Weak Tech Stocks Drive Nikkei Lower In Tokyo, China Stocks Extend 4-day Rally

Arjun Pandit
13 Mar, 2024
Mumbai

Asian markets traded mixed after the latest U.S. inflation report suggested that the U.S. Federal Reserve is more likely to keep rates higher at the end of its policy meeting on March 19. 

In overnight trading, benchmark indexes in New York advanced more than 1% after February's consumer price inflation met investors' expectations.

In Asia, the Nikkei 225 Stock Average declined 0.4%, the benchmark indexes in Shanghai fell 0.3% but in Hong Kong gained 0.4%, and the KOSPI index in Seoul added 0.3%. 

 

Tech Stocks in Tokyo Edged Lower, Investors Look Ahead of Rate Decision

Benchmark indexes in Tokyo traded down, and semiconductor stocks led the decliners on the worry that the recent monthslong rally may have stretched valuation too far. 

On the other hand, investors welcomed the rise in the producer price inflation data released on Tuesday. 

Japan's producer price inflation rose 0.6% from a year ago in February or gained 0.2% from the previous month, the Bank of Japan reported. 

The rise in producer prices follows the increase in consumer prices in the Tokyo metropolitan area, indicating inflation may be on the path to the 2% target set by the central bank. 

Investors are keenly awaiting the monetary policy outcome of the Bank of Japan on Wednesday, March 19, amid rising hopes that the central bank may lay the groundwork for lifting interest rates. 

Japan is the only developed nation in the world with negative interest rates, and investors are hoping that the central bank is ready to end its ultra-loose monetary policy.

The Nikkei 225 Stock Average fell 0.4% to 38,717.18, and the Topix index dropped 0.2% to 2,652.04. 

Semiconductor stocks rebounded following the gains in overnight trading in New York. 

Advantest, Screen Holdings, Tokyo Electron, Disco Corp., and SoftBank gained between 2% and 3%. 

Panasonic, Mitsubishi Electric, and Canon declined between 0.5% and 2%, but vehicle makers Toyota, Honda, and Nissan reversed morning losses to close up between 1% and 3%. 

 

Bargain Hunters Return to China Amid Low Valuations

Market sentiment in Shanghai and Hong Kong was driven by bargain hunters and corporate buybacks, as well as persistent worries about property market weakness and weak consumer sentiment. 

Chinese stock market indexes are down for the fourth year in a row after foreign portfolio investors continue to lighten their holdings and foreign direct investment plunged following the protracted downturn in the property market, persistent worries of intellectual theft, and rising personal security concerns after the government's expansion of espionage laws. 

Moreover, the recently concluded Chinese lawmakers annual parliamentary convention failed to make significant announcements to stabilize financial markets. 

The CSI 300 index decreased 0.6% to 3,576.31, and the Hang Seng index added 0.3% to 17,138.75. 

Hong Kong stocks advanced for the fourth day in a row after the listed companies ramped up their stock buybacks to take advantage of their beaten-down stocks. 

The latest surge is the longest market rally since the five-day advance in October. 

Electric vehicle makers BYD gained 0.4%, Li Auto advanced 4%, but Xiaomi Corp. declined 0.3%. 

AIA Group advanced more than 1% ahead of the company's annual results on Thursday, and yesterday the company confirmed it purchased its stock worth HK$12.7 million. 

Cathay Pacific Airways jumped 6.5% to HK$9.24 after the company reported a sharp jump in revenue and swung to profit in 2023. 

 

Cathay Pacific Traffic Rebounds 

The Hong Kong-based airline said 2023 revenue jumped 85.1% to HK$94.5 million, and net income swung to a profit of HK$9.78 billion from a loss of HK$6.62 billion in 2022. 

The airline has been struggling to expand capacity amid a shortage of pilots and a slow recovery in passenger demand, but the return to profitability allowed the company to declare a cash dividend of 43 Hong Kong cents per share. 

Passengers carried by the airlines jumped more than fivefold to 17.98 million in 2023 from 2.8 million, and air cargo delivered soared 19.6% to 1.38 million tons. 

 

India's Consumer Price Inflation Held Steady, Industrial Production Moderated

Stocks in Mumbai faced headwinds in early trading as investors reviewed the latest updates on inflation and industrial production. 

Retail inflation in India held steady in February and stayed within the range set by the Reserve Bank of India. 

Consumer price inflation in February held at 5.1% and stayed in the tolerance range between 2% and 6% for the fourth month in a row. 

Volatile fresh vegetables, vegetables, and pulses contributed to the food price inflation acceleration to 8.9% from 8.3% in the previous month, said the statistical agency, the Ministry of Statistics and Programme Implementation. 

In other economic news, industrial output decreased moderately to 3.8% in January from 4.2% in December. 

Mining production rose 5.9%, manufacturing output increased 3.2%, and electricity surged 5.6%, according to the preliminary estimate released by the statistical agency. 

India's industrial production index has three components, with 77.6% weight assigned to manufacturing, 14.3% to mining, and 8% to electricity. 

The Sensex index increased 0.01% to 73,516.42, and the Nifty index edged up 0.01% to 22,334.45. 

On the Mumbai stock exchange, 37 stocks traded at their 52-week highs and 105 stocks traded at their 52-week lows.

The yield on the 10-year Indian government bonds increased to 7.03%, and the Indian rupee strengthened to ₹82.79 against the U.S. dollar.