Asia report: Hong Kong leads region lower ahead of US inflation data

Hong Kong led losses across Asia-Pacific stock markets on Thursday, as investors closed their wallets ahead of key inflation data out of the United States later in the global day.

In Japan, the Nikkei 225 was down 0.98% at 27,446.10, as the yen strengthened 0.04% on the dollar to last trade at JPY 146.10.

Robotics specialist Fanuc was down 1.27%, Uniqlo owner Fast Retailing lost 1.02%, and tech investing giant SoftBank Group was 3.65% lower.

The broader Topix index was 0.66% weaker by the end of trading in Tokyo, settling at 1,936.66.

On the mainland, the Shanghai Composite slipped 0.39% at 3,036.13, and the technology-centric Shenzhen Component dropped 1.33% to 10,908.55.

South Korea’s Kospi was off 0.91% at 2,402.23, while the Hang Seng Index in Hong Kong tumbled 1.7% to 16,081.04.

Chinese technology plays were in the red in the special administrative region, with Alibaba Group down 4.55%, JD.com off 3.66%, Meituan losing 1.66%, and Tencent Holdings 2.28% weaker.

The blue-chip technology stocks were on the back foot in Seoul as well, with Samsung Electronics down 2.58% and SK Hynix slipping 0.11%.

Wall Street markets fell by around 2% overnight, with the Nasdaq down 2.5%.

“You can probably put that down to uncertainty around the elections persisting, the blow-up in the crypto market and worries about today’s US inflation data,” said Markets.com chief market analyst Neil Wilson.

“European stock markets traded timidly in early trade on Thursday after a day of losses for Asian equities.

“You’ve also seen a bit of bid come through for bonds which suggests a bid of a safe haven bid, also evidenced by a rally for the dollar in the last couple of sessions off the Tuesday lows, which saw the dollar index hit its weakest in almost two months.”

Wilson said US CPI was expected to remain high as the benefit from lower gas prices ebbed, but added that a “marginal cooling” in the rate of inflation was expected, with core prices seen rising 0.5% on the month, down slightly from September’s 0.6% growth.

Headline CPI, meanwhile, was expected to rise 8% on an annual basis, down from 8.2% in September.

“The risk is that we get another upside surprise which raises bets for a higher terminal rate and arguably nudges the Fed closer to another 75-basis point hike in December, rather than the expected 50-basis points.

“There is a strong chance of volatility and outsize moves in index futures and rates, extending to foreigh exchange on the reading and one point in either direction will move the market.”

Oil prices were lower as the region went to bed, with Brent crude futures last down 0.55% on ICE at $92.14 per barrel, and West Texas Intermediate off 0.75% at $85.19 on NYMEX.

In Australia, the S&P/ASX 200 was down 0.5% at 6,964.00, while across the Tasman Sea, New Zealand’s S&P/NZX 50 slipped 0.46% to 11,091.93.

The down under dollars were both weaker against the greenback, with the Aussie last off 0.48% at AUD 1.5625, and the Kiwi retreating 0.53% to NZD 1.7088.

Reporting by Josh White for Sharecast.com.