Asia markets lower as China inflation data misses expectations

Asia markets traded lower on Thursday morning after Chinese inflation data came in below expectations.

Mainland Chinese markets, watched by investors in relation to Beijing’s ongoing trade war with Washington, were lower in early trade. The Shanghai composite, Shenzhen composite and Shenzhen component all slipped more than 0.1 percent.

The moves came after official inflation data for December, released at the same time as the market open, came in below expectations.

China’s December consumer inflation (CPI) — a gauge of prices for goods and services — rose 1.9 percent on year. That was lower than economists’ expectations of a 2.1 percent growth, according to a Reuters’ poll. Producer inflation rose 0.9 percent on-year in December, which was lower than the 1.6 percent economists were expecting.

Economic data from the world’s second-largest economy has been closely watched by investors for signs of damage inflicted by the trade war between Beijing and Washington.

Symbol
Name
Price

 

Change
%Change

NIKKEI

HSI

ASX 200

SHANGHAI

KOSPI

CNBC 100

Elsewhere in Asia, Japan’s Nikkei 225 slipped 1.49 percent while the Topix index declined 1.19 percent. South Korea’s Kospi was lower by 0.32 percent as shares of steelmaker Posco fell more than 1 percent.

In Australia, the benchmark ASX 200 shed 0.19 percent, with the sectors mixed. The heavily-weighted financial subindex slipped 0.23 percent as shares of Australia’s so-called Big Four banks mostly declined. Westpac was fractionally lower, Commonwealth Bank of Australia declined almost 0.4 percent while National Australia Bank slipped 0.2 percent. Australia and New Zealand Banking Group, on the other hand, gained 0.32 percent.

U.S. and China conclude three days of trade talks

The latest round of trade negotiations in Beijing concluded on Wednesday after an unscheduled third day of talks. Officials from Washington said in a statement that they will report back to the White House for further guidance on the talks.

In a statement, the office of the U.S. Trade Representative said that officials discussed “needed structural changes in China” on matters such as forced technology transfers, intellectual property protection and cyber theft. Talks also focused on “China’s pledge to purchase a substantial amount of agricultural, energy, manufactured goods, and other products and services from the United States,” the statement said.

The Chinese Commerce Ministry also issued its own statement on Thursday morning, saying that the just-concluded round of trade talks with the U.S. were extensive and established a foundation for the resolution of each others’ concerns. Both parties agreed to maintain close contact, the ministry said.

“Initial signs suggest that there is modest momentum building towards a narrow agreement in coming months, but that US trade hawks are fighting an intense rear-guard action to limit the scope of that agreement and keep the pressure up on Beijing,” analysts at political risk consultancy Eurasia Group wrote in a note.

“If a deal is reached, it will almost certainly remain fragile and there will still be a long road ahead of the removal of US tariffs already imposed,” they said.

Analysts at Singapore’s DBS Group Research also said in a morning note that while the three-day meeting was a first step towards easing tensions on both sides, there are challenges ahead.

“US demands for verification and enforceable targets on intellectual-property rights, transfer of technologies and non-tariff barriers may not be that easily addressed,” the DBS analysts wrote. “This sets up room for volatility in the lead up to the 1st March deadline where negotiations on these issues need to be concluded.”

Late last year, the U.S. and China agreed to a cease-fire in their trade war, holding off on any further tariffs until early March so negotiators could seek a deal.

Dow sees fourth straight day of gains

Overnight on Wall Street, the Dow Jones Industrial Average advanced 91.67 points to close at 23,879.12 — its fourth straight day of gains. The S&P 500 also saw a four day winning streak, rising 0.4 percent to finish its trading day at 2,584.96. The Nasdaq Composite gained 0.87 percent to close at 6,957.08.

Wednesday’s moves came after a summary of the Federal Reserve’s December meeting reiterated comments from the central bank’s chairman from last week about patience regarding monetary policy.

The minutes pointed to a backdrop of low inflation in the U.S., meaning the central bank can “afford to be patient about further policy firming.” They also indicated that some Fed officials think a “relatively limited amount” of rate hikes may be coming.

Currencies

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 95.184 after seeing an earlier high around 95.9 in the previous session.

The Japanese yen, widely viewed as a safe-haven currency, traded at 107.91 against the dollar after seeing lows around 108.9 yesterday. The Australian dollar was at $0.7153 after gaining from the $0.714 handle in the previous session.

— Reuters and CNBC’s Fred Imbert and Huileng Tan contributed to this report.


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