Stocks Mixed. Weak China PPI Inflation Takes Gloss Off Trade Hopes
Asian Stocks Talking Points:
- Stocks perhaps lacked an overall theme Monday
- Chinese indexes were pressured by weak producer prices
- Tech weighed on the ASX
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Asia Pacific stocks endured a mixed and scrappy session Monday with focus on Chinese inflation data which remained extremely weak at the factory gate level last month.
Official data showed the Producer Price Index down 0.8% on the year. That was in fact stronger than the 0.9% expected but still the fastest pace of contraction since 2016. Consumer prices rose at a punchy 2.8% on the year, with a huge boost for pork prices as a result of China’s swine fever outbreak playing its part in their strength. Overall food prices were up by 10%.
Equity investors seem to have played up those PPI numbers, worrying about likely investment and employment position should they become entrenched. However, the clearly better tone around US-China trade relations may have counterbalanced these fears somewhat.
The Shanghai Composite was down by 0.3% as its afternoon session kicked off. Hong Kong’s Hang Seng did better but was still only just in the green, up 0.01%, at the same time. Away from China the Nikkei 225 added 0.3%. Nissan got a strong lift after Chief Executive Hiroto Saikawa announced his resignation, effective September 16.
Australia’s ASX 200 was on course for a day of falls with its tech sector seeming to follow the Nasdaq lower on Friday’s news that Google parent Alphabet will face an antitrust probe into its advertising business. Oil names did better in response to gains for crude prices which came after Saudi Arabia’s new Energy Minister committed to production cuts. Deteriorating US-Iran relations kept prices supported.
The Australian equity benchmark had nosed back up into a key resistance zone which, as a previous trading range in June and July, formed the launchpad for July’s ascent to record highs.
However, on present evidence the bulls may yet have more to do if they are to keep their current revisit of the region from being a short one.
US-China trade hopes were still visible in the foreign exchange market where the haven Japanese Yen hit five-week lows against the US Dollar. The British Pound and the Euro both made gains on the Greenback. The Australian Dollar was perhaps an exception, having fallen after that Chinese data and failed to make back much of its losses.
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--- Written by David Cottle, DailyFX Research
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.