Shares dropped in Tokyo and Hong Kong after a larger-than-expected increase in US wholesale prices on Friday dealt a blow to hopes of an early interest-rate cut by the Fed, causing Wall Street to close in the red
Chinese stocks were strong after Lunar New Year but other Asian markets were mixed on Monday as a strong US inflation report rekindled concerns over the timing of rate cuts by the Federal Reserve.
Shares dropped in Tokyo and Hong Kong after a larger-than-expected increase in US wholesale prices on Friday dealt a blow to hopes of an early interest-rate cut by the Fed.
But Shanghai and Shenzhen advanced as traders returned from a week-long break. Markets in Seoul and Sydney also gained, while Singapore started the day flat.
Analysts pointed to data showing a 61% year-on-year increase in rail trips made in China during the Lunar New Year holiday, with hundreds of millions of people on the move.
Early data around holiday travel may show some green shoots for the sluggish Chinese consumer, Taylor Nugent from NAB stated in a note.
Stephen Innes, managing partner at SPI Asset Management, called the data a source of relief for Chinese “policymakers grappling with challenges such as slowing economic growth, deflation risks, subdued consumer demand, and a collapse in the property sector”.
However, while the jump in tourism provides a glimmer of hope, its long-term sustainability remains uncertain, Innes cautioned.
He said investors in Chinese shares were optimistic about sustaining recent positive momentum in Asian markets in spite of last week’s US inflation shock.
Nugent noted on Monday that Fed speakers have “continued to preach patience”, adding that “the data flow is not giving them the green light to accelerate their cutting plans”.
Despite modest drops on Monday, Tokyo’s key Nikkei index has been surging, with a positive trend seen in recent months now taking the index near an all-time record set in 1989.
