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China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes moved less than 0.1% in either direction, as data showed that consumer inflation in the country barely grew, while producer inflation fell to its lowest level in nearly three years in April.
The reading, which follows disappointing trade data from the country this week, raised more doubts over a post-COVID economic rebound in China, and soured sentiment towards its markets.
Weakness in China spilled over into Hong Kong, with the Hang Seng losing 0.2%. But electric vehicle maker Li Auto Inc (HK:2015) was among the few outliers for the day, up as much as 16% after it logged a bumper first-quarter profit.
Other China-exposed markets also remained under pressure. Australia’s ASX 200 index fell 0.2% as heavyweight, China-dependent mining stocks slid, while the Taiwan Weighted index lost 0.5%.
Japan’s Nikkei 225 index was flat as investors awaited more quarterly earnings from the country. Technology investment giant SoftBank Group Corp. (TYO:9984) is set to report its earnings after the bell on Thursday.
Still, the Nikkei was trading close to a nine-month high following a string of robust earnings from the country’s biggest trading houses earlier this month.
Broader Asian markets were muted as traders digested mixed U.S. consumer inflation data. While the reading did ease slightly more than expected through April, it still remained well above the Federal Reserve’s 2% annual target.
Month-on-month inflation also increased, indicating that U.S. price pressures remained sticky and were unlikely to elicit a less hawkish Federal Reserve in the coming months.
While markets widely expect the Fed to hold interest rates during its June meeting, investors are also trimming expectations for a rate cut this year.
The prospect of U.S. interest rates staying higher for longer bodes poorly for risk-driven Asian markets, as monetary conditions tighten across the globe.
Still, some Asian markets took support from the softer U.S. inflation reading, as well as a strong overnight finish in U.S. technology stocks. India’s Nifty 50 and BSE Sensex 30 indexes rose slightly in early trade, while South Korea’s KOSPI added 0.4%.
The Philippine Composite index rose 0.5% after data showed the country’s economy grew more than expected in the first quarter.
