China Deflation Risks Rise, India Holds Rates Steady

Arjun Pandit
08 Feb, 2024
Mumbai

In Asia, the benchmark indexes in Japan advanced, tracking gains in New York, but indexes struggled in Shanghai and Hong Kong due to the protracted downturn in the property market and persistent selling by foreign investors.

In overnight trading, market indexes on Wall Street advanced after companies reported better-than-expected earnings and investors looked beyond rate uncertainty.

Elsewhere in the region, market indexes in India, Sydney, and Seoul traded higher.

The ASX 200 index increased 0.3% to 7,639.20, the KOSPI index edged up 0.2% to 7,639.20, and the Sensex index inched down 0.8% to 71,557.82 after erasing early morning gains.

 

Japan Stocks Trade Higher, SoftBank Soars 10%

Market indexes in Tokyo extended recent gains and approached multi-decade highs, and investors reacted to the latest batch of earnings and the gains in the U.S. markets.

The Nikkei 225 increased 2.2% to 36,904.10, and the benchmark index advanced following a string of positive earnings and stable interest rate expectations, at least for the next two months.

SoftBank Group soared 10.9% to ¥7,332.0 after the company's U.S.-listed ARM Holdings soared nearly 20% in after-hours trading in New York following the earnings release.

Other leading semiconductor industry companies advanced as well.

Tokyo Electron, Advantest, Screen Holdings, and Renesas Electronics jumped between 1% and 5%.

Vehicle makers also participated in the market rally, and Toyota Motor, Honda Motor, Nissan, and Subaru advanced between 1% and 3%.

 

Japan's Current Account Stays in Surplus for the Eleventh Consecutive Month

Japan's current account surplus sharply rebounded to 744.5 billion yen from 0.095 billion yen a year ago, the Ministry of Finance reported Thursday.

The current account was in surplus for the eleventh month in a row in December after merchandise trade swung to a surplus of 115.5 billion yen from a deficit of 1,238.9 billion.

 

China's January Inflation Data Prompts Deflation Worries

China stocks were under pressure, and market indexes trimmed weekly gains after consumer and producer price inflation declined in January.

The CSI 300 index added 0.3% to 3,354.95, and the Hang Seng index dropped 1% to 15,925.10.

Consumer price inflation declined at an annual rate of 0.8% in January, a fourth monthly decline in a row and the largest fall since September 2009.

Producer price inflation fell 2.5% in the month, a 16th monthly decline in a row.

The National Bureau of Statistics reported both inflation updates in a separate report.

Consumer prices fell partly because of a higher base after the start of the spring festival in January, driving prices of food and energy higher.

In stock trading, tech stocks were under pressure after Alibaba Group reported a 70% decline in quarterly earnings and revenue rose less than expected (5.1%).

Alibaba Group fell 6.5% to HK$70.05, and the company expanded its stock repurchase plan by $25 billion to $35.3 billion.

Baidu, JD.com, Tencent, and Meituan fell between 0.5% and 2.0%.

Property developers continue to slide amid no signs of government measures to revive the moribund market and support the overleveraged property companies.

Longfor, China Resources Land, Sun Hung Kai, and China Vanke traded mixed.

 

India Stocks Sell Off On Inflation Forecast

Stocks in Mumbai declined, and bond yields held firm after the central bank held its key lending rate steady.

The Nifty and the Sensex indexes edged lower, and the Reserve Bank of India held the repo rate at 6.5%, as widely expected.

Market sentiment turned negative after the central bank estimated a 5.4% inflation rate for the financial year 2024 ending in March and estimated inflation to rebound to 5.0% in the final quarter.

The Sensex index decreased 0.8% to 71,574.55, and the Nifty index fell 0.7% to 21,756.0.

On the Mumbai stock exchange, 458 stocks traded at their 52-week highs and 13 stocks traded at their 52-week lows.

Adani Ports and SEZ declined 1.3% to ₹1,256.25, and the company won a bid to operate a container terminal at Tanzania's main port, Dar Es Salaam.

Adani will operate the larger of the two terminals, with a capacity of 660,000 twenty-foot equivalent units of containers.

Zomato gained 0.6% to ₹140.85 after the delivery service provider confirmed the closing of its businesses in the Czech Republic and Vietnam.