Asian stock markets were a mixed bag on Wednesday as investors awaited US inflation data for possible clues about the United States Federal Reserve's interest rate moves.
Traders are waiting for the latest data on U.S. consumer prices which will be published on Thursday. Investors hope that the data will show inflation in the world’s biggest economy is slowing, which will in turn ease the pace of Fed rate hikes.
Hong Kong's Hang Seng index was the best-performing Asian bourse on Wednesday, rallying more than 1 percent to a six-month high. Major Chinese technology firms Alibaba Group Holding Ltd and Tencent Holdings Ltd were among the biggest boosts to the index, rising between 3 percent and 5 percent after China earlier this week signaled the winding down of regulatory scrutiny of the country’s biggest internet firms.
After a three-year crackdown the move heralds easier operating conditions for technology firms. Beijing’s shift in stance comes as the government is struggling to shore up weak economic activity amid renewed headwinds from the COVID-19 pandemic.
Foreign investors are slowly buying stocks in China, a sign that the easing of the country's tough COVID-zero policy marks the return of Chinese equities.
Gains in technology stocks also lifted Chinese bourses, with the Shanghai Shenzhen CSI 300 and the Shanghai Composite indexes adding about 0.3 percent each. Markets are now awaiting Chinese consumer price index (CPI) data due on Thursday to gauge whether price pressures improved with the lifting of anti-COVID restrictions.
"The economic and market effect of that reopening is just beginning to be felt," said Ken Peng, head of Asia investment strategy at Citi Global Wealth Investments.
"This is still a long path and we remain very bullish on Chinese equities ...and also the currency," Peng added, expecting foreign inflows big enough to lift the yuan this year.
Broader Asian stocks were in a mixed range, with risk-heavy bourses in Southeast Asia trading red. Indonesian stocks were the worst performers in the region, falling 0.5 percent.
Japan’s Nikkei 225 index added nearly 1 percent, with export-oriented stocks gaining on recent weakness in the Japanese yen. Shares of Fast Retailing Co., Ltd., which operates the popular clothing brand Uniqlo, rose 1.1 percent after it said it will boost its wages by as much as 40 percent.
The move would "greatly strengthening its investment in personnel, remunerating each and every employee appropriately for their ambition and talents, as well as increasing the company’s growth potential and competitiveness in line with global standards", Fast Retailing said in a statement.
India’s Nifty 50 and BSE Sensex 30 indexes also retreated ahead of CPI inflation data due on Thursday, which is expected to show that Indian price pressures remained steady in December.
Markets are now awaiting more cues on U.S. economic health from the CPI reading, which is expected to show that inflation eased further in December from the prior month.
The reading is likely to elicit a positive response from Asian markets, given that it puts less impetus on the Federal Reserve to keep hiking interest rates at a sharp clip. Rising U.S. rates had battered Asian markets through 2022, with traders fearing a similar trend in 2023, given that inflation is still well above the Fed’s target range.
Australia’s ASX 200 index surged 0.9 percent after data showed that retail sales grew more than expected in November, thanks largely to the Black Friday shopping event. But a separate reading showed that CPI inflation in the country bounced back to a 30-year high in November.
According to the Australian Bureau of Statistics, Australia’s monthly CPI rose 7.3 percent in the 12 months to November 2022, accelerating inflationary pressure on its economy.
