Asian stocks, dollar edge up on China inflation data

Reuters Tokyo | Updated on January 16, 2018 Published on October 14, 2016


Asian stocks and the dollar bounced on Friday, erasing some losses from the previous day, as stronger-than-expected Chinese inflation data eased some concerns about the health of world’s second-biggest economy.

MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.4 per cent after dropping 1.1 per cent on Thursday, when weak Chinese export numbers hit global equities, stopped a rise in US yields and halted the dollar's advance.

The index was headed for a loss of 2.1 per cent on the week.

China inflation

Chinese data again set the tone on Friday, with producer prices unexpectedly rising in September for the first time in nearly five years, while consumer inflation also beat expectations. The producer price increase will be good news for Beijing as it struggles to reduce a mountain of corporate debt.

South Korea’s Kospi added 0.5 per cent and Australian stocks were up 0.1 per cent. Shanghai dipped 0.2 per cent, while the Hang Seng rose 0.3 per cent.

Japan’s Nikkei was flat after weaving in and out of the red. It looked set for a 0.3 per cent weekly loss as investors braced for upcoming earnings reports.

“Until new catalysts emerge, investors will likely monitor both US earnings and Japan Inc's earnings,” said Kazuhiro Takahashi, an equity strategist at Daiwa Securities in Tokyo.

Overnight, the Dow fell 0.3 per cent and Nasdaq shed 0.5 per cent, led by falls in financial shares and the weak Chinese trade numbers.

Fed rate hike

The dollar index edged up 0.1 per cent to 97.610. It had risen to a seven-week high against a basket of other major currencies earlier in the week on growing expectations of a December interest rate hike by the Federal Reserve.

The greenback gained 0.1 per cent to 103.860 yen.

It had advanced to a 2-1/2-month peak of 104.635 on Thursday before sliding to 103.340 after the Chinese trade data. It was on track to gain 0.8 percent against the yen on the week.

The euro slipped 0.1 per cent to $1.1046 after pulling back from a 2-1/2-month low of $1.0985 on Thursday on the back of the dollar’s broad retreat. The common currency was en route for a 1.4 percent weekly loss.

Investors will have another chance to gauge whether the world’s biggest economy is ready for tighter monetary policy through US indicators due later, including September retail sales and the University of Michigan consumer sentiment report.

Yellen, Rosengren speech

The markets will also tune into speeches by Fed Chair Janet Yellen and Boston Federal Reserve President Eric Rosengren for hints about the timing of the next interest rate hike.

Elsewhere in currencies, the pound dipped 0.1 per cent to $1.2239. It was on track to lose 1.7 per cent this week.

Brexit woes

Sterling kept well above the 31-year trough below $1.1500 struck last Friday during its flash crash as some fears of a "hard Brexit” ebbed, but it remained under pressure as the road to Britain's exit from the European Union was seen to be strewn with obstacles.

The Singapore dollar hovered a near seven-month low as an unexpected third quarter contraction kept alive prospects of monetary easing after the central bank maintained its current policy.

Thai baht

The Thai baht rose more than one per cent against the dollar, supported by hopes for a calm reaction to the death of Thailand's King Bhumibol Adulyadej on Thursday.

The Thai prime minister had asked businesses to keep investing and traders to maintain their holdings and not “dump" shares.

Crude oil extended gains after bouncing overnight on a U.S. government report showing hefty draws in diesel and gasoline.

US crude was up 0.3 per cent at $50.57 a barrel, having gained about 1.5 per cent so far this week.

Published on October 14, 2016
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