Asia report: Markets weaker as US inflation surges again

Stocks closed lower in Asia on Friday, as investors reacted to another hot set of inflation numbers out of the US, where consumer prices rose faster than forecast again in January.

Traders were off for the National Foundation Day holiday in Japan, as the yen strengthened 0.01% on the dollar to last trade at JPY 116.

On the mainland, the Shanghai Composite was off 0.66% at 3,462.95, and the smaller, technology-heavy Shenzhen Composite lost 1.72% to 2,262.96.

South Korea’s Kospi slipped 0.87% to 2,747.71, while the Hang Seng Index in Hong Kong slipped 0.07% to 24,906.66.

Seoul’s blue-chip technology stocks closed in a mixed state, with Samsung Electronics down 0.66%, while SK Hynix advanced 1.93%.

The losses in Asia came after consumer prices picked up faster than anticipated in January, with the Labor Department reporting overnight that the consumer price index (CPI) advanced 0.6% month-on-month in January, and 7.5% year-on-year.

Both of those measures were ahead of market expectations, which were for 0.5% and 7.3%, respectively.

That led to some serious tumbles on Wall Street on Thursday, where the Dow Jones Industrial Average lost 526 points.

Neil Wilson, chief market analyst at Markets.com, said there was plenty of “inflation angst” among market participants, but noted that there were signs the market had moved “very aggressively” and reflected a position that would require the Fed to be as hawkish as possible.

“We know the tendency is to let the market do some of the tightening and inversion-recession moves may be avoided,” he noted.

“This sets up a possible opportunity to lean against the trend if you dare.”

St. Louis Fed president James Bullard said on Thursday that he would "like to see 100 basis points in the bag by 1 July" favoured kicking off with 50 basis points.

Neil Wilson noted that Goldman Sachs now saw seven hikes this year, while Citi was expecting 50 basis points in March.

Oil prices were higher as the region entered the weekend, with Brent crude last up 0.72% at $92.07 per barrel, and West Texas Intermediate advancing 0.92% to $90.71.

In Australia, the S&P/ASX 200 was 0.98% lower at 7,217.30, while across the Tasman Sea, New Zealand’s S&P/NZX 50 was down 1.93% at 12,173.78.

The down under dollars were both weaker against the greenback, with the Aussie last off 0.47% at AUD 1.4019, and the Kiwi retreating 0.37% to NZD 1.5038.