Stocks fall, China’s consumer inflation rises

SINGAPORE — Asia-Pacific stocks fell on Wednesday as investors digest inflation data out of China and anticipate the US CPI report.

Hong Kong’s Hang Seng index fell 1.96% to close at 19,610.84, with the Hang Seng Tech index down 2.83%. Heavyweights Meituan and JD.com fell 3.64% and 4.46% respectively.

Health care, consumer and real estate stocks also dragged the Hang Seng lower, according to data from Eikon.

Property developer Longfor plunged 16.4% after the company said contract sales for the first seven months of the year fell nearly 58% from the same period a year ago.

Mainland Chinese markets fell, with the Shanghai Composite down 0.54% to 3,230.02 and the Shenzhen Component down 0.87% to 12,223.51.

China’s producer price index for July rose 4.2% from a year ago, lower than the 4.8% rise predicted in a Reuters poll.

Consumer prices rose 2.7% in July from the same period in 2021, the most since July 2020. Analysts had expected the print to come in at 2.9%.

“Underlying inflationary pressures remain limited in China as sporadic lockdowns have weighed on consumer spending and overall economic activity,” Carol Kong, senior associate, international economics and monetary strategy at Commonwealth Bank, wrote in a statement. note from Wednesday ahead of the data release.

“China’s relatively subdued inflation impulse contrasts with persistently strong US inflation,” the note said.

Later Wednesday, the US will also release inflation data. Economists predict consumer inflation to come in at 8.7%, down from 9.1% in June, according to the Dow Jones.

Decline in Asia-Pacific markets

The Nikkei 225 in Japan fell 0.65% to close at 27,819.33, while the Topix index slid 0.17% to 1,933.65.

In South Korea, the Kospi fell 0.9% to close at 2,480.88 and the Kosdaq fell 1.6% to 820.27.

Australia’s S&P/ASX 200 fell 0.53% to 6,992.7.

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MSCI’s broadest index of Asia-Pacific stocks outside Japan lost 1.24%.

In company news, Toyota Motor said it would suspend some production operations due to positive Covid cases at worksites.

Cathay Pacific and Honda Motor are among the companies that announced their results on Wednesday.

Shares of Cathay Pacific in Hong Kong rose about 1% after the carrier reported a smaller loss for the first half of 2022 compared to the same period in 2021. Revenue rose 17% to 18, HK$6 billion ($2.36 billion).

In the U.S. overnight, the Nasdaq Composite fell more than 1% to 12,493.93. The Dow Jones Industrial Average fell 58.13 points or 0.18% to 32,774.41, while the S&P 500 fell 0.42% to 4,122.47.

Currencies and oil

The US dollar index, which tracks the greenback against a basket of its peers, was at 106.329, holding below the 106.5 level.

High inflation should reinforce the idea that the Fed is not about to pause its tightening cycle and that markets will readjust their expectations for US interest rates, added Kong of the Commonwealth Bank.

“A resurgence in FOMC rate expectations may help the USD rally, especially against the JPY, which is sensitive to moves in US Treasuries.”

The Japanese yen was trading at 135.01 to the dollar, remaining weaker since the US payrolls report. The Australian dollar was at $0.6970.

U.S. crude futures fell 0.74% to $89.83 a barrel, while Brent crude futures fell 0.53% to $95.80 a barrel.

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