electric Railway Co. (+3.6%).
Asia’s largest clothing retailer Fast Retailing rose 2.3%, while automaker Nissan Motor Co. – by 2.45%.
The Australian S&P/ASX 200 rose 1.02%.
The market value of the world’s largest mining companies BHP and Rio Tinto increased by 3.5% and 1.8%, respectively.
Commonwealth Bank of Australia rose 0.8%, Westpac Banking Corp. – by 1.04%, Australia & New Zealand Banking Group Ltd. – by 1.35%.
Since July 5, Australia has marked tariffs on Ukrainian imports of goods, in addition to alcohol, fuel and tobacco, as a support package for a year, according to the website of the Australian Department of Trade and Tourism.
As indicated by the agency, we are talking about reducing tariffs from 5% to zero for a period of 12 months for a number of goods that are produced or produced in Ukraine. At the same time, it is clarified that duties equivalent to excises remain in force, for example, those that apply to fuel, alcohol and tobacco products.
According to the report, such measures from Australia and other states support the economy of Ukraine and expand its trading opportunities, and they are also important for Ukraine’s recovery in the near and long term.
According to the report, in 2021, Ukrainian exports to Australia amounted to $122 million.
Australian Prime Minister Entino Albenizi announced that Ukraine will be provided with additional military-technical assistance worth $100 million.
“Today we are announcing an additional $100 million in military-technical assistance. In total, we have already provided $390 million,” he said Sunday at a briefing in Kyiv after meeting with Ukrainian President Volodymyr Zelensky.
“We also provide an additional 14 armored personnel carriers and 20 Bushmaster armored vehicles. Thus, the total number of Bushmasters is 60 units,” he said.
According to the prime minister, Australia will also provide additional military equipment, drones.
“We will also provide additional assistance to the border troops of Ukraine,” he said.
According to the prime minister, “we will also reduce duties on Ukrainian goods. We will join the work of the International Court of Justice, announce additional sanctions and travel bans against 16 Russian ministers and big businessmen.”
Australia, according to the prime minister, will also ban the import of Russian gold.
