Asia report: China leads gains on mixed day for region

Stocks in China led the gains on a mixed Friday in the Asia-Pacific region, as producer inflation in the country slowed in line with expectations.

In Japan, the Nikkei 225 was down 1.49% at 27,824.29, as the yen strengthened 0.43% on the dollar to last trade at JPY 133.78.

Automation specialist Fanuc tumbled 3%, fashion firm Fast Retailing lost 0.93%, and technology conglomerate SoftBank Group was 2.01% weaker.

The broader Topix index was 1.32% weaker by the end of trading in Tokyo, closing at 1,943.09.

On the mainland, the Shanghai Composite was 1.42% firmer at 3,284.83, and the technology-heavy Shenzhen Component was 1.9% higher at 12,035.15.

Fresh data out of China showed producer inflation slowing to 6.4% year-on-year in May, meeting market expectations as the country came out of its latest round of Covid-19 lockdowns.

“We expect relative stability in PPI inflation for the next two months, before the disinflationary trend resumes, thanks to base effects from industrial commodities, and government policy aimed at cutting costs for manufacturing,” said Pantheon Macroeconomics chief China economist Craig Botham.

“This will in turn be passed onto to trade partners, thanks to a close link between PPI inflation and Chinese export prices, helped further by the year-on-year depreciation of the renminbi.

“Global central banks can use all the help they can get.”

Consumer prices, meanwhile, rose 2.1% on the year, just shy of consensus forecasts for a 2.2% rise.

“There is little to worry the PBoC in today’s CPI report, with little sign yet of any reopening-led inflationary spike,” Pantheon’s Craig Botham added.

“Food price pressures will be the biggest concern to policymakers, given the cost of living effects, and we expect these to rise further in the months to come, taking headline inflation with them, while prior rises in PPI inflation are set to push core CPI higher too.”

South Korea’s Kospi was off 1.13% at 2,595.87, while the Hang Seng Index in Hong Kong slipped 0.29% at 21,806.18.

Hong Kong-traded shares of internet giant Alibaba Group reversed earlier gains in the special administrative region to close 1.35% firmer.

That was in stark contrast to the 8.13% fall for the company’s US-listed shares overnight on Thursday, after its affiliate Ant Group and regulators in Beijing said the potential listing of Ant would not be re-explored.

Seoul’s blue-chip technology stocks were on the back foot, meanwhile, with Samsung Electronics down 2.15% and SK Hynix 1.9% weaker.

Oil prices were higher as the region entered the weekend, with Brent crude futures last up 0.68% on ICE at $123.91 per barrel, and West Texas Intermediate rising 0.58% on NYMEX to $122.22.

In Australia, the S&P/ASX 200 lost 1.25% to 6,932.00, while across the Tasman Sea, New Zealand’s S&P/NZX 50 slipped 0.67% to 11,136.28.

The down under dollars were both stronger on the greenback, with the Aussie last ahead 0.37% at AUD 1.4038, and the Kiwi advancing 0.55% to NZD 1.5580.

Reporting by Josh White at Sharecast.com.